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This section reviews the role of the board as well as some of the practices and ways of working as a board under Teal.

A new perspective

The composition of the board in a Teal organization is crucial, says Frederic Laloux. He warns that, when adopting a Teal approach, “The only make-or-break factors are the worldview held by the top leadership and by the owners/board of the organization.”[1]

Why is this so? Because history shows that boards may well support Teal practices when things are going well. But, under pressure, the support of outsiders—who typically make up the board and may not have worked in a similar environment before—can evaporate quickly, and under our current legal structure, boards continue to have ultimate authority.

The board’s role in earlier stage organizations can be characterized as follows:

Red Organizations

In the Red organization, while the Chief/Boss might confide in trusted colleagues or family, the real power is exercised by one person. A ‘board of oversight’ is not welcomed, nor appropriate, in these circumstances.

Amber Organizations

In the Amber organization, the typical board is a small social class at the top of a rigid hierarchy. There may be formal criteria for inclusion, or a qualification process. The board plays the role of "guardian": it ensures that traditions, rules and processes are respected.

Orange Organizations

In the Orange paradigm, the board exists to hold management accountable on behalf of the shareholders/owners or in the case of a non-profit on behalf of its funders, . Its focus is on targets, results, strategies, controls and succession. It is responsible for appointing and, if necessary, dismissing the CEO.

Green Organizations

In Green organizations, board responsibilities are similar to those in Orange but more likely to include acting as guardians of the organization’s purpose/values and of the interests of multiple stakeholders. In Green for-profit organizations, shareholders are often viewed as just one of the stakeholder groups, and individual board members can be designated to specifically represent the interest of other stakeholders, such as employees.

In practice

The board needs to adopt Teal thinking

This means:

  • Forgoing the command and control privileges of earlier perspectives
  • Joining staff members in ‘listening’ for the organization's evolutionary purpose, and being willing to follow its direction.
  • Embracing the purpose and values of the organization.
  • “Holding the space” or doing whatever possible to support the organization’s practice of a Teal approach.

The board should also adopt Teal practices

In self-managing organizations, the board is part of the "advice process". For example, if a board member believes a decision is needed, she should seek advice from appropriate people throughout the organization. In so doing, she not only shows support for the practice, but also invites others to seek advice from the board. This means the division between the board and the rest of the company becomes more ‘porous’, reducing the need for "go-betweens".

The potential for conflict

As mentioned earlier, there is potential for conflict when board members do not have a deeply held Teal worldview, since a board generally has ultimate legal authority. Even for board members with a Teal worldview, there is potential for problems in for-profit organizations. This is because board members there have a fiduciary duty to shareholders, and there is at least the potential that Teal practices may not always be viewed as serving those fiduciary duties.

For–profit Teal organizations can pursue a couple of avenues to limit this potential for conflict. First, they can work to transition (with appropriate shareholder consent) the company to a “Benefit Corporation” structure. This structure, adopted in many states in the U.S., extends the duty of directors to include non-financial interests such as social benefit, concerns of employees and suppliers and environmental impact.

Second, Holacracy has drafted a constitution that a board can adopt and make binding, even to future shareholders. It gives shareholders a legitimate say in matters related to finance, but prevents them from unilaterally imposing a strategy, or from reverting the organization to traditional management practices.

Ultimately, the board is a construct of prior organizational stages, and it is as yet unclear exactly what its role should be under Teal or even if in its current form it is fully compatible with Teal.


Frequently asked questions

If the organization is self-managing, why have a board?

  1. A board might be a legal requirement, but more importantly it can act as a "spaceholder" and protector of Teal practices. This obviously necessitates that board members share the fundamental assumptions and the values underpinning Teal.
  2. It can add perspective, diversity and expertise on important decisions via the advice process.
  3. It can facilitate the process of appointing a new "CEO", should the organization have a continuing need for such a role, when a transition is due.

Having said this, at Morningstar, Chris Rufer, founder and 100% owner, sees no need for a board. People at Morningstar regard the company’s mission/purpose as their ultimate boss.

Who will decide whether the CEO needs to go?

The conflict resolution process deals with this and can be started by anyone who feels that a role-holder (including that of CEO) should be changed. Note that In a Teal company, the "CEO" role may be different. The "CEO" is an employee with the same rights and duties as anybody else.

At Favi, when Zobrist became CEO, he promised his position would be submitted to a vote every 5 years.

At Buurtzorg, the board does not appoint the CEO. This comes from within the organization itself.

Who should be part of the board?

Suitable people who:

  • Understand the core purpose of the organization;
  • Are committed to its endeavours;
  • Share its guiding beliefs;
  • Can help connect the organization and develop relationships with its external environment.

Concrete examples for inspiration

Here are some practical examples of boards from Teal organizations.

Holacracy

A constitution that a board can adopt.

Holacracy has drafted a constitution which complies with U.S. corporate law. It gives shareholders a say in matters related to finance, but prevents them from unilaterally imposing a strategy. 

Patagonia

Apparel - United States - 1,350 employees - For profit

Adoption of the B Corp certification

Patagonia became the first certified B Corp in California in January 2012. A B Corporation is a for-profit company with a specific social or environmental purpose. The board is obliged to protect these non-financial interests.

Buurtzorg

Home care - The Netherlands - 9,000 employees - Non Profit

Buurtzorg needed to replace some board members.

At Buurtzorg's founding, Jos de Blok chose members of the board based on their expertise—for example, a family doctor, a banker, a lawyer, etc. Some were not comfortable with self-managing practices. Others wanted financial projections and budgets, and similar, traditional ‘tools’. Over time, de Blok persuaded several to resign and replaced them with others more comfortable with Buurtzorg's novel principles and practices. In practice, the Buurtzorg board serves as a sounding board for Jos de Blok and his colleagues.

The Buurtzorg by-laws state that the board is not responsible for CEO appointment. This comes from within the organization itself. [2]

Semco

Diversified industrial and service conglomerate - For Profit - Brazil

At Semco, employees may attend board meetings

Board meetings often seem like mysterious occasions where big decisions affecting workers are taken in secret. At Semco, extra seats are available for the first two employees to show up. And they have full voting rights. Semco claims two benefits: first, it debunks some myths about boards (people learn these meetings are as boring as most others); second, it forces discussions to be pragmatic, sometimes by adding a fresh perspective.[3]

Fitzii

Hiring software and services provider - Canada - 10 employees – For profit

Board meetings are transparent and use a real-time agenda.

Fitzii is owned by a B Corp, The Ian Martin Group, whose CEO and senior leaders act as an advisory board. Monthly meetings between the two groups focus on surfacing conflict and seeking advice.

The meeting agenda is created in “real time” at the beginning of every meeting. This reduces bureaucracy and any politicking for topics that may not interest the whole group, or have urgency. Each team head and board member shares four items: what s/he is a) focused on, b) excited about, c) concerned about, and d) tasks that need immediate attention. Urgent topics, and those of broad interest, are discussed, and others deferred. Meeting notes are accessible to all Fitzii team members.

Related topics

Notes and references

  1. Laloux, Frederic. Reinventing Organizations. Nelson Parker (2014), page 238
  2. Interview Jos de Blok with Frederic Laloux in 2013
  3. Ricardo Semler addressing Zappos all hands meeting. May 2015.