4 Companies Outline Their Paths to Great Governance
Trust, Transparency and Self-Management Often at the Heart of Best B Corp Business Structures
In May, B Lab announced its 2018 Best For The World — a list of the companies leading the way to redefine success in business. In addition to the “Best For” Overall list of honorees, there are subcategories for Community, Customers, Workers, Environment, and Governance.
I happen to be a bit of a governance geek. Governance is at the heart of all the other stuff — it’s how we organize and operate in support of our purpose. What could be more important than that?
To earn placement on the Best For The World: Governance list, honorees must score in the top 10 percent of B Corps in the Governance section of the B Impact Assessment (BIA). This section evaluates a company’s overall mission, ethics, accountability and transparency. It measures whether the company has adopted a social or environmental mission, and how it engages its employees, board members and the community to achieve that mission.
The companies shared here are Best For The World: Governance, which is evaluated based on a company’s overall mission, ethics, accountability and transparency; measures whether the company has adopted a social or environmental mission, and how it engages its employees, board members and the community to achieve that mission; and more. Find all Best For The World honorees and stories.
The Governance portion also assesses employee access to financial information, customers’ opportunities to provide feedback and the representation of stakeholders on the companies’ governing bodies.
I believe that two practices in particular — self-management and employee ownership — often catalyze and support good governance. So I decided to ask a few of the BFTW: Governance winners why they thought they made the list.
First, I checked in with Christina Forwood, director of the Standards Review team at B Lab, to see whether and how self-management and employee ownership show up in the BIA.
“All Certified B Corporations meeting the legal requirement for certification are required to consider the interests of all stakeholders, including employees, by baking stakeholder consideration into the DNA of the company,” Forwood says. “Cooperatives are a points-earning governance model as a structure that requires stakeholder consideration. Note that not all cooperatives are formed as cooperative legal entities.”
And while there are no points awarded explicitly for adopting self-management models at this time, the BIA does include concepts of self-management, such as transparency and advice, and outcomes of self-management, like employee engagement and training on optimal team functioning. For governance models, Forwood points to the Best Practice Guide on mission-aligned governance for more details.
Finding Meaningful Work
I asked Tim Masson, CEO of Toronto-based Ian Martin Group, why he thought the recruitment and project staffing firm was in the top tier for governance. His answer surprised me, at least at first.
“I’m not sure how we got to be BFTW in Governance — it was really kind of an accident!” says Masson, who is the third generation to be active in the 60-year-old business, which was co-founded by his grandmother and later led by his father.
When Masson became CEO, his main interest was to bring servant leadership and intrinsic motivation to the company, principles he had cultivated in other organizations. In early 2015, Ian Martin Group’s wholly owned subsidiary Fitzii officially eliminated management functions and became a “self-managing” company. In 2017, Ian Martin Group itself began the process of converting to self-management.
Masson says the firm’s purpose is to “connect people in meaningful work,” and that starts with their own team. Dynamic governance—another name for self-management—supports that purpose directly.
“I guess I’m really an activist who ended up leading a business,” Masson says with a laugh.
Long-Term Vision
Ryan Honeyman is a partner at the Bay Area’s LIFT Economy and author of The B Corp Handbook: How to Use Business as a Force for Good. He credits the B Impact Assessment for driving the changes at LIFT that led to its high ranking.
“For example, we formed a formal board of directors because of the conversations triggered by taking the assessment,” Honeyman says. “We are also strong in the transparency subcategory. All employees have access to all financial data, and we have an intentional education program around shared financials.”
Transparency is a key principle in self-management. Purpose, sometimes expressed as vision and mission, is also a key principle.
“Our policies and bylaws have definitely helped us with effective governance,” Honeyman says. “One of the most important elements, however, has been our vision. We have a 75-year vision that describes how our organization will evolve via five distinct phases. The detail with which we have defined this vision makes our governance, systems, and processes easier to align toward the same overarching goal.”
A Matter of Trust
Boulder’s dojo4 is a worker-owned technology and design agency. Corey Kohn, chief operating officer and partner, says dojo4 is a BFTW Governance honoree “because of our commitment to cooperative ownership and radical transparency, which both allow for a high degree of self-governance.”
Kohn says the agency values the diversified ownership model because it allows for financial, operational and intellectual engagement with its members, clients and community.
“More engagement means more accountability, better relationships, more spontaneous innovation and, ultimately, a greater degree of fun and happiness—and all of that is good for business,” she says.
And who doesn’t want more of those things in their business?
Kohn zeroes in on a major prerequisite for self-management and the connection to transparency: “Our deepest resource is trust. We have to trust each other to do good work, our clients have to trust us to do what’s best for their objectives, we have to trust that we will attract good collaborators and we have to trust that we have taken a business path that will continue to allow us to do meaningful, lucrative work.”
That trust stretches to the company’s business operations and financial information, which are accessible to everyone at the company.
“This allows us each to act independently when needed and further fosters the trust that fuels our business,” Kohn says.
For companies looking to improve their governance, she advises taking a leap—and then evaluating how things are doing.
“Don’t try to craft a ‘perfect’ system before implementing a policy or structure. Test the concept and see what works and what doesn’t work,” she says. “Although something might sound great conceptually, it might not actually work well or as intended with a specific group of people or at a particular time. Don’t be too attached to your idea of what would be cool or effective. Try one thing at a time and be willing to let go of it quickly if it doesn’t really work.”
Empowering all employees builds a stronger company and, she adds, a stronger bottom line.
“Don’t live in fear of loss of control. Allow your company to actualize a governance of its own that doesn’t depend specifically on the authority of its leaders,” Kohn says. “With a clear vision, people will create the governance structures that are most effective and most needed almost organically. This requires strong leadership and lots of space.”
Forceful Transparency
Amicus Solar Cooperative is a rare creature in the B Corp habitat — a purchasing cooperative jointly owned and democratically managed by its member companies, who are solar PV designers, project developers, integrators and installers. Stephen Irvin, who serves as the cooperative’s president, sees transparency and co-ownership practices as key to its BFTW Governance recognition.
“The cooperative business model is a bit foreign to many people, and it takes time to develop a deep sense and belief in democratically governed businesses,” he says. “Our governing actions center around forceful transparency and consistent reinforcement of shared ownership and accountability.”
For example, Irvin says every year members vote on a range of issues, including annual elections for board of directions and selection of vendor partners. One vote led to the cooperative’s move to become a Public Benefit Corporation.
“Then there is open-book management,” he says. “We report the financials of our cooperative openly to all members, including patronage dividend calculations, and also publish a ‘member report card’ which shows each member’s purchases of solar panels and other items. That report card is a powerful example of members being able to openly see how the actions of other members are either helping or hurting our mission, which allows them to hold themselves and each other accountable.”
Irvin says these consistent practices, rather than written bylaws or a mission statement, have created a more inclusive and healthy governance structure for Amicus.
“We’re not perfect at it, and still have a lot of room for improvement, but I feel we’re on the right path toward building a strong co-ownership culture and ensuring all members feel included in the governance of Amicus,” he says.
From these four diverse organizations, it is clear there is no simple “one size fits all” approach to great governance. But some themes do emerge, including trust, transparency, cooperative or employee ownership, and self-management. If you aspire to join these companies on the Best for the World list, these principles and practices would be a good place to start.
B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
