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.”
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:
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.
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.
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.
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.
The board needs to adopt Teal thinking
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
- 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.
- It can add perspective, diversity and expertise on important decisions via the advice process.
- 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.
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.
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 cases for inspiration
Notes and references
Laloux, Frederic. Reinventing Organizations. Nelson Parker (2014), page 238 ↩︎