Leverage the 80/20 Rule in the Boardroom

Invest 80 percent of your board work on future ministry opportunities—not rehashing the past.

 

by Dan Busby and John Pearson

 

Effective executives, in my observation, do not start with their tasks.
They start with their time.
And they do not start out with planning.
They start by finding out where their time actually goes. [1]

Peter F. Drucker

 

A board governance colleague, Gordon Flinn, introduced us to the brilliant concept of the 80/20 Rule in the Boardroom. Here’s the big idea:

If your CEO and board chair do not proactively create a forward-looking board meeting agenda, you’ll squander the board’s time. And worse—you’ll squander those ministry opportunities that have eternal consequences. Focus on the future. Inspire your board members to be discerning where God wants you to minister—because as Henry Blackaby notes, “God reveals His will and invites you to join Him where He is already at work.”[2]
 

POP QUIZ!

Which board meeting agenda will inspire and engage board members to bring their best into your boardroom?

  • CHECK ONE:

 

  • Dead Sea Ministries 
    Monthly Board Meeting Agenda
  • Mega Impact Ministries 
    Quarterly Board Meeting Agenda
  • Call to Order
  • Prayer
  • Minutes
  • Committee Reports
  • More Committee Reports
  • Old Business
  • Really Old Business
  • New Business (if there’s time!)
  • Prayer
  • Adjournment
  • Welcome & Refreshments
  • Prayer in Small Groups
  • 10 Minutes for Governance[3]
  • Heavy Lifting Topic: “Drucker Question #3: What Does Our Customer Value?”[4] (60 min.)
  • Recommendations from Committees
  • Consent Agenda (including approval of board minutes)
  • 80/20 Rule Recommendations:
  • (80% focused on our future)
  • Next Steps and Accountability
  • Five-Finger Feedback[5]
  • Doxology
     

We know. We know. It’s so tempting for some board members to obsess ad nauseam over last quarter’s numbers. Others will micromanage down in the weeds and interject irrelevant topics unrelated to Kingdom advancement. Still others will inappropriately wear their volunteer hats in the boardroom. But for the sake of the ministry, you must inspire board members to resist these temptations. (See “Big Rocks, Pebbles, and Sand.”)

We’ve seen dozens of boards who major on the minors, and minor on the majors. But good news—there is a solution. If your board recently squandered an hour rehashing mistakes of the past—rather than creating best practice policies to give you guardrails for the future—talk about this ministry-changing “80/20 Rule.” (You may be familiar with Vilfredo Pareto’s 80/20 rule, but this is a new application of that rule)[6]

The best boards, we believe, have a very strategic 80/20 rule:

  • Great boards invest 80% of board work on the future.
  • And great boards allocate only 20% of board work on the past.

That sounds easy—but just review the minutes of your last four board meetings. It’s quite possible your board has reversed the ratio:

  • Investing just 20% of board time on the future.
  • Allocating 80% of board time on rehashing the past.

In fact, one of ECFA’s research projects asked nonprofit board members, "Roughly what percent of a typical board meeting is spent on the FUTURE (as opposed to reviewing the present or past)?" Only 49 percent said that they spend half or more of their meeting on the future. Interestingly, CEO’s responses were a bit lower than 49 percent and board member responses were a bit higher, meaning that CEOs don’t sense a “future focus” as strongly as board members do.

We then divided the survey responders into two groups: those who agreed that their board is effective and those who didn’t. Among boards that rate themselves as effective, 87 percent spend half or more of a typical meeting dealing with the future[7]

You must avoid Rearview Mirror Syndrome! For a tool to help you focus on the future, consider using a strategy map process—a graphic representation of the “resources, processes, and product/service offerings necessary to achieve your goals.”[8]

According to George Babbes and Michael Zigarelli, one benefit of the strategy map is that this process will move “your ministry past the traditional focus on lagging indicators, such as [program participation] and [donor giving] (indicators that essentially tell you about your past performance), and on to leading indicators, such as innovative programs in the pipeline, member satisfaction, and available staff and volunteer talent (indicators that tell you where you’re headed in the future).

Stated differently, an exclusive focus on outcomes such as membership or financial health is like looking in a rearview mirror: they only tell you where you’ve been. In contrast, a focus on things such as the number of new discipleship initiatives ready for introduction or the spiritual maturity of your members foreshadow what’s likely to occur spiritually and financially for months or even years to come. In this way, a strategy map is an indispensable tool for any ministry to “excel still more” (1 Thessalonians 4:1 NASB).[9]

And yes, we have anticipated your next question. “But . . . I’m not sure our board would know what to do if we allocated 80 percent of our board meeting time on the future!”  

There are many ways to inspire your board to be future-focused. Here are six ideas:

  • Great boards allocate a two-hour or three-hour block, quarterly, for heavy lifting or big rocks. This might include pre-reading assignments and a task force’s major analysis of a critical topic, such as “Turning the Flywheel” and this question: “What are the four to six components that are unique to our ministry’s flywheel?” (Read the 40-page booklet by Jim Collins.)[10]
  • Great boards have a robust strategic planning process. Some use a Rolling 3-Year Strategic Plan approach with a one-page document summarizing three to five initiatives—with annual benchmarks over three years.[11] The one-pager is updated annually like clockwork—similar to the budgeting process.
  • Great boards engage the board and senior team members in trend-spotting year-round but especially at the board’s annual planning retreat. Some boards use a trend-spotting exercise that invites every board member to research and report on relevant trends.[12]
  • Great boards “own the strategy”[13] to ensure new programs, products, and services are in alignment with a staff-prepared and board-approved two-page summary of the ministry’s strategy (a critical component of the strategic planning process).
  • Great boards appoint a “Readers Are Leaders”[14] champion—a book zealot who inspires the board to read and discuss at least one future-focused book each year.[15]
  • Great boards invest time on their knees to discern direction. They are mindful of Ruth Haley Barton’s wisdom, “Just because something is strategic does not necessarily mean it is God’s will for us right now.”[16] Prolonged periods of prayer should translate into more time to discern God’s plans for the future—instead of more time devoted to confession for the ministry’s sins of the past!

Gordon Flinn, our trend-spotter on the “80/20 Rule” noted that Peter Drucker, the father of modern management, said that systematic innovation (always looking ahead) includes leveraging seven sources for innovative opportunity. Drucker said to watch for three changes outside of your organization, including 1) demographics, 2) changes in perception, mood, and meaning, and 3) new knowledge.[17] That’s a meaty future-focused topic for your next “heavy lifting” session!

The Apostle Paul wrote, “Be very careful, then, how you live—not as unwise but as wise, making the most of every opportunity, because the days are evil. Therefore do not be foolish, but understand what the Lord’s will is” (Ephesians 5:15-17, NIV).

This is challenging work for any board—and to land on God-honoring priorities and direction takes time. But if you squander 80 percent of your board time analyzing the past, the remaining 20 percent will be sorely inadequate for fully discussing and discerning God’s plan for your ministry in this needy world.

 

BOARDROOM LESSON
_______________________________

Redeem the time in every board meeting.
Establish priorities and policies that will give guidance
to the allocation of resources and the fulfillment of God’s mission for your ministry.
Invest 80 percent of your board meeting time looking forward, not looking back.

  Board Action Steps:

  1. Search: Review recent board minutes to assess if your board is investing 80 percent of your valuable time on looking forward.

  2. Stop: If an inappropriate amount of time is spent looking back—stop! Refresh your agenda (see Big Rocks, Pebbles, and Sand) so you focus on heavy lifting and big rocks and board-level policies and priorities.

 

Prayer

Lord, as Psalm 90:12 reminds us,
“Teach us to number our days,
that we may gain a heart of wisdom.”Amen.

 

 

 

[1] Peter F. Drucker with Joseph A. Maciariello, The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done (New York: HarperBusiness, 2004), 269.

[2] Henry T. Blackaby and Claude V. King, Experiencing God: Knowing and Doing the Will of God (Nashville: LifeWay Press, 1990), 8.

[3] Dan Busby and John Pearson, Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, 2nd Ed. (Winchester, VA: ECFAPress, 2018), 202–206.

[4] Peter F. Drucker, Frances Hesselbein, and Joan Snyder Kuhl, Peter Drucker’s Five Most Important Questions: Enduring Wisdom for Today’s Leaders (Hoboken, NJ: John Wiley & Sons, 2015), 35–45.

[5] Ibid.

[6] Richard Koch, The 80/20 Principle: The Secret to Achieving More with Less (New York: Doubleday, 2008).

[7] Warren Bird, Unleashing Your Board’s Potential: Comprehensive Report from ECFA’s Nonprofit Governance Survey (Winchester, VA: ECFAPress, 2019), 30, 43.

[8] George S. Babbes and Michael Zigarelli, The Minister’s MBA: Essential Business Tools for Maximum Ministry Success (Nashville: B&H, 2006), 119. (See pages 119–131, “The Strategy Map: Creating a Blueprint for Success.”)

[9] Ibid., 127.

[10] Jim Collins, Turning the Flywheel: Why Some Companies Build Momentum . . . and Others Don’t (New York: HarperCollins, 2019).

[11] See “The Rolling 3-Year Strategic Plan” featured in Dan Busby and John Pearson, ECFA Tools and Templates for Effective Board Governance: Time Saving Solutions for Your Board (Winchester, VA: ECFAPress, 2019), 149–66.

[12] See “Board Retreat Trend-Spotting Exercise” featured in Busby and Pearson, ECFA Tools and Templates for Effective Board Governance, 167–70.

[13] Ram Charan, Owning Up: The 14 Questions Every Board Member Needs to Ask (San Francisco: Jossey-Bass, 2009), 57–71. (See Question 5 on owning the strategy.)

[14] Busby and Pearson, Lessons From the Nonprofit Boardroom, 198. See Lesson 38: “Great Boards Delegate Their Reading.”

[15] Visit “The Strategy Bucket” webpage (http://managementbuckets.com/strategy-bucket) for a short list of future-focused books recommended by John Pearson, including The Attacker’s Advantage: Turning Uncertainty into Breakthrough Opportunities by Ram Charan.

[16] Ruth Haley Barton, Pursuing God’s Will Together: A Discernment Practice for Leadership Groups (Downers Grove, IL: InterVarsity Press, 2012), 99.

[17] Gordon Flinn, “Week 42: Halftime Is An Entrepreneurial Enterprise,” Drucker Mondays (blog), Oct. 20, 2015, https://urgentink.typepad.com/ drucker_mondays/2015/10/week-42-halftime-is-an-entrepreneurial-enterprise.html. Flinn’s blog was one of 52 color commentaries by 52 ministry leaders on the book, Joseph A. Maciariello, A Year With Peter Drucker: 52 Weeks of Coaching for Leadership Effectiveness (New York: HarperBusiness, 2014), 330.

 

From More Lessons From the Nonprofit Boardroom: Effectiveness, Excellence, Elephants!, 2019, www.ECFA.org/KnowledgeCenter.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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