Navigating Governance: The Boat and the Balloon
By Michele Hengen, Client Services Executive
In every organization, each party plays a critical role: the board, the CEO, and the staff. Without a solid framework, the lines between roles can become blurred, leading to avoidable challenges. A strong governance framework ensures that leadership and management functions are well defined, promoting efficiency and accountability.
Understanding Governance
Governance refers to how a board (or council) and management work together to run an organization effectively. It provides the system through which objectives are set and attained, and performance is monitored. One common model is the Policy Board Model, which is rooted in theory developed by John Carver. We are going to focus on this model throughout the article.
Doing the right things vs. doing things right
A board’s primary role is to oversee key functions in an organization, while remaining independent from management. This means that the board is not involved in the day-to-day business but instead ensures the organization is doing the right things.
The board delegates internal management functions through its one employee – usually the CEO. The CEO’s role is to ensure that the staff implements decisions, strategies and policies so that the organization is doing things right.
The boat and the balloon analogy

Future Quest Consulting shared this helpful analogy to understand roles in governance. Imagine a boat navigating through a maze of rock formations while a hot air balloon observes from above. In this analogy, the board is in the balloon, providing oversight and direction, while management steers the boat.
For governance to be effective, the board must stay in the balloon, ensuring the organization stays on course and avoids risks. If the board steps into the boat and takes over operations, it leaves the organization without high-level oversight.
In a crisis situation, the board may need to temporarily climb aboard to keep the boat afloat, but management is still responsible for driving the boat.
Establishing a solid governance framework
All boards have a critical fiduciary duty. Even with the best of intentions, conflicts of interest, confidentiality breaches and other potential problems can arise. How can organizations ensure that their governance practices are effective and suitable for their organization?
To safeguard against these risks, organizations must develop a framework that clearly articulates board member and management roles and responsibilities, as well as expectations around code of conduct. The framework must ensure the organization does not find itself depending on specific individuals in a way that could invite scenarios of elevated risk. Instead, the board needs to be confident that the system ensures internal controls are followed and objectives are met, no matter who is driving the boat.
Managing governance challenges
One challenge organizations may face is managing conflicts of interest. Let’s examine two examples:
- A school board is voting on raises for teachers. One of the board members has a daughter who teaches in the system. As the member’s daughter would benefit from the raises, it would be a conflict of interest for the board member to vote on the decision.
- A board member’s family member owns a construction business. The board is selecting a contractor for an upcoming project and this business submitted a bid. To avoid a conflict of interest, the board member should not participate in the decision-making process or vote on the selection.
Fortunately, a robust governance system can mitigate the risks inherent in these situations. For example, a regular meeting agenda item can be incorporated for members to declare if they have a conflict of interest related to a topic under discussion. If so, there would be policies about how to manage the situation, whether it involves recusing the member from the discussion, voting or both. The overall goal is to ensure that each decision is made with the answer to this question in mind – “who are we here to serve?”
Navigating a ‘won the lottery’ scenario
If a board knows the CEO’s and management well and trusts them all explicitly, it can be tempting to think that establishing proper governance is not necessary. However, strong governance ensures organizational stability, even in unforeseen circumstances. Consider this scenario:
A CEO and the entire management team have won the big lottery and suddenly retire. The board is left with a new management team that they do not personally know or trust to steer the boat. If good governance practices are in place, the board can remain confident that the internal control environment is intact, and objectives will be met.
In this or any other scenario, having a solid governance framework will help to enhance an organization’s performance and results immediately and in the long term.
Strengthening Your Governance Framework
Good governance enhances organizational performance both immediately and in the long term. If you’re unsure whether your governance framework needs improvement, download our checklist below.
For more support in establishing a governance framework for your organization, contact People First to discuss your needs.