Governance - Interpreting Results

Governance Diagnostic Questionnaire
(click the above link to obtain the questionnaire)
Interpreting Questionnaire Results
Guidance Notes Prepared by:

Dr Rory Ridley-Duff
May 2008
Participant: __________________
Interpreting Results
Scoring for ‘Awareness’

Each question answer carries a score that indicates the awareness/formality of the approach,
and your orientation towards that stakeholder group. This section deals with the scoring and
interpretation of the questionnaire. Appendix A contains details on the theoretical
underpinnings of the questionnaire, together with a complete list of the questions and the
issues that went into their formation.
Awareness Scores in the Questionnaire

0 – Minimal or no awareness
1 – Minimal awareness and/or minimal operationalisation.
2 – Informal awareness, informally operationalised.
3 – Formally aware with partial or mixed operationalisation.
4 – Formally aware, formally operationalised.
The results are added together and banded as follows:

1. Responsibility Avoidance: 0 – 25 (average response between 0-1)
2. Informal Approach: 26 – 50 (average response between 1-2)
3. Mixed Approach: 51 – 75 (average response between 2-3)
4. Formal Approach: 76 – 100 (average response 3+)
All questions where the response was 0 or 1 indicate minimal awareness and might be added
to meeting agendas for further discussion. Appendix A contains further information on each
question.
Scoring for ‘Orientation’

To establish the „orientation‟ scores, count the number of times that a respondent answers 0,
1, 2, 3 and 4 for all questions. Results are plotted onto a series of concentric circles:
1. Inner Circle: 0-2 responses

2. Second Inner Circle: 3-5 responses
3. Second Outer Circle: 6-8 responses
4. Outer Circle: 9+ responses
Orientation Scores in the Questionnaire

0 – No clear preference expressed.
1 – Authority is vested in one key individual (individualised / exclusive).
2 – Authority is vested in one group (collectivised / exclusive).
3 – Authority is negotiated by individuals (individualised / inclusive).
4 – Authority is negotiated by groups (collectivised / inclusive).
In working out the results, any answer with a 0 score is ignored. The results are drawn onto a
diagram with quadrants labelled as follows:
Individualised / Exclusive: Entrepreneurial (Authoritarian)

Collectivised / Exclusive: Elitist (Authoritarian)
Individualised / Inclusive: Co-operative Entrepreneurship (Democratic)
Collectivised / Inclusive: Stakeholder (Democratic)
The next page enables you to record your results and learn more about their meaning.
© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 1

Understanding Your Awareness Results

The chart and text below indicate the levels of awareness and formality in your approach to
governance. Results are classified in one of four ways:
 Avoidance (0 - 25)
 Informality (26 - 50)
 Mixed Approach (51 - 75)
 Formality (76+)
Your board / organisation has the following score for awareness and formality (write your
score below the band that your score falls into):
Mixed
Avoidance Informality Formality
Approach
Each level of awareness/formality is characterised on the following pages:
2 © Dr Rory Ridley-Duff, 2009. Reproduced with permission.

Avoidance (Minimal awareness and operationalisation)

Boards with this level of awareness and informality are likely to be unable to shoulder (or are
positively avoiding) director-level responsibilities. There may be two reasons. Firstly, the
organisation has been set up by a group of people with little experience of running
organisations. Secondly, the organisation may be young and has not had sufficient time to
develop governance concepts and practices. In the early stages of organisation development,
an organisation may rely on one key individual or support professionals for advice and
guidance. In these circumstances, a mentor can usefully work with board members to
understand responsibilities so that informed choices can be made (without paying too often
for third-party advice, or being over reliant on a CEO). Identify where you answered 0 or 1:
you can use the appendix of question topics at the end of this document to build an action
plan, or include items on the agenda of future governance meetings (board meetings).
Question answers that indicate minimal awareness or avoidance of governance:
Legal Issues
1. I don't know if we have an equal opportunity policy / we've not discussed this policy at board
level. We [would] leave development of our equal opportunity policy to our Chief Executive
/ Human Resources Manager.
2. We [would] ask our Chief Executive / General Manager or get professional advice when we
need to know something. I'm unsure if we've ever properly discussed the threats and
opportunities that arise from new legislation.
3. I can't ever remember us having a major difference of opinion or dispute about the way we
meet our legal obligations. We don‟t debate it much. We took guidance from our Chief
Executive / Chair / External Consultant.
4. I can't remember ever seeing a strategic plan in this place. We usually go along with the
founder's / chair's wishes. Our CEO doesn't discuss plans with staff until s/he has got in
principle agreement from the board / senior management.
Stakeholders
5. It is a bit vague here - that's no bad thing. I've not participated in discussion about mission or
values. The mission / values of an organisation are set by the founder / leader. The board,
staff and volunteers learn to apply these in their decision-making.
6. I'm not sure how organised our service users / staff are or how we might integrate them into
decision-making. Our Chief Executive leads on this: it is not something we (would) discuss
at board level.
7. There is very little conflict in our organisation: I can't remember us ever needing to use a
conflict resolution process. We have a clear mission and set of values. When there is conflict
we ensure the organisation is put first and its values are upheld.
8. Our planning process is informal. Come to think of it, I‟ve never seen / approved a written
plan. The founder / CEO creates written plans of what we'll do and the board checks this over
before giving approval.
Funding and Investment

9. I think we're very reactive and do whatever we can as opportunities arise. It makes budgeting
almost impossible. Our funders/investors determine what we do. We agreed budgets and
report back to them how we are performing.

10. I'm not sure how we obtain our funding and income. It doesn't get discussed much at board
level. The individuals / organisations who fund our organisation dominate the board and
policy. It's their responsibility.
11. I'm not sure how we choose between different proposals: it all seems to be hit and miss, or
decided on a whim. There are one or two people who are influential here. Their judgement is
critical and we usually follow their lead.
12. I'm not sure what controls we have on financial data or whether I'm entitled to inspect the
accounts. Financial data is carefully controlled: our financial director / CEO has full control.
They give information out when there is an AGM.
Employees, Members and Volunteers

13. We accepted our accountant's advice. We've never discussed how the constitution affects
decisions. We expect our CEO to be knowledgeable and capable of using their judgement to
decide who should be involved.
14. This stuff is always difficult so the board leaves it to senior managers. We're focussed on
strategic, not operational issues. We may get an expert to advise us, then we follow their
recommendations.
15. I don't really know what 'natural justice' is or whether we've incorporated the principles into
any of our contracts. All this formal stuff makes my blood boil. We should be left to solve
problems informally.
16. I'm not sure I've ever attended an AGM or have any concept of what we should be doing
there. We use the AGM as a way for our founder / Chair to communicate their vision for the
next year.
Executives and Management

17. We don't see a need for (don't have) a separate CEO and Chair. They are one and the same.
At times we work together well, but at other times months pass without any information or
contact. It's a bit hit and miss.
18. This place is dominated by a few strong characters. We give them plenty of scope then pull
on the reigns if we see risks escalating. It is not a big issue here. So long as things get done,
we're happy. That's the best way to reduce risk.
19. Managers come and go here but I don't remember them ever coming into conflict with the
board. Managers manage operations. Board members direct the managers. If managers don't
understand that, they don't last long here.
20. We don't have a separation here because we designed the organisation to have just one key
decision-maker. We do whatever we have to as the circumstances arise. We don't have
formal meetings.
Board Development
21. I've never read our organisation's constitution. I don't know for sure what the provisions are
for replacing directors / trustees. I can't remember us appointing a trustee / director that was
not a friend of the CEO or Chair.
22. You can't become a trustee / director here unless the Chair / CEO like you. You have to agree
with their vision to be considered. I'm not sure what criteria we use to select trustees /
directors. I've never seen documents that describe the process.
23. The Chair is influential. He / she suggests who does what. You are unlikely to get on a
committee without their support. It really depends who is in with who and what you are
interested in. I don't think we have any clear cut approach to this.
24. So far as I'm aware, trustees / directors do not undergo any regular appraisal of their
performance. It is up to member groups to monitor and communicate with their trustee /
director. If they don't perform, they won't be re-appointed/re-elected.

Informality (Awareness and informality)

Boards with this level of awareness are considering issues for which they are responsible and
are taking some action to address them. On balance, they use an informal approach either
because formal procedures have not been developed, or they are side-stepping formal
procedures that have been put in place. The approach indicates that there is a reliance on key
individuals to sort out specific problems, or a commitment to mutuality and the strength of
personal relationships to avoid formal approaches. In some cases, this may be an effective
approach (in SMEs or small-medium sized co-operatives, for example) and, arguably,
reduces the likelihood of conflict escalation and legal challenges. In larger organisations,
informal approaches run greater risk of leaving the organisation vulnerable to legal claims.
Depending on your size and age, consider reviewing the development of policies, or the
extent to which existing policies are followed. You can work with stakeholders to institute
communications systems and develop clearer policies and procedures, or new ways of
applying them to practice.
Question answers that indicate awareness and informality in governance:
Legal Issues
1. We are individually committed to equal opportunity but don't have a formal written policy.
2. We have informal discussions inside/outside board meetings and occasionally involve experts
to raise our awareness.
3. Disputes are rare, but when they occur, there is a lot of politics involved to reach a
compromise.
4. Our planning process is informal and organic. We go with good ideas regardless of their
source.
Stakeholders
5. It doesn't help to fix mission and values: we debate how to change and evolve our
organisation.
6. Managers / board members meet informally with service users/members and we find this
helpful.
7. Whoever is in disagreement, we get round a table to identify underlying issues / interests.
Conflict can be used to improve decisions and create respect.
8. We're not big on formal planning but spend a lot of time investigating a range of project
opportunities on an ongoing basis.

9. We're driven by projects and project managers who liase with finance staff to monitor and
report to the board.
10. These matters are dealt with by our Chief Executive / Fundraiser. We get the CEO to set
targets and monitor them.
11. Whenever a member of staff / board member has a good idea, we find ways to support it even
if it takes time.
12. The board has powers to inspect financial records. We encourage them to ask for
clarifications whenever needed.


13. Our employees can't sit on the board. We keep a strict separation between board / employees
to avoid conflicts of interest.
14. Board members discuss various possibilities before deciding the strategy and informing the
rest of the management group.
15. We rely on professionals to draw up HRM policies and review implementation with our CEO
or HR Manager.
16. AGMs are a huge undertaking. We celebrate, have debates and involve not just members but
staff, clients / customers / beneficiaries.

17. The CEO / Chair have crucial roles, but underlying this there are teams who work with each
other on several levels.
18. We value diversity here. It's deliberate to create a healthy tension between activism and
management control.
19. Occasionally board members have battles with managers. When that happens, we follow a
process to help rebuild their relationship.
20. There is regular communication between board members and those with management
responsibilities, but it is mostly informal rather than at meetings.
Board Development
21. Formally, we have elections for trustees / directors every 3 years, but elections are never
contested.
22. Candidates are nominated for election and make an election statement. These are sent to
members so they can choose between them.
23. Anyone can nominate, but long-serving board members band together to decide who does
what.
24. The Chair appraises the performance of each trustee / director. He / she then decides on any
necessary training / development.

Mixed (Awareness and mixed informal/formal procedures)

Boards / organisations with this level of awareness/formality are clearly addressing issues and
considering them carefully. They are also developing an approach that is not over-reliant on
either formal procedures or single individuals in discussion and implementation. A mixed
approach shows an awareness of the dangers of becoming over bureaucratic as well as the
need to debate and monitor board and executive performance. Any areas where awareness is
possibly under-formalised or over-formalised can be identified by looking for answers that
are either 0 or 4 in your results. In terms of identifying areas to develop, examine whether
your answers are consistent across all areas of governance, or whether they vary with
different stakeholders. If they vary, reflect on why different stakeholders are treated in
different ways. Is this necessary and desirable? Is there a case for greater equity?
Question answers that indicate a mixed approach to governance:
Legal Issues
1. We discussed the basic parameters at board level and then delegated the task to a manager.
2. Our board has been assembled / appointed for their legal awareness. We rely on them to
identify threats and opportunities.
3. We got someone to carefully research the underlying issues, get input from our stakeholders,
then facilitated a board level debate.
4. We consult staff once proposals are formally agreed by the board and address concerns in the
light of organisational needs.
Stakeholders
5. This mission stuff is a fad: all stakeholders' values have to be respected in an effective
organisation.
6. Service user / staff representation would undermine the professionalism we want to develop
in our policy making.
7. Disputes happen and are often complex once investigated. We have a process, but the person
with most power usually prevails.
8. Planning is an iterative process that brings together different stakeholders into working parties
on a continual basis to create policies.

9. Our CEO drives this. S/he is well connected and takes responsibility for accounting to
funders.
10. Investor involvement, whether individuals or organisations, is important: we work with them
on new projects and ideas.
11. We have a formal process for evaluating investment proposals. Some we support. Some we
don't. It's the board's job to decide.
12. Members have a clear constitutional right to inspect financial records at any time. There is
full transparency here.


13. We have strong 'membership' values. We try to remove barriers that prevent stakeholder
involvement in decision-making.
14. We have formal / informal discussions, and let individuals express their opinions, before we
make any decisions.
15. We review our contract terms, including Employment Contracts, and tell our staff about the
changes we're making.
16. We invite all members, give them plenty of information and use social events to encourage
active participation.

17. The CEO and Chair have formal responsibilities, but we're a collegial group and support each
other all the time.
18. We consciously develop an entrepreneurial culture. We're activists and impatient with
bureaucracy.
19. Conflict is both overt and covert. We force issues into the open so we can negotiate a
solution.
20. Only our CEO meets the board on a regular basis. Reports are prepared and the CEO attends
part of the meeting.
Board Development
contested.
what.

Formal (Awareness and formal procedures)

Boards with this level of awareness/formality not only pay close attention to their legal
responsibilities, but have also invested substantially in the development of formal procedures.
There are, however, some dangers from over-formalising the organisation‟s approach to
governance. It may be bureaucratic and rule bound (rather than providing a framework
within which people can be pragmatic and make effective decisions sensitive to context). In
some cases, a more informal approach may yield time/money savings by precluding the need
for formal processes which consume disproportionate amounts of time/effort, or which
exacerbate rather than address social divisions. Look at your answers to see where the 4s
predominate and reflect on whether a more informal approach might bring either performance
or social benefits.
Question answers that indicate a mixed approach to governance:
Legal Issues
1. Our policy was negotiated by members / employees and managers together, then discussed
and approved by the board.
2. We discuss risks and opportunities arising from new legalisation and involve our managers
and other staff in these discussions.
3. We had robust debate at board meetings until we agreed a policy. We don‟t wash our dirty
linen in front of staff.
4. Staff representatives are informally and formally involved in the development of our plans
from the outset.
Stakeholders
5. It is vital that the board sets a clear mission and values. This has to be communicated by
managers to all staff.
6. We formally include service users and other parties: it is a way to improve governance and
promote healthy debate.
7. If two parties cannot agree, we bring in a third-party to mediate until the parties reach
agreement.
8. Plans are developed by leader(s) with board guidance. Once agreed, we work with
stakeholders to deploy resources effectively.

9. We work all the time with managers / staff on budgeting/accounting for projects that fit in
with the board's plans.
10. Funders are vital, but we don't want them on the board. We give them what they ask for but
the board keeps its own council.
11. There are always double or triple bottom-line issues. We debate these widely then make
decisions.
12. We're aware that irregularities could occur and have an elected audit committee comprising
more than one stakeholder for internal audit.


13. We don't care if members/employees are board members or not: they all have a formal role in
decision-making at different levels in the organisation.
14. We discuss it formally across the whole organisation, including with the workforce, before we
negotiate an agreement on how to ensure the future of the organisation.
15. We draw up dispute resolution policies with staff / members. If there is an allegation, it must
be in writing and go through due process.

management control.
20. There are regular meetings between board members and non-board members: both can bring
proposals to the table depending on what is discussed.
Board Development
21. Each stakeholder group has power to elect its own trustee(s) / director(s), and only members
of that group can vote them in and out.
22. Our trustees / directors are appointed using the same equal opportunity recruitment process as
for any other member of staff.
23. We decide work allocation at board meetings. There's a round table discussion until we're all
agreed who should do what.
24. Members and/or those working in the organisation assess the performance of their trustees /
director(s) / managers on a regular basis.

Suggested Areas for Further Action

Using Appendix A, list areas where you answered 0 or 4. You can consider prioritising these
areas in board meetings in the future:
Conclusions on Awareness and Formality of Procedures
Depending on the size and constitution of the organisation, an informal, mixed or formal
approach may be the most appropriate overall. For example, co-operatives often place a high
value on mutuality in decision-making, and may institutionalise debate and mediation into
disciplinary and grievance procedures. Other organisations may prefer strong
line-management approaches, with formal reports, strong discipline and respect for authority
combined with unambiguous policy documents. Whatever the formal legal requirement, each
of these approaches may be effective in particular circumstances and the organisation‟s
board/staff are the ultimate arbiters of what is most appropriate for the organisation.

Understanding Your Orientation Results

There are a number of approaches that can be effective in different circumstances. You can
map your orientation results on the chart below to understand the commitment of your board /
organisation to each of the following problem-solving / power-based relationships:
 Individualised / Exclusive - Entrepreneurial Authority (Authoritarian)

 Collectivised / Exclusive - Managerialist Authority (Authoritarian)
 Individualised / Inclusive - Co-operative Entrepreneurial Authority (Democratic)
 Collectivised / Inclusive - Stakeholder Authority (Democratic)
Place a cross in each quadrant to reflect the number of times you chose each orientation:
1. Innermost Circle: 0-2 responses

2. Second Inner Circle: 3-5 responses
3. Second Outer Circle: 6-8 responses
4. Outer Circle: 9+ responses
Individualised
Weak Preference Co-operative

Entrepreneurial Enterpreneurship
(Authoritarian) (Democratic)
Moderate Preference
Strong Preference
Dominant Preference
Exclusive Inclusive
Managerialism Stakeholder
(Authoritarian) (Democratic)
Collectivised
Organisations may show a preference for different approaches in different circumstances

(your score may vary in different sections of the questionnaire), or there may be a consistent
clear preference. Each approach, its merits and problems, are discussed below:

Individual Entrepreneurship (Individualised / Exclusive)

Governance is dominated by a recognised leader to whom others defer and whose values
dominate in decision-making, disputes and communications. Rules are created when the
leader needs to resolve a dispute, or re-establish their authority. The leader allocates
responsibilities (and adjudicates conflicts) or delegates the authority to a person they trust.
The leader takes an entrepreneurial approach to decision-making, selects / appoints senior
management to meet goals set, then runs the organisation on the assumption that they have
control rights. Both entrepreneur-led enterprises (social and private) as well as charities
established by a philanthropist or political activist can take on this character. One upside is
fast efficient action that is targeted according the values/vision of the entrepreneur. A
downside, however, is that the entrepreneur (or those they favour) may not adequately
consider the needs or views of those outside their peer group.
Questions answers that indicate faith in entrepreneurial authority:
Legal Issues
1. We left development of our equal opportunity policy to our Chief Executive / Human
Resources Manager.
2. We ask our Chief Executive / General Manager or get professional advice when we need to
know something.
3. We didn't debate it much. We took guidance from our Chief Executive / Chair / External
Consultant.
4. Our CEO doesn't discuss plans with staff until s/he has got in principle agreement from the
board / senior management.
Stakeholders
5. The mission / values of an organisation are set by the founder / leader. The board, staff and
volunteers learn to apply these in their decision-making.
6. Our Chief Executive leads on this: it is not something we (would) discuss at board level.
7. Disputes happen and are often complex once investigated. We have a process, but the person
with most power usually prevails.
8. The founder / CEO creates written plans of what we'll do and the board checks this over
before giving approval.

9. Our CEO drives this. S/he is well connected and takes responsibility for accounting to
funders.
10. These matters are dealt with by our Chief Executive / Fundraiser. We get the CEO to set
targets and monitor them.
11. There are one or two people who are influential here. Their judgement is critical and we
usually follow their lead.
12. Financial data is carefully controlled: our financial director / CEO has full control. They give
information out when there is an AGM.


13. We expect our CEO to be knowledgeable and capable of using their judgement to decide who
should be involved.
14. We get an expert to advise us, then we follow their recommendations.
15. We rely on professionals for this and review implementation with our CEO or HR Manager.
16. We use the AGM as a way for our founder / Chair to communicate their vision for the next
year. We keep formalities to a minimum.

17. We don't see a need for (don't have) a separate CEO and Chair. They are one and the same.
18. This place is dominated by a few strong characters. We give them plenty of scope then pull
on the reigns if we see risks escalating.
19. Conflicts are often puzzling and over really petty things. If that happens, we get a respected
person to discuss things informally.
20. We don't have a separation here because we designed the organisation to have just one key
decision-maker.
Board Development
21. I can't remember us appointing a trustee / director that was not a friend of the CEO or Chair.
22. You can't become a trustee / director here unless the Chair / CEO like you. You have to agree
with their vision to be considered.
23. The Chair is influential. He / she suggests who does what. You are unlikely to get on a
committee without their support

Managerialist (Collectivised / Exclusive)

Governance by a managerial elite who are able to create or impose a consensus. Rules
reflect their shared values and they allocate responsibilities and adjudicate disputes according
to their perception of collective interests (“the common good”). Elites sometimes take their
authority for granted and entrench their right to make appointments and key decisions.
Authority is based on educational or professional qualifications, „expert‟ status in a particular
field, and/or perceived social status (as indicated by formal/informal hierarchies). In
addition, businesses started by families, work colleagues or closely knit social networks may
develop in this way. Lastly, co-operatives and mutual societies with an inactive membership
can start to adopt similar practices. One upside is the cohesion of the dominant group and the
shared values that can lead to focussed and effective action. One downside, however, is that
points of views held by non-professionals or those with low perceived social status can
become marginalized or ignored, leading to oppressive cultures that resist change.
Questions answers that indicate faith in managerialist authority:
Legal Issues
1. We discussed the basic parameters at board level and then delegated the task to a manager.
2. Our board has been assembled / appointed for their legal awareness. We rely on them to
identify threats and opportunities.
3. We had robust debate at board meetings until we agreed a policy. We don‟t wash our dirty
linen in front of staff.
4. We consult staff once proposals are formally agreed by the board and address concerns in the
light of organisational needs.
Stakeholders
5. It is vital that the board sets a clear mission and values. This has to be communicated by
managers to all staff.
6. Service user / staff representation would undermine the professionalism we want to develop
in our policy making.
7. We have a clear mission and set of values. When there is conflict we ensure the organisation
is put first and its values are upheld.
8. Plans are developed by leader(s) with board guidance. Once agreed, we work with
stakeholders to deploy resources effectively.

9. Our funders/investors determine what we do. We agreed budgets and report back to them
how we are performing.
10. The individuals / organisations who fund our organisation dominate the board and policy. It's
their responsibility.
11. We have a formal process for evaluating investment proposals. Some we support. Some we
don't. It's the board's job to decide.
12. The board has powers to inspect financial records. We encourage them to ask for
clarifications whenever needed.


13. Our employees can't sit on the board. We keep a strict separation between board / employees
to avoid conflicts of interest.
14. Board members discuss various possibilities before deciding the strategy and informing the
rest of the management group.
15. We've review our contract terms, including Employment Contracts, and tell our staff about
the changes we're making.
16. We have a fantastic informal evening each year. The board and a few members accept the
accounts, confirm officers, then have a drink.

17. The relationship between our Chair and CEO is a close one: they tend to run the show and we
contribute our expertise as needed.
18. We're quite careful, I think. We don‟t jump prematurely to embrace the latest fad. Most of us
are quite conservative (with a small 'c').
19. Managers manage operations. Board members direct the managers. If managers don't
understand that, they don't last long here.
20. Only our CEO meets the board on a regular basis. Reports are prepared and the CEO attends
part of the meeting.
Board Development
contested.
22. Our trustees / directors are appointed using the same equal opportunity recruitment process as
for any other member of staff.
what.
24. The board members keep tabs on each other's work. It's pretty informal, but we do appraise
each other and give feedback.

Co-operative Entrepreneurship (Individualised / Inclusive)

Governance that encourages individual initiative and accommodates conflict through respect
for individual rights and commitment to dialogue. Balance is achieved through democratic
approaches to control based on individual action and devolved responsibilities. One-member
/ one-vote societies, associations, democratic businesses and co-operatives may show a
preference for this approach (or profess commitment to it). Directors and executive officers
may be elected by the membership rather than appointed by an elite. Overall, there is an
emphasis on egalitarianism and individual action, rather than corporate control. One upside
of this approach is the reported level of individual commitment and satisfaction amongst
members and employees, leading to adaptability and innovation when change is needed. One
downside, however, arises when trying to reach agreement with other organisations that want
to negotiate with a „leader‟ rather than a collective.
Questions answers that indicate faith in co-operative entrepreneurial authority:
Legal Issues
1. We are individually committed to equal opportunity but don't have a formal written policy.
2. We have informal discussions inside/outside board meetings and occasionally involve experts
to raise our awareness.
3. Disputes are rare, but when this one occurred, there was a lot of politics involved to reach a
compromise.
4. Our planning process is informal and organic. We go with good ideas regardless of their
source.
Stakeholders
5. It doesn't help to fix mission and values: we debate how to change and evolve our
organisation.
6. Managers / board members meet informally with service users/members and we find this
helpful. Formal arrangements won't help.
7. If two parties cannot agree, we bring in a third-party to mediate until the parties reach
agreement.
8. We're not big on formal planning but spend a lot of time investigating a range of project
opportunities on an ongoing basis.

9. We're driven by projects and project managers who liase with finance staff to monitor and
report to the board.
10. Investor involvement, whether individuals or organisations, is important: we work with them
on new projects and ideas.
11. Whenever a member of staff / board member has a good idea, we find ways to support it even
if it takes time.
12. Members have a clear constitutional right to inspect financial records at any time. There is
full transparency here.


13. We have strong 'membership' values. We try to remove barriers that prevent stakeholder
involvement in decision-making.
14. We have formal / informal discussions, and let individuals express their opinions, before we
make any decisions.
15. All this formal stuff makes my blood boil. We should be left to solve problems informally.

17. The CEO and Chair have formal responsibilities, but we're a collegial group and support each
other all the time.
18. We consciously develop an entrepreneurial culture. We're activists and impatient with
bureaucracy.
20. There is regular communication between board members and those with management
responsibilities, but it is mostly informal rather than at meetings.
Board Development
21. We don't have elections. New directors are introduced through personal connections. Word
of mouth reputation matters the most.
23. We decide these things formally at board meetings. There's a round table discussion until
we're all agreed who should do what.
24. Members and/or those working in the organisation assess the performance of their trustees /
director(s) / managers on a regular basis.

Stakeholder Democracy (Collectivised / Inclusive)

Governance that recognises group interests and promotes debate / discussion between
stakeholders throughout the organisation. Conflict is accommodated through debate and
negotiation rather than the imposition of rules and centralised controls. Social and economic
challenges are met with a mixture of participation at team level and representative democracy
at senior levels. Directors, managers and executive officers may (in some cases) be elected
and removed by their groups rather than appointed / co-opted by board members. One upside
of this approach is the acknowledgement and recognition of group interests as well as the
responsiveness of senior staff to the needs of different stakeholders. One downside, however,
may be the time it takes to reach consensus across the organisation as underlying group
interests create additional challenges and conflicts.
Questions answers that indicate faith in co-operative entrepreneurial authority:
Legal Issues
1. Our policy was negotiated by members / employees and managers together, then discussed
and approved by the board.
2. We discuss risks and opportunities arising from new legalisation and involve our managers
and other staff in these discussions.
3. We got someone to carefully research the underlying issues, get input from our stakeholders,
then facilitated a board level debate.
4. Staff representatives are informally and formally involved in the development of our plans
from the outset.
Stakeholders
5. This mission stuff is a fad: all stakeholders' values have to be respected in an effective
organisation.
6. We formally include service users and other parties: it is a way to improve governance and
promote healthy debate.
7. Whoever is in disagreement, we get round a table to identify underlying issues / interests.
Conflict can be used to improve decisions and create respect.
8. Planning is an iterative process that brings together different stakeholders into working parties
on a continual basis to create policies.

9. We work all the time with managers / staff on budgeting/accounting for projects that fit in
with the board's plans.
10. Funders are vital, but we don't want them on the board. We give them what they ask for but
the board keeps its own council.
11. There are always double or triple bottom-line issues. We debate these widely then make
decisions.
12. We're aware that irregularities could occur and have an elected audit committee comprising
more than one stakeholder for internal audit.


13. We don't care if members/employees are board members or not: they all have a formal role in
decision-making at different levels in the organisation.
14. We discuss it formally across the whole organisation, including with the workforce, before we
negotiate an agreement on how to ensure the future of the organisation.
15. We drew up a policy with staff / members. If there is an allegation, it must be in writing and
go through due process.
16. AGMs are a huge undertaking. We celebrate, have debates and involve not just members but
staff, clients / customers / beneficiaries.

management control.
19. Conflict is both overt and covert. We force issues into the open so we can negotiate a
solution.
20. There are regular meetings between board members and non-board members: both can bring
proposals to the table depending on what is discussed.
Board Development
21. Each stakeholder group has power to elect its own trustee(s) / director(s), and only members
of that group can vote them in and out.
22. Each member group elects / appoints a director / trustee using a system they feel is
appropriate. We don't interfere.
23. We devolve these decisions to the committees themselves. They suggest who they would like
and we accommodate their wishes.
24. It is up to member groups to monitor and communicate with their trustee / director. If they
don't perform, they won't be re-elected / re-appointed.

Final Comment
Effective governance maintains a balance between appropriate learning, social cohesion (but
not necessarily social harmony) and responsible lawful action. The dominant approach may
change over time, or in response to the changed wishes of organisation members / leaders.
Effective governance can be promoted by increasing the awareness of directors and
organisation members regarding the merits and pitfalls of different approaches. Since World
War II (1950s), after research demonstrating the value of participative approaches, command
and control approaches to governance became less popular. In the 1970s/1980s, however,
further research suggested that such approaches do not work well in all circumstances. With
governance scandals (Maxwell, Marconi, Enron), there has been a reintroduction of
command and control techniques.
Choosing the most effective approach for a given situation is one of the skills that
directors can develop. Rather than relying on a single approach, we recommend that
you develop your understanding of the benefits and pitfalls of each approach so that
you can make informed choices in every situation.
This questionnaire was initially devised by Dr Rory Ridley-Duff (Sheffield Hallam University) with input at the design stage from
Mike Bull (Manchester Metropolitan University). The first phase of development was funded by a collaborative partnership between
universities and enterprise support agencies led by St Martin College, Cumbria. The second phase of development has involved
Tracey Coule and Christine Gilligan from Sheffield Hallam University and been funded by the Enterprise Centre at Sheffield Hallam
University.

Appendix A – Developing the Questionnaire

This section provides more information on the how the questionnaire was designed and
developed, as well as further information on each question. Based on PhD research into
corporate governance, and in collaboration with Mike Bull (Centre for Enterprise,
Manchester Metropolitan University) and Cherie Semper (Social Enterprise Business Coach
for the North West), Rory developed the following model to identify stakeholders in an
enterprise‟s governance system.
Beneficiaries
Customers Funding and
Government
Clients Investment
Suppliers
Assessing Legal Establishing Trading

Reporting Outcomes
Obligations Terms
Should the board

shield the organisation
Board of
from, or conform to Directors/
wishes of, different Trustees
stakeholders?
Health & Safety

Strategic & Risk
Working Conditions
Management
&
&
Participation,
Performance
Consultation and
Monitoring
Information
Employees
Executives and/or
Members

Key Themes
Exclusive or Inclusive Orientation: the consultants to the project recognised that there are
both individual and collective approaches to entrepreneurship that seek to exclude or include
different parties from decisions. The former (exclusivity) prioritises the judgement of some
parties if there is a perceived conflict of interest. The assumption here is that some parties are
better placed to make decisions on behalf of the organisation and protect its interests (and
property rights). The latter (inclusivity) is grounded in a view that the board does not (or
should not) have a privileged position in decision-making. Its role is to be responsive to the
divergent and congruent interests of different stakeholder groups and broker solutions that
ensure the viability of each stakeholder in the interests of the overall organisation.
Each series of questions involves four aspects that can reveal the assumptions of individuals
involved in governance. To decide these themes, two researchers and a business support
coach debated how differences in attitudes became apparent during consultancy and research
projects. They settled on four areas of management activity where differences were most
apparent:
 Decision-Making Practices
 Assessing Risks and Opportunities
 Dispute Resolution / Handling Different Perspectives
 Communication Strategies
By asking questions on each relationship to a stakeholder group, board members' views on
governance would be revealed (albeit partially and imperfectly). By organising responses in
terms of an existing theory of governance1 it is possible to 'map' the attitudes of organisation
members.
Society is best served by Society is best served by
developing consensus accommodating diversity
Exclusive (Unitarist) Inclusive (Pluralist)

Governance by a ruler who imposes Governance that accommodates conflict
their values to provide an equitable through individual rights and democratic
system of governance. Rules are dialogue. Balance is achieved through
Individualist / created to impose social order, democratic control (in social life) and
Entrepreneurial allocate responsibilities and market mechanisms (in economic life).
adjudicate conflicts.
Governance by an elite able to create Governance that accommodates conflict

Communitarian / consensus. Rules reflect the shared through democratic structures to
Collectivised values of a political elite who determine political rights and
allocate responsibilities and responsibilities of individuals within
adjudicate disputes according to their different groups. Balance is achieved
perception of collective interests. through a mixture of participatory and
representative democracy.
1
Ridley-Duff, R. J. (2007) "Communitarian Perspectives on Corporate Governance", Corporate
Governance: An International Review, Vol. 15 No 2, pp. 382-392

Awareness: The questionnaire asks four questions on each relationship (one each on
decision-making practice, risks and opportunity management, handling differences and
disputes, and strategies for communication). These explore the way the board interacts with
each stakeholder group (including within itself). Each response is coded to both assess and
develop awareness of the scope and nature of governance in a social economy enterprise.
In assessing awareness, there is also a focus on the level of formality (in the sense that the
more there are formal processes in place, the higher the level of awareness). Previous
research on organisation culture, however, has highlighted that there is both an informal and
formal set of norms and that in most instances, informal norms prevail over the formal. The
Weberian belief that bureaucracy could bring about social justice and fairness through
standardisation of procedures has not held up over the long term as adherence to formal
norms typically fail due to their inability to cope not only with the nuances of human
behaviour and social life, but also because they are grounded in the highly contestable idea
that rules can be 'value-free'.
While high levels of formality indicates awareness, it represents only a partial level of
awareness (i.e. requirements of the public, rather than private domain of life). It does not
follow that well established procedures will produce optimal governance outcomes if these
conflict with informal (private) norms of behaviour. For this reason, the questionnaire seeks
to elicit information about a range of informal/formal experiences.
On this basis, 24 scenarios were developed to test the level of informal and formal awareness
in four types of management activity reflecting six different internal/external relationships
that company directors and charity trustees are obliged to manage. These, in turn, are coded
according to awareness levels and social orientation toward individuals and groups.
Themes Decision- Risks & Disputes and Communications

Making Opportunities Difference
1. Legal Issues
2. Stakeholders
24 workplace scenarios based on the intersection of
3. Funding and Investment each vertical and horizontal theme.
4. Employees / Members / Volunteers
5. Executives and Management
6. Board Maintenance / Development

Section 1- Legal Issues
1. Decision-Making
There are currently over 200 legal obligations on directors/trustees of a constituted

organisation with employees. Board members are required to ensure the organisation
operates lawfully. In practice, they differ in the way they implement legal obligations, and
the level of support they give to various legislative programmes (often for well justified
reasons).
How has your organisation gone about developing its policy on equality of opportunity?
2. Risks & Opportunities
In the last decade there has been a series of changes to Employment and Health & Safety
Laws. Threats from new legalisation constitute a risk to any organisation (e.g. poor
procedures on Health & Safety and/or Disciplinary and Grievance that might leave the
organisation open to unlimited legal claims and fines). Legislation also provides an
opportunity to develop new services, particularly in unpopular or difficult areas (e.g. sexual
and racial discrimination), and provides an opportunity for debate within an organisation.
How does your board go about assessing threats and opportunities from new
legislation?
3. Disputes and Differences
Organisations can vary enormously in the way they discuss, manage and handle differences
of opinion. If two board members, or two different groups within the organisation disagree
about how to fulfil legal responsibilities, there may be informal or formal processes to
reconcile the differences. Think of an occasion when there has been a difference of opinion
on how to respond to legal requirements (or you disagreed with a course of action suggested
by the board).
Which of the following most closely resembles the way your organisation resolved a
recent difference of opinion about responding to legislation?
4. Communications
Recent changes on information and consultation place an obligation on board members /

managers to involve and consult staff representatives on any plans likely to affect economic
or social working conditions (e.g. job changes, restructures, redundancies, mergers, takeovers
etc.). In some cases, there may be established mechanisms for consultation (with trade union
representatives or a works council). In other cases, there are few formal structures in place
for consultations with the workforce and it is handled effectively using an informal approach.
Which of the following most closely resembles the way you involve the workforce in
meeting new legal requirements?

Section 2 - Stakeholders
5. Decision-Making
The phrase 'stakeholder democracy' grew in importance throughout the 1990s after Adrian
Cadbury wrote persuasively on groups that have a stake in organisations (e.g. executives,
employee groups, suppliers, shareholders, volunteers, service users, beneficiaries,
government). At one extreme is the idea that a board should develop shared values and a
common vision (a unitary outlook). At the other extreme is a policy prioritising 'the
satisfaction and protection of individuals and disadvantaged groups" (a pluralist outlook).
Which of the following most closely matches the way your executive(s) view the
development of a mission and social values?
Views about recognising and negotiating with different stakeholders vary considerably. At
one extreme, the development of any autonomous group (not established by management
action) is regarded with suspicion because it has the potential to destabilise good workplace
relationships. At the other extreme, the development of informal and formal groups is
regarded as an important source of creative tension and innovation.
Which statement most closely reflects attitudes to stakeholder involvement in strategic

decision-making?
Sometimes different stakeholders in an organisation take alternative perspectives on a course

of action. For some, such disputes are attributed to personality clashes and communication
problems (i.e. a lack of mutual understanding). For others, they are attributed to deep-rooted
conflicts of interest that occasionally escalate into formal disputes. Think of a situation
where managers / customers, managers / beneficiaries disagreed over a policy or decision.
When there are disagreements between two stakeholder groups, which of the following
most closely matches the way you go about resolving the dispute?
8. Communications
When developing written plans, the range and diversity of input affects development and
levels of support. In the 1980s, it was found that in Eastern and more collective cultures,
decisions take longer (and opportunities are missed) but also that implementation is quicker
and succeeds more often. By contrast, in Anglo-American cultures, decisions are often made
quickly by a few people but that implementation is often slow (or fails completely).
Which of the following statements most closely matches your approach to

communication during strategic planning?

Section 3 - Funding and Investment
9. Decision-Making
Budgeting has an influential role in the life of each organisation, and also plays a role in
determining the level of authority and autonomy of different stakeholders. If individual
stakeholders have the power to authorise their own spending, and raise their own funds, this
contributes to decentralised decision-making and local autonomy. If these powers are
centrally controlled, it is possible to increase accountability and implement anti-fraud
measures more effectively.
Which of the following statements most closely matches the control of budgets in your
organisation?
Those who fund an organisation (whether by contract, grant, investment or personal funds)
often wish to have representation at board level and to exercise influence over the
organisation's activities. As with staff involvement in decision-making, there is sometimes
ambivalence towards the involvement of investors / funders in the management of an
enterprise.
Which of the following most closely represents the board's attitude to involving funders
/ investors in business planning?
Stakeholders compete for funds in an organisation, particularly when there is central control
over spending and budgeting. Inevitably, demand for funds sometimes outstrips supply and
some projects have to be delayed or abandoned.
Which of the following statements most closely matches your approach to evaluating
different investment and income generation schemes?
12. Communications
In some charities or social firms, financial information is tightly controlled by professionals

(e.g. a chartered accountant). In other organisations - particularly co-operatives -
constitutional provisions may allow members to inspect financial information (including staff
wages / expense payments) at any time. Transparency v tight control is one of the key
determinants of organisational culture.
How tightly is financial data controlled in your organisation?

Section 4 - Employees, Members and Volunteers
13. Decision-Making
Third Sector organisations adopt many constitutional forms. Mutual associations, societies
and co-operatives often try to maximise membership: they may also have employees,
customers and suppliers as board members / company directors. Those following the
conventions of charities, on the other hand, usually limit board membership more tightly.
Which of the following is most true of your organisation's approach to board

membership and involving members in joint decision-making?
In 2004, new regulations came into force across the EU on the way that the workforce should
be consulted about social and economic risks affecting the company‟s future. When
economic risks increase, the way senior staff respond varies considerably (compare Honda‟s
and BMW‟s approach to safeguarding jobs during the 2008 economic downturn). The board
/ senior management may isolate themselves from the workforce, customers and suppliers to
make decisions with bankers and investors, or immediately begin consulting with
stakeholders, employee groups, unions (and perhaps creditors). The way a company goes
about restructuring, therefore, can reveal approaches to the governance of risk, and whether
HRM policy is oriented towards viewing the workforce as a cost or an asset.
How does your board go about organisation restructuring?
Articles of Association have rules governing the admittance and exclusion of directors and
company members. Contracts of employment (and trading contracts) have procedures for
entering into and terminating agreements about employment. In the case of Employment
Law, there is now a statutory procedure embracing natural justice principles. Failure to
observe natural justice principles will automatically result in unfair dismissal where an
employee or worker is protected by law.
Has your organisation incorporated natural justice principles (written allegations, a

formal hearing, a chance to cross-question any party making an accusation) into its
disciplinary and grievance procedures?
16. Communications
Constituted organisations have an Annual General Meeting (AGM) at which they can make
changes to the organisation's constitution. They may also formally accept or reject plans,
policies and other resolutions. In practice, AGMs can vary a great deal: they may be little
more than a social event at which company officers are elected (or reconfirmed);
alternatively, they may be important social events spread over several days, include policy
papers for debate, and business plans that are subject to scrutiny.
Which of the following statements is closest to the way your organisation defines the
purpose of its AGM?

Section 5 - Executives and Management
17. Decision-Making
The process by which an enterprise starts operating has a deep impact on its culture and
ethos. It may have been started by an enthusiastic entrepreneur, a group of friends combating
hardship, or work colleagues who decide to spin off their workgroup to form a new
organisation. Whatever the origins, growth tends to result in a separation of the board from
management as founders find themselves unable (or unwilling) to commit their working /
leisure time to day-to-day management activities.
Which statement best characterises the relationship between your board and executive
manager(s)?
Single-leader organisations are often associated with fast effective change, but have also been
linked to short-lived gains and unsustainability (particularly after they leave). Collective
leadership, while less responsive, has the virtue of being able to insulate an organisation from
fads and fashions, or personality cults, that contribute little to sustainability or long-term
growth prospects.
Which of the following statements is closest to the way your board sees the links
between management style and risk taking?
Occasionally, policy and strategic plans create (perceived) conflicts of interest. There is
debate whether board members comprise three competing groups (funders/investors, directors
and executives) or represent a cohesive group unified by common interests and shared values.
When there is disagreement in management meetings, which of the following most

closely resembles the outcome?
20. Communications
Organisations use a range of approaches when communicating between board and executive.
In some cases, great faith is placed in the communications that take place between CEO and
Chair, but other organisations have monthly or quarterly meetings involving several board
members and managers who work collaboratively.
Which of the following most closely matches the way your directors (or trustees) discuss
work issues with your manager(s)?

Section 6 - Board Development and Maintenance
21. Decision-Making
Boards have their own dynamic, and ways of reproducing and developing themselves. In
some cases, the power to appoint rests with the wider membership and existing
directors/trustees must be re-elected every few years. In other cases, the power to appoint
new board members rests with existing board members (through the provision of a veto to
block the appointment of anyone unacceptable to existing board members).
Which of the following statements most accurately reflects the way board members are
appointed in your organisation?
The way that trustees/directors are selected is one way that organisations can limit risk.
Views, however, differ considerably. One popular view is that risk can be limited by
selecting trustees/directors who subscribe to a 'shared vision' and hold 'shared values'. Some
codes of conduct, however, argue that diversity and a mix of internal / external board
members reduces risk.
Which of the following statements most closely matches the selection approach used by
your board?
Opportunities to get involved with strategic management exist at board level. There may be
competition amongst board members for who goes on which work/policy committee, and
who becomes involved in public relations work or the internal audit of the company.
Which of the following statements most closely reflect the way that work is allocated at
board level (in General Meetings)?
24. Communications
Board members can benefit from appraisals to develop their board skills. In the 1990s, the
idea of performance appraisal for boards and board members took a higher profile. In the
Higgs report (2003), it was suggested that a Senior Independent Director (externally
appointed) should appraisal senior executives who sit on the board. In other cases, the board
Chair would undertake appraisals.
Which of the following statements most closely reflects the way your board members
are appraised and developed?

Governance - Interpreting Results

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Governance - Interpreting Results

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Governance Diagnostic Questionnaire

(click the above link to obtain the questionnaire)

Interpreting Questionnaire Results

Guidance Notes Prepared by:

Scoring for ‘Awareness’

Awareness Scores in the Questionnaire

The results are added together and banded as follows:

Scoring for ‘Orientation’

1. Inner Circle: 0-2 responses

Orientation Scores in the Questionnaire

Individualised / Exclusive: Entrepreneurial (Authoritarian)

© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 1

Understanding Your Awareness Results

Each level of awareness/formality is characterised on the following pages:

2 © Dr Rory Ridley-Duff, 2009. Reproduced with permission.

Avoidance (Minimal awareness and operationalisation)

Question answers that indicate minimal awareness or avoidance of governance:

Funding and Investment

© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 3

Employees, Members and Volunteers

Executives and Management

4 © Dr Rory Ridley-Duff, 2009. Reproduced with permission.

Informality (Awareness and informality)

Question answers that indicate awareness and informality in governance:

Funding and Investment

© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 5

Employees, Members and Volunteers

Executives and Management

6 © Dr Rory Ridley-Duff, 2009. Reproduced with permission.

Mixed (Awareness and mixed informal/formal procedures)

Question answers that indicate a mixed approach to governance:

Funding and Investment

© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 7

Employees, Members and Volunteers

Executives and Management

8 © Dr Rory Ridley-Duff, 2009. Reproduced with permission.

Formal (Awareness and formal procedures)

Question answers that indicate a mixed approach to governance:

Funding and Investment

© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 9

Employees, Members and Volunteers

Executives and Management

10 © Dr Rory Ridley-Duff, 2009. Reproduced with permission.

Suggested Areas for Further Action

Conclusions on Awareness and Formality of Procedures

© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 11

Understanding Your Orientation Results

 Individualised / Exclusive - Entrepreneurial Authority (Authoritarian)

1. Innermost Circle: 0-2 responses

Weak Preference Co-operative

Organisations may show a preference for different approaches in different circumstances

12 © Dr Rory Ridley-Duff, 2009. Reproduced with permission.

Individual Entrepreneurship (Individualised / Exclusive)

Questions answers that indicate faith in entrepreneurial authority:

Funding and Investment

© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 13

Employees, Members and Volunteers

Executives and Management

14 © Dr Rory Ridley-Duff, 2009. Reproduced with permission.

Managerialist (Collectivised / Exclusive)

Questions answers that indicate faith in managerialist authority:

Funding and Investment

© Dr Rory Ridley-Duff, 2009. Reproduced with permission. 15

Employees, Members and Volunteers