Recently, I delivered a workshop on governance. Attendees were board members, CEOs, and healthcare providers. I had the group think through the following:
- Recall a time when, as a board member, you were uncertain about what to do.
- Examine the circumstances surrounding the problem.
- Formulate and ask a question about it.
Four major questions kept coming up in the responses. While this particular conference was aimed at health care organizations, I realized that the questions they were asking were relevant to nearly all boards in all sectors, both private and public. Because of their universality, the four questions and my answers follow here. Reading them might help you see that we’re all in this together.
Question 1: How much information should we expect from our Executive Director or CEO to help us make decisions?
Response: The workshop participants who raised this question didn’t feel they were getting enough information to be certain about the issues they were being asked to decide upon. Also, they cited that raising such concerns brought about some pushback from staff.
This question was also particularly relevant to the CEOs and Executive Directors in my audience (community health centers) because they are required by the Department of Health and Social Services Bureau to meet once a month. That’s a lot. Prepping a board packet and holding a meeting each month is a major burden for management. (If you look at data from far larger and more complex organizations, you see this frequency of meetings is normally not necessary.)
My answer to them: executive directors and CEOs should provide the following information in a common format for each agenda item placed before the group. The common format eases the strain on both the board and management in that the board knows how to find answers in the consistent, easy to understand format and management can use the format as a simple checklist when preparing for meetings. What to include:
- Agenda item
- Relationship to the strategic plan
- Relevant policy
- Alternatives: Alternatives should include pros, cons, and recommendations. The recommendations should be presented in the form of motions, or in such a way that they can be easily converted into motions. It’s wise to include as much data as needed to make the issues clear, but consider having all data formatted in a consistent and common manner, because doing so makes it much easier for members to follow the process.
Question 2: I don’t understand the information presented, especially financial data. How do I come to understand it?
Response: I have found that, at the root of much confusion, there is usually a word or a concept that’s not understood. I have seen this countless times with boards, especially in regards to financial data. To remedy this, take the time for a work session and simply go through a definition of terms, with examples from a simple business that is familiar to everyone. Do this until the terms are understood. Focus on terms such as: assets, liabilities, net, gross, receivables, depreciation and so forth.
Next, be sure that all acronyms are explained.
Finally, if your staff can’t explain material in terms you understand, they might not fully understand it themselves. I suggest to boards that they complete an evaluation at the close of each meeting. Simply ask all attendees, board and staff, how the meeting could have been better. (See our meeting evaluation form for an example.) Use this process to let management know that their presentations are not easily understood, if that’s the case. If management is not willing to try new means to help you get it, then the problem is more fundamental, one of intent, for example. But, honest exchange on this issue should lead everyone to better understanding.
Question 3: What are the legal requirements of boards?
Response: Before I discussed the legal standards that are the responsibility of all boards, I encouraged the workshop participants to look to any grant or funding requirements specific to their organization, State or Federal regulations, or other relevant standards in their industry for specific performance requirements. These are not really legal requirements, but rather regulatory. But they are essential to know and understand nonetheless.
As for legal standards, all governing boards are held to two:
Duty of Care: the requirement for each director to take action based on what a reasonably prudent person would do. Courts have applied simple rules of common sense in interpreting this duty. For example, if you are advised by a known expert (your accountant, your medical director, your architect, for example) and you take action that is contrary to that advice, you have violated the standard. It does not mean that you have to do exactly what the expert recommends, but rather give due consideration to the advice, and most especially, to any warnings contained therein.
Duty of Loyalty: the requirement to always act out of what is in the best interests of the organization rather than in your own personal interests, and to support the decisions of the board, once made, even if you did not support that decision at the time it was made.
Question 4: What are the responsibilities of the executive director or CEO, as opposed to those of the board?
Response: This question is really beyond the scope of a single blog post, but let me offer this rather simplistic summary. The board’s role is to direct. The role of the executive director or CEO is to manage the progress toward that direction. The board sets the purpose, vision, priorities, values and key policies of the organization (including the budget and the amount of authority given the CEO). Then the executive director or CEO manages the completion of the priority projects, the progress toward the vision, manages all staff and attendant issues, and generally operates the organization within the policies set by the board.
I hope these questions and responses have been helpful. What’s been your experience as a board member? When have you been uncertain and what was the circumstance surrounding that uncertainty? We would love to hear from you. Email us with your thoughts.