Feb 10, 2012
In the search for organizational accountability, the Board of Director’s are under the microscope. More and more questions about board composition, independence and processes are surfacing on S.E.C., I.R.S., and other official forms and forums. It calls into question: What are the expectations and responsibilities of a board of directors?
While the specific responsibilities of boards and their members vary with the nature of the organization and applicable laws, a duty common to all boards of directors is that they govern and lead the organization. Board governance - establishing the policies and strategies that help to fulfill the mission or purpose - is what boards do. Acting honestly and in “good faith” while carrying out their duties is the expectation of how they do it.
As leaders, part of the boards’ charge is to set the standard for ethical behavior in the organization. Each member must take responsibility for their own behavior, of course. Collectively, the board must create an atmosphere that guides the everyday conduct of the board itself, the people within the organization and the relationships among management, staff, and the community at large.
The idea of “setting a tone” can be difficult for some boards to get their arms around. The tips offered below can start a board on the right path.
Open Up to the Possibilities of Diversity
A first-rate board understands how their decisions on governance issues can lead the organization to perform more ethically. Choices made regarding the boards’ composition are key in that respect.
In an effort to be professional and efficient in the discharge of their business, board members may inadvertently be tempted to minimize conflict in order to reach consensus and take swift action. In other words, they may engage in a type of thought known as “groupthink” (Irving Janus, 1972). As a result of groupthink, ideas may be acted on hastily without the proper analysis and evaluation which may be needed to make sound decisions.
One example of groupthink is when member’s rubber stamp issues before the board. That is, they may accept management decisions without adequate review and discussion. A second instance of groupthink may ensue when board members engage in cronyism. As they recruit others to join the board, members may tend to approach those they know through business and social scenarios and who share like experiences with them. Thirdly, the board of directors may become set in their ways, for instance, an older, privileged group of leaders that holds fast to practices used throughout their careers, can unwittingly hinder the board’s ability to think “out of the box.”
Tip: Diversifying the composition of the board can lead to more inclusive and potentially more ethical decisions and actions. To ensure board members are equipped with the proper tools, processes, and motivation to carry out their responsibilities, board leaders may:
Recommend candidates for the board of directors with diverse personal and professional backgrounds and experiences, and who reflect the demographics and interests of the community or those the organization serves.
Empower the board of directors with members who have differing points of view.
Encourage independent thinkers on the board and select a member to act as a contrarian.
Endorse inquisitive members who ask tough questions to clarify issues.
Conduct board self-assessments to reflect on the board of director’s definition of and accountability to diversity.
Enact term limits to make sure there is room for new perspectives.
Implement exit interviews to assess progress related to inclusiveness.
Such actions nudge board members into thinking more creatively, reflectively and inclusively. As Outi Flynn writes in Meeting, and Exceeding Expectations: A Guide to Successful Nonprofit Board Meetings, “any exercise that forces the board to open up to accepting new ideas can turn an ordinary board into a vigorous and insightful group of team members.” Embracing the lively discourse and other benefits that come from diversity can build an even stronger bond among board members, one that helps them to understand their important role as the architects of the organizations’ ethos (or character).
Embrace Discourse, But Avoid Conflicts
A reputable board of directors energizes the development of a healthy dynamic in the boardroom. Board meetings are more likely to be civil when board members keep in mind commonly held protocols. There is the obvious social decorum in the boardroom which includes arriving on time, coming prepared, and maintaining personal courtesy.
However, some considerations go beyond etiquette. Failing to keep confidential information confidential, for example, and failing to recognize and report conflicts of interest may have consequences beyond the boardroom. Questionable actions of board members individually and the board of directors jointly, undermine the integrity of the board and the organization as a whole.
Controversies may also arise if new board members misunderstand the guiding principles and obligations of organizational governance. Unfortunately, sitting board members may not offer adequate assistance. When responsibilities are not understood and roles are not clearly delineated, leadership conflicts may result and trigger a disconnect between the board of directors and the organization’s Chief Executive Officer(CEO), management, staff, or others.
Tip: Clearly define board functions by creating “job descriptions” for officers and members of the board and developing committee charters to delineate tasks assigned to committees. Be sure that the organizations mission or purpose is reflected in the description or charter.
Promote Open Communication
A board of directors with exceptional leadership acts as a conduit, not a dead end, for communication in the organization. Not only is good communication essential for positive relationships among board members, it is also crucial between the board of directors, and the organization’s executive management, staff, and volunteers.
Transparency allows communication to flow, not only from the board of directors to the CEO, staff, and other stakeholders; it also provides a channel for information to travel up an organization’s hierarchy. A road block by the CEO, or a mere miscommunication however, may have a devastating effect on morale and performance. It is short-sighted to think that all this negative energy will not extend to relations with other stakeholders outside the organization.
Tip: To check that communication is flowing, consider adding a Reports section to your board agenda which provides opportunity for staff/community to bring issues directly to the board, for updates and follow-up to previous actions, and prior board decisions to be reviewed and reflected upon.
Realize Accountability and Responsibility
The board of directors has overall responsibility for the ethical conduct within an organization and is charged with general oversight of an organization’s programs. But rarely does its role extend to managing the operations of these programs. An exception is the board’s duty to hire and evaluate the CEO’s performance.
Additionally, the board of directors is accountable for fiduciary oversight of the organization. Legal liability can be lethal to board members who fail to take their responsibilities seriously. If an organization fails, board members may be held personally liable for such things as workers’ unpaid wages, severance, and termination compensation.
Tip: Make sure that the duties and responsibilities of staff and board are clearly delineated and that accountability for those duties and legal compliance is justly and appropriately assigned. To that end, explicitly discuss the lines of accountability with the CEO, finance officer and other management staff.
Governing an organization is demanding. The board of directors must work diligently to ensure an organization is true to its mission, well run, and sustainable. Board members owe their organization careful attention to the formulation of its culture. Placing high standards for how the board functions, what and how it communicates, and when and who it selects to lead are the type of governing decisions that set the right tone for an ethical culture to develop.