How Should National Governing Bodies of Sport Be Governed in the UK? An Exploratory Study of Board...

How Should National Governing Bodies ofSport Be Governed in the UK? An ExploratoryStudy of Board Structure

Marc Taylor and Noel O’Sullivan*

ABSTRACT

Manuscript Type: EmpiricalResearch Question/Issue: This study explores the most appropriate board structure for national governing bodies (NGBs)of sport in the UK. Sports are a very important aspect of UK society, involving a significant number of participants andspectators, occupying a key role in furthering the nation’s health, and, at the elite level, a source of considerable nationalpride. From a governance perspective, NGBs of sport are non-profit organizations, managing both professional and amateursports, and administering the allocation of considerable amounts of funds, especially public funds. The study was motivatedby a renewed interest, not least from government, in ensuring NGBs had an appropriate structure to ensure optimaldecision-making for their stakeholders.Research Findings/Insights: We interviewed 22 senior administrators involved in sports in the UK. Our interviews soughtto ascertain their views on the appropriateness of applying a number of key board reforms, currently seen as good practice,to NGBs of sport. The overall consensus is as follows: (1) NGBs should reform the composition of their boards to better reflectbusiness demands; (2) board size should be in the range of five to 12 members; (3) NGBs should have different individualsoccupying the positions of CEO and chairman; and (4) boards of NGBs should possess more non-executive directors.Theoretical/Academic Implications: This research adds to our understanding of governance in non-profit organizationsgenerally and NGBs of sport in particular. Ascertaining the views of key administrators and advisors in sport provides anovel contribution to the governance in sport literature. Our findings allow us to develop a number of propositions capableof being examined further in subsequent research.Practitioner/Policy Implications: The results of this study feed into an important on-going debate regarding the appropriategovernance structure of sport NGBs in the UK. A key finding is that boards in NGBs should move away from being onlyrepresentative, but should also include members with specific business expertise as well as a greater element of non-executive monitoring.

Keywords: Corporate Governance, Non-profit Governance, Sport, NGBs, Directors, Board Structure

INTRODUCTION

S port is an important activity in the UK, both at an eco-nomic and social level. It is estimated that as many as

27 million people participate in sports activities in the UKannually (UK Sport, 2002). Furthermore, during 2004 it isestimated that over 36.7 million people over the age of 15experienced live sports (Mintel, 2005). Sports contribute£5.5 billion to the central government (Campbell, 2005) andover £2 billion of the central government and nationallottery money was to be invested in sports between 2002

and 2005 (Department of Culture, Media, and Sport/Strategy Unit, 2002). Not surprisingly, with so many peopleinvolved and with such significant resources employed, theway in which sports organizations are structured andmanaged is currently attracting increased scrutiny. Accord-ing to the Department of Culture, Media, and Sport/Strategy Unit (2002) there are over 300 governing bodiescovering the 112 sports recognized in the UK. Like allother organizations these national governing bodies(NGBs) operate in a continuously changing socio-economicenvironment and consequently require effective systems ofgovernance to safeguard against any misappropriationof funds as well as ensuring the long-term viability andvitality of their sport (Deloitte & Touche, 2003; Scissons,2002).

*Address for correspondence: Professor of Corporate Governance, ManagementSchool, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, UK. E-mail:[email protected]

681

Corporate Governance: An International Review, 2009, 17(6): 681–693

© 2009 Blackwell Publishing Ltddoi:10.1111/j.1467-8683.2009.00767.x

The governance of UK sports organizations does not existin isolation. NGBs in sport are typically nonprofit organiza-tions, so issues surrounding their governance key intodiscussions concerning the governance of nonprofit organi-zations as a whole. Furthermore, much of the current gov-ernance debate, both in the case of nonprofits generally andin the case of sports organizations specifically, has beeninfluenced by developments in the private sector where thepast two decades has witnessed a significant focus on thereform of governance structures. A key element of thesereforms has been the strengthening of board independence,focusing specifically on board leadership and independence(Cadbury, 1992; Hampel, 1998; Higgs, 2003). A primaryobjective of recent governance reforms in the private sectorhas been ensuring organizations are run in the interests ofshareholders. Many of the governance initiatives currentlybeing discussed for NGBs in sport are inspired by develop-ments in the private sector (Burns, 2005; UK Sport/Instituteof Chartered Secretaries and Administrators, 2004), but,instead of seeking to further shareholders’ interests, thesedevelopments are intended to focus the management ofNGBs on looking after the interests of their broad stake-holder interests and ensuring a greater degree of financialstability.

Even though the governance of private-sector organiza-tions has received a significant amount of academic atten-tion, less attention has been devoted to governance in thenonprofit sector (Callen, Klein, & Tinkelman, 2003; O’Regan& Oster, 2005) with very little research having been under-taken on the governance of sports organizations (Ferkins,Shilbury, & McDonald, 2005; Forster, 2006). Indeed, we arenot aware of any other piece of primary research that hasspecifically sought to investigate structural governanceacross a range of different sports. Ferkins et al. (2005:212)note that, “the structure and composition of sport boards hasnot been specifically addressed by sport researchers.” Thepurpose of this study is to provide an initial contribution tofilling this gap in the literature. Specifically, our study seeksto ascertain the most appropriate board structure for NGBsof sport. Due to the number and range of different sports, a“one size fits all solution” for the entire UK sport sector isproblematic. However, in the course of this study we under-took interviews with a large number of key actors involvedin sport in the UK, many holding very senior executivepositions in NGBs and others representing key stakeholdergroups. A main focus of the interviews concerned issuessurrounding board leadership and independence and thepotentially difficult issue of reconciling an acceptable levelof stakeholder representation with greater commercial ori-entation and the adoption of more developed business prin-ciples to the way NGBs are currently structured.

The paper proceeds as follows. The next section providesan overview of the sporting landscape in the UK, includinga description of recent governance developments in thesector. Section 3 provides a summary of prior literature ofrelevance to this study. In particular, we review research onboard governance in nonprofit organizations generally andthen review the relatively more limited prior work devotedto the governance of NGBs in sport. This review provides thetheoretical context to which our subsequent empirical find-ings seek to contribute. Section 4 describes the research

methodology while Section 5 presents the views of the inter-viewees as well as outlining a number of propositionsarising from our findings. Section 6 presents a summary ofthe study’s main findings and suggests a number of areasfor further research.

THE SPORTING LANDSCAPE IN THE UKAND RECENT GOVERNANCE

DEVELOPMENTS

Governing sports in the UK is a complex and challengingtask. There are a large number of stakeholder groups includ-ing “clubs, local, national and international organizations,athletes and agents, broadcasters, and supporters/fans”(Hindley, 2002:29). At a policy level, the Department ofCulture, Media, and Sport takes responsibility for sportsthrough its Sports and Recreation division. At a deliverylevel, responsibility for sport in England, Scotland, Wales,and Northern Ireland lies with the respective home countryministries and secretaries of state (Chaker, 2004). The fiveSports Councils (i.e., UK Sport, Sport England, Sportscot-land, The Sports Council for Wales, and The Sports Councilfor Northern Ireland) provide the link with sports organiza-tions. While these non-departmental public bodies operate atarms length from government, they are “expected to accountfor their decisions and explain them to government, Parlia-ment and the general public” (Department of Culture,Media, and Sport/Strategy Unit, 2002:39).

On the whole, the UK government adopts a non-interventionist model for sport, focusing on providing finan-cial and logistical support. Despite the operation of anon-interventionist model, a number of significant develop-ments have occurred within UK sport since 2000. In 2002,Game Plan: A Strategy for Delivering Government’s Sport andPhysical Activity Objectives (Department of Culture, Media,and Sport/Strategy Unit, 2002) was published. This high-lighted the complexity of sports in England (Figure 1) and

FIGURE 1Key Organizations Involved in Sports in England

National (Government) National(Non Government)

• Department of Culture Media and

• Other Government Departments

• UK Sport • UK Sports Institute • Sport England • English Institute of Sport • National Governing Bodies (NGBs) • National Sports Organizations

(NSOs) inc. Youth Sports Trust, CCPR and Sportscoach UK

Regional Local• SE Regional Offices • Regional Cultural Consortia • Regional Sports Boards • Government Offices • Regional Federations of Sport and

Recreation• County Partnership • NGB regional and county level

• Local Authorities • NGB Local Level • Local Sports Councils • Local Sports Clubs and Associations • Private Health and Fitness Clubs • Further and Higher Education

Institutions• Schools (private and state)

(Department of Culture, Media, and Sport/Strategy Unit, 2002:38)

Sport

682 CORPORATE GOVERNANCE

Volume 17 Number 6 November 2009 © 2009 Blackwell Publishing Ltd

indicated that a clearer separation of funding and serviceprovision was required with Sport England and UK Sportfocusing exclusively on funding with actual delivery beingconcentrated in the voluntary and private sectors at a locallevel (Figure 2). Prior to this, it was felt that the funding anddelivery roles of Sport England and UK Sport led to confu-sion in respect to their own objectives, inefficiencies in termsof bureaucracy, as well as

a danger that they crowd out service provision by the private/voluntary sectors; and do not enable service delivery to becarried out at a local level by those with local knowledge(Department of Culture, Media, and Sport/Strategy Unit,2002:173).

Game Plan established two broad targets, relating to activityand success. In terms of activity, Game Plan seeks to increaselevels of sports and physical activity with a target of achiev-ing 70 per cent of the population as reasonably active(defined as participating in 30 minutes of moderate exercisefive times a week) by 2020. Game Plan outlined its target forsuccess as follows: “British and English teams and individu-als to sustain rankings within the top five, particularly inmore popular sports” (Department of Culture, Media, andSport/Strategy Unit, 2002:15).

Although it was recommended within Game Plan that UKSport and Sport England should have a clearer split offunding responsibility between “high performance/elite”sport and “grassroots/community/mass participation”sport, the remit of UK sport is greater than this including“protection of the individual, equity, drug-free sport, corpo-rate governance and sporting conduct” (Chaker, 2004:95).An element of Game Plan relates to success at an “elite” level.However, at an “activity” level, while the popularity ofsport “often capitalizes on the interest in sport generated byelite competitors or popular sport entertainment, the goal ofthe Sport for All movement is to generate participationrather than excellence or audiences” (Thoma & Chalip,1996:147).

As a result of Game Plan, the distribution of the fundinglandscape has also changed and “financial commitments tohigh-level athletes, governing bodies and events are madefor periods of up to four years to provide them with acertainty of funding and to facilitate effective planningcycles for future Olympic Games” (Chaker, 2004:95).However, this funding structure is not just relevant forOlympic Sports, as a number of the larger sports, in terms ofparticipation, are not Olympic Sports. In 2004, a new SportEngland operating model was introduced,

reducing 75 programs to just two funding streams–a nationalstream working in partnership with 20 priority sports and acommunity stream delivered through nine Regional SportsBoards (Sport England, 2004:6) (Figure 3)

At a structural level, typically the organization of sportsabove the club level is managed by NGBs which provide thebackbone as to the way sport in the UK is organized(Hindley, 2002). The UK has over 300 NGBs recognized bythe sports councils, representing over 100 sports in the fourhome countries. The importance of NGBs is immensely sig-nificant, emphasized by the fact that NGBs oversee “150,000sports clubs, over 8 million members, and approximately 26per cent of all volunteering in the UK, which takes placein sport and recreation” (adapted from Chaker, 2004:97).Given that NGBs are independent of the sports councils andgovernment, many belong to the Central Council of PhysicalRecreation, an independent voice of sport in the UK. Giventhe significant role NGBs play in the sporting landscape it isnot surprising that the way they are governed has becomesuch a topical issue.

The landscape of UK sport has changed dramatically overthe past decade. One of the most significant changes hasbeen the advent of lottery funding that has allowed thegovernment to significantly increase its investment in UKsports. In return, the government has made it clear that itexpects the extra funding to allow NGBs of sport to showimprovement in “outputs” – both in terms of broadeninggrass-roots representation and thereby helping to improvethe nation’s health and well-being, but also in helping toachieve elite performance. While increasing its expectationsof UK sports organizations, the government also recognizedthat as well as investing more funds in the sector, it wasnecessary to try and ensure that NGBs had in place appro-priate structures and systems to make efficient use of the

FIGURE 2Clearer Separation of Funding and Service Provision

for Sport

FUNDINGDISTRIBUTION

SERVICE PROVISION

FUNDING DISTRIBUTION

SERVICE PROVISION

(Department of Culture, Media, and Sport/Strategy Unit, 2002:174)

NOW FUTURE

UKSIUK SPORT

SPORT ENGLAND

OTHER PROVIDERS EDUCATION, LAs, CLUBS,

PRIVATE

OTHER PROVIDERS

NGBs, PRIVATE

SPORT ENGLAND

UK SPORT

OTHER SERVICE PROVIDERS

OTHER PROVIDERS INC. CCPR

FIGURE 3Priority and Development Sports

UK WIDE PRIORITY SPORTS:

ENGLAND PRIORITY SPORTS:

ENGLAND DEVELOPMENT

SPORTS: Athletics Badminton Basketball

slwoB ,tekcirC gnieonaC gnixoB llabtooF gnilcyC etaraK floG nairtseuqE essorcaL yekcoH scitsanmyG

ecnaD dna tnemevoM llabteN oduJRowing Rugby League Outdoor Pursuits

(Mountaineering and Angling) Sailing Rugby Union Rounders/Softball/Baseball

Swimming Squash Table Tennis llabyelloV sinneT nolhtairT

(Sport England, 2004:8)

HOW SHOULD NATIONAL GOVERNING BODIES OF SPORT BE GOVERNED IN THE UK? 683

Volume 17 Number 6 November 2009© 2009 Blackwell Publishing Ltd

extra funding. To this end, in 2001 the government estab-lished through UK Sport, the Modernization Program, whichwas intended to help governing bodies to undergo theadministrative changes necessary to achieve the govern-ment’s objectives.

In its Investing in Change – High Level Review of the Mod-ernization Program for Governing Bodies of Sport on behalf ofUK Sport, Deloitte and Touche (2003) identify poor corpo-rate governance as a significant barrier to the future successof NGBs and recommended that NGBs should prioritize thereform of their internal governance. Furthermore, thereview recommended that the sports councils should agreeon what constitutes best practice on governance matters forNGBs. In early 2004 UK Sport commissioned the Instituteof Chartered Secretaries and Administrators to produce aGood Governance Guide for National Governing Bodies.Like its counterparts in the private sector (Cadbury, 1992;Higgs, 2003), this guide focused on the boards of NGBs withsuggestions and recommendations in respect of board size,the use of non-executives, tenure, attending meetings andthe establishment of board sub-committees (UK Sport/Institute of Chartered Secretaries and Administrators, 2004).

THE GOVERNANCE OF NONPROFIT ANDSPORTS ORGANIZATIONS

The past two decades have witnessed a significant interest inthe way organizations are governed. The main impetus formuch of this work has come from perceived shortcomings inthe governance of for-profit companies with regulatorsseeking to improve the accountability of company managersto their shareholders (e.g., from Cadbury, 1992 throughto the Combined Code, 2008). The associated academicresearch in this area is predominantly focused aroundagency theory, in particular recognizing shareholders as theprincipals and that a key objective of corporate governanceis to monitor and/or incentivize managers (the agents) tohelp ensure they behave in the interests of the principals.1 Innonprofit organizations however, there are no residualclaims to be paid out and no owners expecting to earn aprofit. Furthermore, there are no shares through which man-agers may be incentivized through ownership or disciplinedvia a market for corporate control. Consequently, the gover-nance environment in which nonprofit organizationsoperate is, as Olson (2000:283) observes, “clouded.”

Even though nonprofit organizations do not have ownersin the traditional commercial sense, all possess some specific(or multiple) stakeholder primarily as a consequence offunding sources (e.g., membership fees, donations, endow-ments, government grants, etc.). Consequently, there exists asignificant governance issue in seeking to ensure that theinterests of these stakeholders are pursued. In order toachieve this, all nonprofit organizations have some form ofboard of directors2 to decide on the organization’s strategyand to ensure that the chosen strategy is being pursuedappropriately by management. In the absence of identifiableexternal governance mechanisms, academic research ongovernance in nonprofit organizations has focused almostexclusively on the board of directors, with the central objec-tive of much of this work seeking to ensure that organiza-

tional effectiveness is maximized.3 Two strands of inquirycan be identified in this work that is especially relevant to thecurrent study.4 The first focuses on the composition of non-profit boards with researchers seeking to identify whetherboard member characteristics influences the operation of theorganization. The second strand of research examines therelationship between the board and the executive in anattempt to ascertain what characteristics of this relationshipmay impact effectiveness.

In relation to board composition, much of the nonprofitgovernance research is descriptive and, as Stone andOstrower (2007:420) observe, “studies have found that non-profit boards are large relative to for-profits and primarilycomposed of White men from upper-middle-class or upper-class backgrounds.” However, findings from some of themore analytical studies seem to suggest that board charac-teristics may influence organizational effectiveness. In one ofthe few studies to examine the influence of outside versusinside directors on organizational efficiency in nonprofits,Callen and Falk (1993) fail to identify an impact of boardcomposition in a large sample of charity organizations. Sicil-iano (1996) finds that the social diversity of YMCA boardmembers has a positive impact on the extent of the organi-zation’s commitment to social issues. This finding was inkeeping with the organization’s mission despite financialrestrictions influencing more business-minded boardmembers to argue for a reduction in such activity. Olson(2000) finds evidence that larger boards, longer averagetenure, and more extensive business backgrounds of direc-tors strengthen the board’s ability to monitor, be less influ-enced by managerial directives and possess the expertise tomake difficult business decisions. Total revenue and totalgift income were the performance measures used in Olson’s(2000) study of independent nonprofit colleges. In a study ofUS charities, Callen et al. (2003) find that the presence ofmajor donors on the board is associated with greater orga-nizational efficiency as measured by the ratio of administra-tive expenses to total expanses. Callen et al. (2003) suggestthis is consistent with Fama and Jensen (1983) who sug-gested that in the case of nonprofit organizations majordonors are expected to monitor management in the sameway as large shareholders are expected to do so in for-profitorganizations. In an extension of this line of enquiry,O’Regan and Oster (2005) find that board members withlonger tenure and who sit on more boards are more gener-ous donors to their organizations, both in terms of financialcontributions and time commitment.

The second strand of this research concerns the relation-ship between the board of directors and executive manage-ment. In the absence of owners, or often a dominantstakeholder, the board is assumed to take on the role of“prime defender of the mission statement and as championof its achievement” (Caers, Du Bois, Jegers, De Gieter,Schepers, & Pepermans, 2006:32). When viewed in this waywe might expect managers in nonprofit organizations toseek to pursue their own objectives at the organization’sexpense and a central role of the nonprofit board is to ensurethis possibility is minimized. One way in which such agencycosts may be minimized is by keeping the ratification andmonitoring of decisions separate from the initiation andimplementation of those decisions (Fama & Jensen, 1983).



Indeed, this is precisely what nonprofits seek to do withboards typically comprised of non-executive directors and,often when the CEO sits on the board, they are precludedfrom voting (Ostrower, 2007). Structurally, therefore, boardsof nonprofit organizations appear well suited to address thespecific agency issues present. The issue researchers in thisstrand of enquiry have sought to address is how well thisboard model works by examining the relationship betweenthe board and the executive.

The research evidence on the relationship between boardsand executive management presents a mixed picture. On theone hand, it seems widely accepted in the literature thatboards of nonprofit organizations do not actively monitormanagement (Caers et al., 2006; Glaeser, 2003; Miller, 2002).However, it is also accepted that the weak control that isobserved does not appear to be associated with evidence ofmanagers pursuing their own objectives at the organiza-tion’s expense. Miller (2002) provides a particularly interest-ing insight on this through her study of board meetings andinterviews with individual members of nonprofit boards.Miller (2002) found no evidence that boards or individualdirectors did not trust the organization’s CEO and were verycomfortable relying on information provided by manage-ment on which to make decisions. Miller’s (2002) findingssuggest that nonprofit boards undertake low levels of moni-toring of their executives because more rigorous monitoringis deemed unnecessary. Caers et al. (2006) suggest that thelack of executive members on the board may actually reduceits monitoring capacity since executive presence does bringkey inside information needed for optimal decision-making.In other words, the increased independence of nonprofitboards designed to ensure managers are better monitoredmay actually deprive the board of some of its most importantmonitoring tools.

Research on board governance in NGBs in sport is veryunderdeveloped (Ferkins et al., 2005). We are aware of nostudy that has explicitly examined board structure andcomposition in the context of NGBs of sport. The gover-nance work that has taken place primarily focuses on theboard-executive relationship and therefore mirrors the dis-cussion already mentioned in relation to nonprofit gover-nance more generally. Two studies by Hoye (2004, 2006)investigated the relationship between board leadership andexecutive leadership and its impact on the performance of asample of sporting organizations in Queensland. Hoye(2004, 2006) reports evidence of board chairs and executiveshaving a very positive perception of their working relation-ship. Furthermore, Hoye (2004, 2006) also found that thequality of the relationship between the board chair andexecutives was higher than the relationship between eitherthe executives and other board members or between theboard chair and other board members. These findings seemto mirror the positive relationship between boards and theexecutive for other nonprofit organizations discussed pre-viously (e.g., Miller, 2002) as well as signalling the impor-tant role played by senior executives in the governance ofsports organizations.

In a further development of this theme, Hoye andCuskelly (2003) undertook research on boards of sportingorganizations in the state of Victoria deemed by an indepen-dent expert panel as being either effective or ineffective. The

researchers then used questionnaires and interviews toexamine the link between the board-executive relationshipand perceptions of board performance. The principal find-ings were that: effective organizations were associated withgreater levels of trust between the board and the executive;there was a perception of joint leadership by both the boardchair and the executive in effective organizations; in bothtypes of organizations there was widespread acceptance thatthe executive controls information flows to the board and, inso doing, has a significant influence on what is discussed;and in both types of organizations board performance wasseen as the primary responsibility of the board chair. Thesefindings are interesting because they illustrate the key rolesenior executives play in NGBs of sport and this impactneeds to be considered in any analysis of board governance.

Our study seeks to add to our understanding of gover-nance in nonprofit organizations generally as well as inNGBs of sport in particular. Prior work on the governanceof nonprofits focuses on principal-agent issues but from theviewpoint of the board being the principal and the execu-tive being the agent. The work reviewed above does notidentify tension in this relationship but points to a signifi-cant degree of solidarity with both parties seeking to genu-inely take forward the objectives of the organization. Theresearch in respect of sports organizations seems to mirrorthis with an emerging focus on the equally significantroles of the board and the executive in the governance ofsports organizations. The research on nonprofit governancereviewed earlier also points to some useful findings onboard composition issues in respect of nonprofits with dif-ferent director characteristics having specific impacts onorganizational effectiveness.

As noted by Ferkins et al. (2005), no prior research hassought to explicitly address issues of board compositionand leadership in sports organizations so this study isbreaking new ground in doing so. By interviewing verysignificant stakeholders in NGBs of sport, including anumber of CEOs of priority sports, we achieve insights onhow they believe the governance of boards should bestructured. In addition to the need to take forward theissues of board governance highlighted in the above reviewof the literature, at the time of this study we were alsoacutely aware of the practical governance issues faced byNGBs of sport. In particular, our study was designed andundertaken soon after the emergence of the UK Sport GoodGovernance Guide for National Governing Bodies, whichsought to utilize existing good governance practice fromthe for-profit sector. Consequently we decided to focus ourstudy on interviewees’ views on specific aspects of boardcomposition, board size, and board leadership. Specificallythe main research questions our study seeks to obtainstakeholder views on were as follows:

1. What is the most appropriate orientation for boards ofNGBs in order to balance the interests of the broadermembership with the increasing commercial orientationof the sport?

2. What is the optimal size for boards of NGBs?3. What is the most appropriate leadership structure, CEO

duality or a separate Chairman and CEO?



4. What is the role for non-executive directors on the boardsof NGBs?

RESEARCH METHODOLOGY

The objective of our study was to begin examining the mostappropriate governance structure for nonprofit sport orga-nizations in the UK. Since there has been little academicresearch on this topic, we felt that the most appropriateresearch approach was to interview individuals involved inthe management of sports, especially individuals holdingsenior positions in significant sporting organizations. Interms of targeting organizations, we held numerous conver-sations with various relevant parties starting a year prior tothe interviews being conducted. This enabled the authors todevelop relationships with Deloitte and Touche Sports Busi-ness Group, Sport England, and the Central Council ofPhysical Recreation. As a result of these initial discussions,Sport England and the Central Council of Physical Recre-ation also contacted a number of targeted NGBs advocatingsupport for the research project. The original sample was notrandom but specifically targeted senior personnel withinNGBs and relevant agencies as well as two agencies in Aus-tralia and New Zealand. In terms of the NGB mix, it was anobjective to interview a spectrum of UK Priority, EnglandPriority, England Development, other sports, and otherorganizations and agencies involved with or advising NGBson governance matters. These included sports consultingorganizations, sports councils in the UK, Australia, and NewZealand and the Central Council of Physical Recreation. Thesports councils in Australia and New Zealand were targetedbecause some key pieces of research on sports governancehave originated from there and the environment in whichNGBs of sport operate appear to be similar to that in the UK.From an original target list of 33 organizations we weregiven the opportunity to undertake interviews with 22 ofthem (a success rate of almost 67 per cent).

Our sample consisted of 23 senior executives from 22organizations, ultimately providing 22 interviews that couldbe used in the analysis stage of the project. Of this usablesample, 15 individuals represented UK NGBs, three repre-sented sporting agencies/bodies in the UK, one representeda public sector sporting agency in New Zealand, and threerepresented relevant sports consulting firms (details of inter-viewees are presented in Figure 4).

Once the interviews were agreed upon, one semi-structured interview was conducted with each respondentover a six week period during August and September 2005.All the interviews were undertaken by one of the authors inorder to ensure consistency. The interviews varied in lengthdepending on the responses of the interviewees, but alllasted between 40 minutes and 1 hour and 20 minutes. Wedeveloped an interview template for NGBs and another forother external agencies. An outline of a merged interviewtemplate is shown in Appendix I. In order to aid accuracyand to maximize use of interviewees’ time, all the inter-viewees agreed to have the interviews recorded (both face toface and by telephone). None of the interviewees were givena copy of the interview schedule in advance as it was ourobjective to obtain the personal views of the interviewees, as

opposed to a predetermined corporate view. Additionally, atthe start of each interview we asked each respondent if theywere happy to be quoted directly, anonymously, or with thequotations reviewed by the respondents. Each intervieweewas also advised that they could have an electronic copy ofthe word transcription, and/or a CD of the interview,although no respondents actually requested either of these.

An important issue with qualitative data is how best tocondense the information into a format that offers a usefulstory and insight for the reader (Easterby-Smith, Thorpe, &Lowe, 2002). As qualitative data deriving from interviewsresults in a large amount of text, they are not easy to analyzeand there are no clear rules as to how qualitative data analy-sis should be carried out (Bryman & Bell, 2003). We analyzedand interpreted the data in a holistic manner, generatingconclusions based on the text as a whole. Given the potentialrichness of the content of the interviews, coding was alsodiscounted because “by plucking chunks of text out of the

FIGURE 4Anonymous Listing of Interviewees Used in This Study

Interviewee Ref.

Title Organization Face to Face or

Telephone Ref. 1 Senior Consultant Sports Consultancy 1 Face to Face Ref. 2 Senior Consultant Sports Consultancy 1 Face to Face Ref. 3 Senior Consultant Sports Consultancy 2 Face to Face Ref. 4 Chief Executive

Officer NGB 1 –

UK Priority Sport Face to Face

Ref. 5 Chief Executive Officer

NGB 2 –UK Priority Sport

Face to Face



Face to Face

Ref. 7 Director of Operations


Face to Face

Ref. 8 Head of Finance NGB 5 – UK Priority Sport

Face to Face

Ref. 9 Head of Corporate Affairs


Face to Face


NGB 7 – England Priority Sport

Face to Face

Ref. 11 Executive Chairman

NGB 8 - England Priority Sport

Face to Face

Ref. 12 Finance and Administration Director


Face to Face

Ref. 13 Head of Strategic Development


Telephone


NGB 11 – England Development Sport

Face to Face



Face to Face

Ref. 16 Retained Consultant



NGB 14 – Other Sport

Face to Face

Ref. 18 General Secretary NGB 15 - Other Sport

Face to Face

Ref. 19 Governance, Risk and Assurance Manager

Sport England Face to Face

Ref. 20 Head of Services CCPR Face to Face

Ref. 21 UK Performance Manager

UK Sport Face to Face

Ref. 22 Business Improvement Manager

Sport and recreation New Zealand

(SPARC)

Telephone



context within which they appeared, such as a particularinterview transcript, the social setting can be lost” (Bryman& Bell, 2003:439). Another weakness of coding in this contextwould have been that the interviews resulted in a “fragmen-tation of data, so that the narrative flow of what people say islost” (Bryman & Bell, 2003:439). Holistic analysis does notsuffer from such shortcomings, thus enabling the greatestopportunity to analyze the interviews against the originalresearch aims and objectives. In order to analyze the inter-views holistically, each interview was transcribed as a worddocument. In order to analyze the content collected in theinterviews, we devised an interview transcription processthat enabled the aggregation of the interview findings intothe key research areas (see Appendix II).

INTERVIEW FINDINGS

The Nature of the Board: Motivated by CommercialOrientation or Member Representation?The first part of the interviews focused on trying to ascertainrespondents’ views on the most appropriate orientation forboards in NGBs of sport. Specifically, we sought views onwhether boards should be orientated towards member rep-resentation, as is typically the case at the moment, orwhether they should be more commercially orientated. Thispotential dilemma is perhaps best illustrated in the largelyrepresentative nature of the FA’s council and the recommen-dations of Burns (2005) for a more focused, corporate-styleboard. Of the 22 interviewees, 16 were generally supportiveof the notion that NGBs should be moving away from atraditional representative structure. Within this number,there was significant difference in emphasis, with non-NGBrespondents more favorable of board members beingselected for their skills rather than whom they represent. Onthe other hand, the majority of respondents from NGBs wereconscious of the need to retain some element of representa-tion on the board, so as to avoid boards becoming alienatedfrom those they are seeking to serve. Of the six respondentswho were not strongly supportive of more commercially-oriented boards, none were actually hostile to the idea butchoosing not to come down firmly on either side. Two ofthese respondents, both representing NGBs, highlighted apreference for NGBs to structure their boards in a way that isappropriate to their specific needs.

Even though the general view favored more commercial-orientated boards, there was an appreciation that changingto this format would be a difficult challenge for NGBs: “his-torically NGBs have grown from a model of representationand have therefore gone for a model of representation” (Ref.2), with many: “so far down this amateur ethos/approachand committee driven system, it is hard to impose a stan-dard approach. Ideally all sports should be under one struc-ture, but in NGBs it is unfeasible” (Ref. 2). Having differentcorporate objectives from commercial organizations, anumber of respondents commented on the uniqueness ofNGBs: “I think you have to understand that governingbodies are not commercial organizations, whilst they mightact like commercial organizations in certain circumstances”(Ref. 5).

While recognizing that NGBs are different from purelycommercial organizations, there was no suggestion thatNGBs should not be looking to commercial structures forgovernance leadership. Another driver towards commercialorientation, regardless of the NGB size, is that:

a board of directors is very important as opposed to an executivecommittee as it enables you to put in proper risk and roles forstrategic direction, and governance of the organization, whichyou might not have as an executive committee (Ref. 10).

While NGBs do not have the same organizational drivers aspure commercial companies: “all commercial organizationsshould structure their board to fit their function, and there isno difference in any sporting body” (Ref. 17).

With relatively strong support for following elements ofcommercial practice, one could argue that NGBs shouldsimply follow the recommended governance reports andrecommendations aimed at commercial organizations.However, there was a strong feeling that NGBs should notfollow these to the letter:

governance in the sporting world should be based on best prac-tice and NGBs should be aware of what best practice is, yet onedoes not necessarily have to follow that absolutely, but needs tolook at where it applies and where it doesn’t apply (Ref. 11).

Despite their history, heritage, and existing structures, therewas a view that NGBs need to adhere to business principles.Unique skills are required within certain elements of theiroperation, yet any business, whether profit or non-profitorientated, needs unique skills. That NGBs cannot hidebehind the sport is a different argument so clearly articu-lated by Ref. 12:

The same principles apply to them [NGBs] as any other orga-nization – if you spend more than you bring in you are introuble. I got told the same when I first started in sport andagain I have come to the same view. If a sport is not run on acommercial basis, it is very difficult to put anything on top of it,like grassroots development or elite performance. You can’t doall the things you want to do if you ignore the fundamentals ofrunning any organization in terms of corporate governance,transparency, making a surplus, cash management, all thethings people would take for granted in the commercial world.

Our findings from this section of the interviews providesolid support for the notion that boards of NGBs shouldrebalance their structure to incorporate a greater element ofbusiness expertise in order to help them operate successfullyin the increased commercial environment in which theynow operate. At the same time there was broad appreciationof the need to retain member representation on the board.Respondents felt the retention of membership on the boardis especially important to avoid leadership of the NGBbecoming alienated from those it seeks to serve.

Proposition 1: Nonprofit boards should contain a reasonablebalance between members possessing appropriate businessexpertise and members representing the wider membership ofthe organization.

Board Size: How Many Members is Optimal?The motivation for this element of the research was to obtainrespondents’ views on appropriate parameters of board size



for effective performance. Of the 22 interviewees, 18 sug-gested actual numbers, and of these, only two argued for anupper number exceeding 12 members. An upper limit ofbetween 10 and 12 members was suggested by 13 respon-dents. In terms of this upper limit, “there comes a pointwhere the quality of debate is significantly reduced, and youeffectively end up with people ‘grandstanding’ ” (Ref. 4).Three interviewees argued very convincingly for an upperlimit of 10 members: one supporting the group dynamicargument; one suggesting if it is greater than 10, the boardwill have elements of inefficiency because it will not befocused; and one highlighting the value of group cohesive-ness and commitment to a common cause:

you can’t make decisions if you have more than 10 people there.You need something manageable between 5 and 10. If it is over10, you can’t be doing your job, and I would keep it to the lowerend of that (Ref. 17).

Eight to 10 people on the board is sufficient. The purpose of theboard is to manage the organization, to manage the executivedelivering the strategy, monitoring performance, agreeing poli-cies, international representation. I don’t think it needs to bemuch bigger than that. If it is, it is trying to do more than itshould be doing (Ref. 6).

Five is the minimum, 10 is the absolute maximum, I would beuncomfortable with more than eight. I will give you one specificexample. In the last three and a half years this board has not hadone leak, not one, which you can do with just five people. Whenyou get more and more, it is more difficult to monitor, and witha larger board you get the “Well I was in favor syndrome . . .”(Ref. 11).

It is worth noting that every Sports Council intervieweehighlighted examples of effective NGB boards with either 11or 12 members, and one NGB respondent indicated: “Iwould say five to 10 is about right. It is not a bad number,but it is not worth going to war for 11 or 12. What you don’tneed is the ‘57 old farts’ ” (Ref. 5).

In terms of a minimum board size, the emerging viewsuggested a figure of five, predominantly because of argu-ments made in relation to the need for focus, speed, andefficiency of decision-making. Some concerns wereexpressed at having a figure this low as you “probably donot want four or five as you do get more checks and balanceswith slightly higher numbers” (Ref. 2), and “once you dropbelow seven to six or five then there is the danger that it isseen to be unrepresentative and/or getting single strongvoices dominating the table” (Ref. 22). Therefore, the consen-sus appears to be boards of between five and 12 members.Ultimately

the key thing is that it works as effectively as possible, and Ithink it is somewhat irrelevant as to the size of the organization.It is about getting quality people on it, and keeping it to a sizethat can be managed by the chair (Ref. 14).

Respondents were in agreement that board size is animportant issue in respect of the quality of debate anddecision-making within NGBs. The vast majority had clearviews on the need to restrict the size of boards with a clearconsensus emerging for no more than 12 members. Simi-

larly, respondents suggested a minimum number of fivemembers to ensure sufficient checks and balances exist.

Proposition 2: Nonprofit boards should be limited to betweenfive and twelve members, thereby facilitating debate while alsooptimizing decision-making.

Board Leadership: Separate Chairman and CEO?Having discussed the orientation and appropriate size ofboards in NGBs, the next issue we explored concerned boardstructure, beginning with obtaining respondents’ views onhaving the same person occupying the positions of chairmanof the board and CEO of the organization. Sixteen of the 22interviewees were in agreement with the principle of sepa-rating the roles of CEO and chairman, some relatively vocif-erously, and numerous examples were quoted highlightingadvantages of this approach.

The chairman should be there to support the CEO, but also toalmost act as a bit of a buffer between the political shenanigans.The more the CEO can stay out of the politics, and the more thechairman can try and deal with that and bring people together,the better. There is also the time aspect as well. You cannotunderestimate just how much time the chairman role will takeup in keeping people together (Ref. 1).

Another advantage mentioned is that the relationshipbetween chairman and CEO can help strengthen the perfor-mance of both individuals “it is the most important relation-ship within sport, that of the CEO and chairman. Leadershipis a lonely affair at times, and any leader needs somebody tobounce ideas off/consult with” (Ref. 4). A concern was alsoraised about management being accountable to managementif the roles are not split, “If you have those two joined, thenI think you lose the difference between policy and manage-ment, and I think it is a worthwhile difference to keep” (Ref.2). Points were also made that often it is the chairman whohas a close relationship with the volunteer sector of theNGBs and concerns exist that such support could be lost ifthe roles of chairman and CEO were held by one individual.

Although in a minority, a number of respondents indi-cated that separation of chairman and CEO may not neces-sarily be optimal for NGBs. It was noted that some do havethe roles combined, and this results in really effective per-formance and delivery against the NGBs’ strategic objec-tives. A number of NGBs commented on the politicalconflicts where these roles are separate. While having twoseparate individuals can be an advantage, some have seenissues in relation to understanding boundaries between thetwo roles. This arises because the CEO is often the onlymember of paid staff in NGBs and some unpaid staff/chairsoften perceive that the paid employees are there just to “helpthem out.” Such confusion would not be present where theroles are combined. The potential for personality clashes wasalso highlighted as an issue within a split model: “clearlythere is plenty of scope for personality clash in the structureas is” (Ref. 8). It was also recognized that CEO-chair dualitymay have benefits in terms of the speed of decision making:

It would not change my mind for the [NGB], but I canquite see why it is more effective or efficient. It is a lot simpler



to make a decision than to discuss and explain it to someoneelse, who might not be up to speed or need a lot of background(Ref. 7).

Personality appears to be a critical factor in NGBs wherethe role is combined, “it goes back to the personalities. If youhave got the wrong person then it won’t work whatevertheir title. It is more important to have the right person” (Ref.12). However, even in NGBs where the roles are currentlycombined, while: “it can work to get things moving, in timeit may be appropriate to split the role” (Ref. 16). In NGBs thathave the two roles combined, it is not only important to havea senior independent director, it is crucial to have a reallystrong board:

I can see how the role of an executive chairman is a hugeadvantage and in [The Sport], most people believe it is a hugeadvantage. It is important that you have a good board if youhave an executive chairman because it is a very powerful roleand you need to have a board to be strong when necessary. Thecomposition of the board and the way the board acts is very veryimportant if you have a chairman/CEO in one role . . . It is avery very demanding role, and that is an issue for the personwho does both jobs, but on the other hand, if it works, it works(Ref. 11).

Despite reservations in some quarters for the two roles tobe combined, it would appear that this whole topic warrantsfurther research within NGBs. There are strengths andweaknesses of both models and, while critics of executivechairmen do exist, not only do both models appear to work,but there could be actual benefits for some NGBs in havinga combined structure, particularly in the short term. Provid-ing the personality and competencies of the individualsenable them to perform in both guises efficiently, the speedof decision-making is considerably quicker.

The issue of board leadership generated much discussionamong our respondents. This is not surprising since withinour sample we interviewed some of the most senior execu-tives within NGBs so this aspect of the study had a particu-lar relevance for them. Overall, the view was that havingseparate chairman and CEO is good for the organizationensuring an appropriate check between the role of the boardand the executive. It was also noted that such a separationfacilitates the chairman to bond with the volunteer sector ofthe NGB, which for some NGBs, is a very important part oftheir organization.

Proposition 3: Nonprofit boards should separate the roles ofchairman and CEO. This separation should make the boardmore objective and independent while also enabling the board toeffectively pursue multiple and often conflicting objectives.

Board Composition: A Role for Non-executiveDirectors?The final area explored in the interviews relates to the com-position of boards. There is no agreement as to the modelNGBs should be following. With many NGBs developingunder a representative structure, very different models exist.Numerous arguments suggested a 100 per cent representa-tive model could not be current best practice,

the board was originally constructed along discipline lines, thiswas very ineffective, people would come to the board and rep-resent the interests of their discipline and not the interests ofthe business (Ref. 18).

This topic of board composition warranted research becausea number of governance reports and codes recommendusing independent non-executive directors. Within NGBsthere does not appear to be a uniform understanding as towhat non-executive directors are, with some arguing thatnon-salaried directors are non-executives, “we are halfwaythere, as in a sense all our board is non-exec” (Ref. 8). Thiswas not the only example of a similar belief, but is quitedifferent to the definition of non-executives as defined in thecase of shareholder-owned companies and was a concernhighlighted by a number of interviewees, “this is where theline may get blurred, as some NGBs may argue that they areindependent as they are not salaried, or fee earning at all”(Ref. 1).

In total, 16 out of the 22 interviewees expressed supportfor the use of non-executive directors as they can bring“better ‘skills and experience’ and it is better than appoint-ing someone without the experience, or just because theyhave been an employee” (Ref. 11). Also: “it allows you tobring people in on a very cost effective basis . . . you canmake decisions in the best interests of the sport and thebusiness, as opposed to decisions made for an individual’sbest interests” (Ref. 11). Advocates of non-executives alsodemonstrate the ability of being able to recruit skills thatwiden the knowledge in a specific function. For example:“at this time we have co-opted onto our board a re-presentative from a communications agency who offerscommunications/media expertise” (Ref. 20). Of the six inter-viewees who were not outright supportive, three expressedcaution that non-executives should only be used where it isabsolutely necessary and obvious as to what they bring tothe organization, one highlighted the difficulty in gettingpredominantly membership organizations to vote to bereplaced by non-executives, one felt it was not practical insmall NGBs, while the remaining interviewee did notprovide a definitive response.

An issue that emerged in this discussion was the prospectof NGBs having to provide a financial retainer to acquire theservices of non-executives, “payment comes into it. I wouldfind it to hard to justify the expenditure, even if it was onlya £5k retainer” (Ref. 7) and some reservation as to the caliberthey could attract “even if we paid them a nominal fee, say£1,000 a year, I don’t think we will get the right type ofpeople coming in” (Ref. 9), whereas some NGBs do not feelthey could pay anyone and would need to get non-executives on a voluntary basis. In addition to the ability topay, there are some policy concerns raised as to the principleof paying non-executives:

there is a raging issue in the voluntary sector at the moment asto whether you should pay non execs, or particularly a chair ora deputy chair. I don’t think that you should pay them, person-ally (Ref. 20).

Interestingly, none of the sports council representatives holdsuch a view, for example,



I think it is an excellent idea. The issues come in about compe-tence; large corporations tend to pay people fairly well to sit onboards, whereas sports aren’t really in a position to fund sig-nificant amounts. There is definitely a quality issue, I wouldnot say independents for the sake of independents, it has got tobe very much competency based . . . There is very much adanger of not being able to attract the right caliber of person;things such as 2012 will certainly help . . . We are not againstfunding people and making clear to people what the benefits are(Ref. 19).

With most governance reports in relation to the privatesector suggesting the board should comprise 50 per centnon-executives or for non-executives to be in sufficientnumber to carry weight in the boardroom, attention wasgiven to see whether this figure was appropriate for NGBs.Only two interviewees showed support for conformingwith or even exceeding the 50 per cent recommendations,for example, “I am quite happy to have a majority of non-execs, as it is important that executives can be outvoted.That is absolutely fundamental to corporate governance”(Ref. 11), as: “there should be one more non-exec thanexec” (Ref. 12). However, there is also support for non-executives to carry sufficient weight in decision making, “Ithink they should be just in the minority, but only just.They should be a big enough group to influence outcome”(Ref. 5), and “they have got to be in sufficient number sothey are not a lone voice” (Ref. 19). There was relativelystrong support for a figure of two or three really genuineindependent non-executives as per recommendations inthe “Modernization Program,” but also some concern that50 per cent seems high for sport.

This element of the research presented some interestingvariety as to how non-executives should be used withinNGBs. There was strong support for non-executives tohave either clear roles and responsibilities or agreed termsof reference. Yet, how non-executives should be used pre-sented significant differences, and may reflect either thesize of or the existing skill set in the particular NGB. Anumber of NGBs and the sports councils believe non-executives should be there to offer high level businessexperience, whereas other respondents want to use non-executives in a functional capacity, “we would clearly beusing them for their greater expertise and experience.So they may be able to comment on everything but mayinfluence specifics” (Ref. 15).

If they are truly independent, they only have a finite amount oftime to spend on it. They need to be clear about what their roleis – what should they be challenging and what they shouldn’t bechallenging so that they can be confident that they are discharg-ing their duties, as ultimately they are still the director of acompany and that carries with it significant responsibilities(Ref. 19).

The use of non-executive board members appears to bean issue attracting much interest in NGBs. The majority ofrespondents favored the inclusion of non-executives ontheir board, primarily for the opportunity to gain expertiseand skills the board does not already possess. While therewas not support for boards to possess a majority of non-executives there was a consensus that they should have

sufficient influence to provide a check on executive deci-sions. The issue of offering non-executives a financialretainer generated a mixture of responses with argumentsagainst based both on principle and ability to pay but onthe other hand there was some concern expressed regard-ing the quality of non-executives recruited without a finan-cial incentive. There was no overall consensus on this pointbut it is a topic deserving further study in the context ofNGBs.

Proposition 4a: Nonprofit boards should contain sufficient non-executive representation so as to ensure the independence ofdecision-making.

Proposition 4b: Non-executive directors should bring ontoboards of nonprofits specific business insights or experiencethat the board does not already possess.

CONCLUSIONS

Sport is a very important aspect of UK society involving asignificant number of participants and spectators, occupyinga key role in furthering the nation’s health and, at the elitelevel, a source of considerable national pride. In recent timessport has also attracted a significant amount of funding,both from private sponsorship and government sources. Theadvent of increased funding has also brought renewedpressure on the NGBs of sport to ensure they possesssufficient systems of governance to ensure their objectivesare being achieved. It is in this environment of pressurefor governance reform in sport that we undertook ourstudy. We undertook the research to find out how seniorpersonnel in some of the largest NGBs and associatedagencies felt about the application of specific elements ofexisting best practice to NGBs of sport. Our researchinvolved substantial interviews with some of the mostprominent and influential figures in the administration ofsport in the UK.

Our findings can be summarized as follows: First, therewas widespread acceptance that the nature of boards ofNGBs should move away from a traditional representativestructure in favor of a more focused, corporate style, board.Central to this is a belief that boards of NGBs should focuson board members who bring specific business skills to theboard. It should be noted, however, that within such a reor-ganization, respondents representing NGBs argued stronglyfor some representative element to remain on the board so asto avoid membership alienation. Second, bearing in mindthat many NGBs currently possess large representativeboards, respondents expressed agreement that board sizeshould be in the range of five to 12 members. Many of theresponses here echoed arguments in the academic literaturethat relatively smaller boards tend to be better focused andprovide more efficient decision-making. Third, the majorityof respondents supported the notion of NGBs in sporthaving separate individuals occupying the roles of chairmanand CEO. However, there was also support for the benefitsof having the roles combined with some respondentsvoicing concerns about separation increasing political con-flicts at the very top of their organizations as well as servingto delay decision-making. Fourth, there was strong support



for the use of non-executive members on the boards ofNGBs. In particular, respondents felt that it allows them toaccess specific skills and experiences, with a number ofexamples provided. It should also be noted that respondentsappreciated the potential difficulties in recruiting highquality non-executives since many NGBs did not have theresources to offer a significant retainer to such boardmembers.

One of the key objectives of this study was to inform theongoing discussions regarding the appropriate governancestructure for boards of NGBs. The research findings provideextremely useful policy implications for NGBs. There seemsto be a consensus view that large representative boards mayno longer be optimal and NGBs should move towardssmaller more focused boards. Given this, the study alsoemphasized a need for some board members to possesselements of specific business knowledge. Since many of theparticipants in the study held senior management positionsin NGBs, it should be appreciated that the views expressedare likely to be slanted more towards management/businessissues. However, as prior research in the broader non-profitsector has highlighted the value of having board memberswith a specific affinity to the mission of the nonprofit, achallenge remains for NGBs to ensure adequate memberrepresentation while at the same time ensuring the NGB isadministered along business lines. The findings reportedhere also highlight the different perception of non-executives in NGBs. NGBs seem to associate non-executivedirectors with board members without an obvious affinity tothe specific sport and typically view non-executives asbringing additional expertise to board deliberations ratherthan viewing non-executives in a monitoring capacity, as isfrequently the perception in the case of for-profit organiza-tions. Policymakers need to be aware of this when issuingguidance on good governance to NGBs. Finally, while thenotion of CEO/chairman duality was not favored by themajority of respondents there was an appreciation fromsome that it may have a role. This may suggest that futureguidance should allow individual NGBs the opportunity tojustify the presence of CEO/chairman duality in the contextof their own specific circumstances rather than imposing ablanket prohibition.

This study presents an initial investigation of how theboards of sport NGBs should be structured and providessome testable propositions for future research. In addition,future research could usefully attempt to chart the charac-teristics of boards in NGBs. For example, we know littleabout the composition and leadership of boards in sports,such as the mix of full-time executive staff and non-executives and the extent to which the most senior execu-tive also holds the position of chairman. Furthermore,it would be extremely interesting to know more abouthow the members of boards in NGBs are selected, espe-cially the degree of emphasis on personnel with specificskills as opposed to those with significant prior involve-ment with the particular sport. Central to all discussionssurrounding board governance is the extent to whichboards achieve their organization’s objectives. Futureresearch should seek to investigate the efficiency of boardgovernance in NGBs by analyzing the success with whichthe organization’s key performance indicators (KPIs) are

achieved. In particular, it would be very interesting toinvestigate whether the structural characteristics of boardcomposition influences the degree to which organizationalobjectives are achieved.

ACKNOWLEDGEMENTS

This article has benefited significantly from the detailedcomments of the editor, William Judge, the associateeditor, and two anonymous reviewers. We would also liketo thank the participants who gave their time to take part inthe study.

NOTES

1. It is important to note that research on corporate governance isnot exclusively the domain of agency theory and a significantamount of work has been undertaken using alternative theoreti-cal perspectives, most notably, resource dependency and stake-holder theory. Clarke (2004) provides an excellent summary ofthe different theoretical perspectives.

2. The terms “board of directors” or “board” are used throu-ghout this paper to signify the organization’s ultimatedecision-making body, but we appreciate that different non-profit organizations use different terms to describe this organ ofgovernance.

3. It should be noted though that research on the effectiveness ofnonprofit organizations is complicated by a lack of consensus onthe appropriate measure of organizational effectiveness to beused (Cornforth, 2001; Forbes, 1998). Forbes (1998) provides anexcellent summary of the range of measures of effectivenessused in prior work.

4. A significant amount of academic research has also beendevoted to the roles and responsibilities of boards in nonprofitorganizations but this line of research is not directly relevant toour study.

APPENDIX I

Semi-structured Interview Template (Combined toShow NGB and External Agency Wording)

Contact Name Contact NameTitle E.g. CEO, NGBParticipation

AcknowledgementHappy to be named

and quoted (etc.)Telephone Number – ContactEmailWebsite address if knownDateMethod of Contact Face to Face/Telephone

Interview Background and ObjectivesA lot has been written in recent years relating to corporategovernance, including relating to sport. While NGBs arenonprofits, investing any profits back into the development



of the sport, effective governance is essential so “insidertrading is avoided” (Oketch, 2004:15). Additionally, “despitethe burgeoning literature on governance, little researcheffort has to date been devoted to examining the term inrelation to the organization, administration, and manage-ment of sports organizations” (The Higher Education Author-ity, 2004).

It is not the intention of this research to criticize or critiqueexisting governance structures in NGBs, but rather toexplore a number of key topic areas so that a body of knowl-edge develops relating to “developing best practice struc-tural governance within NGBs.”

Best practices and the findings will be shared with allinterview participants, with the future aspiration of NGBs“cherry picking” the best findings that can be applied andimplemented within their NGB, while possibly focusing any“future research” in specific areas;

While it is accepted “one size does not fit all,” to under-stand what best practice structural governance is, the scopeof this project is to investigate areas of:

• Effective board structure in terms of size, and manage-ment relevant to NGBs

• The value of independent non-executive directors toNGBs

• The role of the chief executive officer and chairman

1. Effective board structure in terms of size, and manage-ment relevant to NGBs

i) Firstly, do you think it is important for NGBs tohave a “Board of Directors” similar to a commercialorganization, and why, or why not?

ii) What is your opinion as to the most effective orefficient “board size” and why?

iii) Do you think it is important for all elements of theNGB/sport be represented at Board Level? And why/why not (e.g., Community Game, Referees/Umpires,Minority participants etc.)

2. The value of independent non-executive directors toNGBs

i) Most commercial organizations have IndependentNon Executive Directors (INEDs) on their Board. Doyou think NGBs should have Independent NonExecutive Directors and why?

ii) Most governance reports recommend 50 per cent ofdirectors be independent, and a number of docu-ments, e.g., “Investing in Change” recommend aminimum of three non-executive directors. If youbelieve NGB boards should have “Non-Execs” howmany do you think should be employed and why?

iii) Would you expect this number to change or differwithin different NGBs, and if so, why?

iv) Jansen and Kilpatrick (2004) argue “Non-Execs”need to have clearly articulated “Roles and Respon-sibilities,” not be Board “yes men” with no objec-tive opinions or input. Should NGBs seek to havethis system, or is it feasible to expect such asystem?

3. The role of the Chief Executive Officer and Chairmani) The Combined Code redraft (2003) demands split-

ting the role of the CEO and Chairman? Do youagree this should be the case in UK NGBs and why?

ii) In relation to the splitting of the CEO/Chairmanrole, Hamil, Holt, Michie, Oughton, & Shailer (2004)highlight 25 per cent of UK professional footballclubs are in breach of this role. In France, it isnot common business practice to split the role ofthe CEO/Chairman. In the USA, even followingSarbanes-Oxley (2002), most roles are not split,and the 2005 Booz Allen Hamilton’s CEO SuccessSurvey (Caulkin, 2005) shows that companies withcombined CEO-chairmen deliver measurably betterreturns than those where the roles are separated? Inview of this, do you still believe NGBs should splitthe role of the CEO and Chairman?

Any other business – Opportunity to raise any other relevantsalient points, e.g.,

Issue regarding implementation – volunteers in NGBs?“Box Ticking” rather than cultural change etc.?That is the end of the interview – Thank you for your

time and cooperationElectronic copy of the interview transcription will be

available to view until destroyed.

APPENDIX II

Interview Transcription Process

22 interviews recorded via ipod

22 word documents of fully transcribed

interviews

4 New Documents created for each

“Research Objective”

Relevant section of each of 22 word

documents “cut and paste” into relevant

new document

4 “Aggregated Documents” created

to be viewed “holistically.”

Interviews copied from ipod to “desktop” and to

two 700MB CDs (For contingency & audit)

REFERENCES

Bryman, A. & Bell, E. 2003. Business research methods. Oxford:Oxford University Press.

Burns, T. 2005. FA structural review: To the cairman and the boardof directors of The Football Association. Available from: http://www.thefa.com.

Cadbury, A. 1992. Committee on the financial aspects of corporategovernance. London: Gee.

Caers, R., Du Bois, C., Jegers, M., De Gieter, S., Schepers, C.,& Pepermans, R. 2006. Principal-agent relationships on thestewardship-agency axis. Nonprofit Management and Leader-ship, 17: 25–47.



Callen, J. L. & Falk, H. 1993. Agency and efficiency in nonprofitorganizations: The case of “specific health focus” charities. TheAccounting Review, 68: 48–65.

Callen, J. L., Klein, A., & Tinkelman, D. 2003. Board com-position, committees, and organizational efficiency: The case ofnonprofits. Nonprofit and Voluntary Sector Quarterly, 32: 493–520.

Campbell, D. 2005. Give it back. Observer Sport Campaign, TheObserver. April 20, 2005.

Caulkin, S. 2005. All that’s good is pure poison. The Observer –Business. August 7: 9.

Chaker, A. N. 2004. Good governance in sport: A European survey.Strasbourg: Council of Europe Publishing.

Clarke, T. 2004. Theories of corporate governance. London:Routledge.

Combined Code (Revised). 2008. The combined code on corporategovernance. London: Financial Reporting Council.

Cornforth, C. 2001. What makes boards effective? An examinationof the relationships between board inputs, structures, processes,and effectiveness in non-profit organizations. Corporate Gover-nance: An International Review, 9: 217–227.

Deloitte and Touche/UK Sport. 2003. Investing in change – Highlevel review of the Modernization Program for governing bodiesof sport, UK Sport modernization report. July 2003.

Department of Culture, Media, and Sport/Strategy Unit. 2002.Game plan: A strategy for delivering government’s sport andphysical activity objectives. A joint DCMS/Strategy unit report– December 2002.

Easterby-Smith, M., Thorpe, R., & Lowe, A. 2002. Mana-gement research: An introduction (second ed.). London: SagePublications.

Fama, E. & Jensen, M. 1983. Separation of ownership and control.Journal of Law and Economics, 26: 301–325.

Ferkins, L., Shilbury, D., & McDonald, G. 2005. The role of theboard in building strategic capability: Towards an integratedmodel of sport governance research. Sport Management Review,8: 195–225.

Forbes, D. 1998. Measuring the unmeasurable: Empirical studies ofnonprofit organization effectiveness from 1977–1997. Nonprofitand Voluntary Sector Quarterly, 27: 183–202.

Forster, J. 2006. Global sports organizations and their governance.Corporate Governance, 6: 72–83.

Glaeser, E. (Ed.). 2003. The governance of not-for-profit organiza-tions. Chicago: University of Chicago Press.

Hamil, S., Holt, M., Michie, J., Oughton, C., & Shailer, L. 2004. Thecorporate governance of professional football clubs. CorporateGovernance: International Journal of Business in Society, 4 (2):44–51.

Hampel, R. 1998. Committee on corporate governance. London:Gee.

Higgs, D. 2003. Review of the role and effectiveness of non-executive directors. The Stationery Office.

Hindley, D. 2002. An examination of the utility of the concept ofgovernance in relation to the sports of swimming, football, andcricket. Unpublished Ph.D. dissertation, The Institute of Sportand Leisure Policy, Loughborough University.

Hoye, R. 2004. Leader-member exchanges and board performanceof voluntary sport organizations. Nonprofit Management andLeadership, 15: 55–70.

Hoye, R. 2006. Leadership within Australian voluntary sport orga-nization boards. Nonprofit Management and Leadership, 16:297–313.

Hoye, R. & Cuskelly, G. 2003. Board-executive relationships withinvoluntary sport organizations. Sport Management Review, 6:53–74.

Jansen, P. J. & Kilpatrick, A. R. 2004. The dynamic nonprofitboard. The McKinsey Quarterly. Available from: http://www.mckinseyquarterly.com.

Miller, J. L. 2002. The board as a monitor of organizational activity:The application of agency theory to nonprofit boards. NonprofitManagement and Leadership, 12: 429–450.

Mintel 2005. Spectator sports-UK – April 2005. Mintel InternationalGroup Limited Report.

Oketch, M. O. 2004. The corporate stake in social cohesion. Corpo-rate Governance: International Journal of Business in Society, 4(3): 5–19.

Olson, D. E. 2000. Agency theory in the not-for-profit sector: Its roleat independent colleges. Nonprofit and Voluntary Sector Quar-terly, 29: 280–296.

O’Regan, K. & Oster, S. M. 2005. Does the structure and composi-tion of the board matter? The case of nonprofit organizations. TheJournal of Law, Economics, and Organization, 21: 205–227.

Ostrower, F. 2007. Nonprofit governance in the United States:Findings on performance and accountability from the firstnational representative study. Washington, D.C.: The UrbanInstitute.

Scissons, E. H. 2002. All numbers sre not created equal: Measure-ment issues in assessing board governance. CorporateGovernance: International Journal of Business in Society, 2 (2):20–26.

Siciliano, J. I. 1996. The relationship of board member diversity toorganizational performance. Journal of Business Ethics, 15:1313–1320.

Sport England. 2004. The framework for sport in England: MakingEngland an active and successful sporting nation: A vision for2020. Available from: http://www.sportengland.org.

Stone, M. M. & Ostrower, F. 2007. Acting in the public interest?Another look at research on nonprofit governance. Nonprofitand Voluntary Sector Quarterly, 36: 416–438.

Thoma, J. E. & Chalip, L. 1996. Sport governance in the globalcommunity. West Virginia: Fitness Information Technology, Inc.

UK Sport. 2002. The sporting toolkit. Available from: http://www.uksport.gov.uk.

UK Sport/Institute of Chartered Secretaries and Administrators.2004. A UK sport good governance guide for NGBs. Availablefrom: http://www.uksport.gov.uk.

Marc Taylor ([email protected]) is a principalconsultant in the culture, sport, and lifestyle division ofPMP Genesis Consultants. He is also an independent non-executive director of the Amateur Swimming Association.Taylor is a member of the Institute of Directors, the CharteredManagement Institute, the Chartered Institute of Marketing,and the Institute of Sport, Parks, and Leisure. He holds anMBA from the University of Sheffield where he was awardedthe Geoff Sykes memorial prize in 2005. Marc has worked onstrategic consultancy projects with some of the major nationalgoverning bodies of sport in the UK and Ireland.

Noel O’Sullivan is Professor of Corporate Governance atSheffield University Management School. His research inter-ests include the governance role of boards of directors, gov-ernance in the insurance industry, mergers and acquisitions,and audit pricing. His research has been published in manyof the leading journals in the fields of accounting and man-agement. Noel is also an Associate Editor of the InternationalJournal of Management Reviews.



How Should National Governing Bodies of Sport Be Governed in the UK? An Exploratory Study of Board...

Documents

Transcript of How Should National Governing Bodies of Sport Be Governed in the UK? An Exploratory Study of Board...