In the course of my twenty seven years of consulting with nonprofit boards of directors throughout the U.S. and Canada. I wrote a monthly series of articles (175 in all) called "BOARD SENSE – Common Sense For Nonprofit Board Members" which I distributed to national associations who, in turn, re-distributed them to their local nonprofit member organizations. I was therefore surprised when quite a large number of these board members would tell me at workshops or conferences that what I was writing for my nonprofit clients applied in large measure to the businesses, large and small, which these board members owned or worked for. In the last four years before I retired I switched distribution of BOARD SENSE to the Internet and when I finally stopped, I had over eight hundred subscribers world wide.
Thinking that many of you who read my blogs might find this information useful in whatever type of board you might be involved with I decided to make a number of them available here. For those of you who have little or no interest in this subject, fear not, as I will not allow this one topic to dominate the subjects I will be writing about – except for the first five or six until I feel I have an audience for this type of material. Here now is the first and, perhaps, the most fundamental article in the series:
THE EIGHT FUNDAMENTAL RESPONSIBILITIES OF BOARDS OF DIRECTORS
This list of board responsibilities was drawn up particularly for my nonprofit clients. However, in reviewing it for this blog I realized that much of it also applies to proprietary and/or publicly held organizations.
1) To establish the purpose and the mission of the organization and to make certain that both are achieved.
Implementing the purpose (why the organization exists) and the mission (what the organization will do to achieve the purpose) is carried out by staff and/or volunteers, but the board of directors must make sure that this happens and that the quality of the service and/or products provided are as high as available resources will permit.
2) To determine mission related goals and major organizational policies.
Mission related goals are a breaking down of the mission statement into specific and manageable units, usually best developed within a strategic planning process.
Policies are precepts or principles designed to influence and control present and future decisions, directions and actions.
The above two fundamental responsibilities are primary. By establishing the purpose, mission, mission related goals, and major organizational policies the board clarifies for staff the board's results expectations. These goals and policies become the criteria by which the board evaluates organizational as well as CEO performance.
3) Being the Ultimate Employer.
The board is the ultimate employer of the staff in that it is responsible to assure correct and equitable personnel policies and practices. The CEO is responsible to develop such policies and carry out such practices within the major organizational policies established by the board. The board should not involve itself in the hiring, supervising, evaluating, compensating or terminating of any staff below the level of the CEO. An exception to these prohibitions probably applies to senior corporate officers in a publicly held or proprietary organization.
4) Appropriately monitoring and evaluating the performance of the CEO.
Board monitoring and evaluation of CEO performance must be based upon the mission, mission related goals and major organizational policies established by the board. For example:
... appropriately reviewing the budget developed by the CEO and
monthly financial statements compared to that budget against
major organizational policies established by the board in
these areas, as well as obtaining an annual outside audit.
... paying close attention to the CEO'S monthly oral and written
reports to the board. Such reports should be based primarily
upon the mission, mission related goals, strategic plan and major
organizational policies established by the board.
... reviewing and/or causing expert review of personnel policies
and practices, compensation programs, and other CEO
activities against appropriate major organizational policies
established by the board of directors.
... keeping one's eyes and ears open as one interacts with the
organization. This is not an invitation to meddle - talking
to subordinate staff about CEO performance - except in the
most serious circumstances - is out of order.
... conducting an annual performance evaluation of the CEO. The
evaluation process should use as the primary criteria the
previously established purpose, mission, mission related goals,
strategic plan and major organizational policies established
by the board of directors.
5) Appointing committees.
Few boards can function without standing and ad hoc committees to which the board can assign issues for study, review, deliberation and, finally, for recommendation of options for board action. Only the governing board can make final and binding decisions - committees normally only recommend.
6) Fund Raising and Financial Oversight.
Raising funds is more likely to apply to nonprofit organizations. An organization's funds may come from several sources. Sales, fees, dues, third party reimbursements, subsidies, grants, income from investments, regular or periodic fund raising, planned giving and so forth. Who has the responsibility to actually procure these funds depends upon the organization and the funding source. However, the board should usually play the lead role in any fund raising from the greater community.
In any event and in most organizations, proprietary or nonprofit, the board must assure that the organization always has sufficient funds coming in to achieve the purpose, mission and mission related goals, and to build a solid financial base for the future.
Once these funds are in hand, the board must then assure that the money is prudently managed and expended.
7) Holding property.
Proper care and protection of whatever the organization owns, leases or has free use of is ultimately the responsibility of the board of directors. Staff, or volunteers or committees will do the actual work involved but the board, once again, must assure that this happens. Again, this more likely applies to nonprofit organizations
8) Leadership development.
With all due respect to capable CEO'S and staff, it is the quality of the board of directors which ultimately determines the quality of the organization and its programs and/or products. Staff can never perform to their fullest potential lacking the support of a dedicated and effective board of directors.
Therefore, the full board should be involved in identifying prospective new board and/or committee members and this should be a year round activity. The incumbent board should know best what the needs of future boards will be and, therefore, should have considerable input to, if not control of, the formal nominating process.
It is a fact that in most cases, the best, most effective boards are those that have been deliberately assembled!
Andrew Swanson is also the author of a recently published novel "The Grantor" and you will find it described in my first blog under that title. The blog provides a description of the novel and instructions as to how to order it. It is also currently listed by Amazon Books, Barnes and Noble, and Borders.
Swanson is also an independent distributor for the Shaklee Corporation who, among some 250 products manufactures a truly remarkable product called Vivix. Vivix provides an extended life span (up to age 125) for its users and overall good health for its users which makes the extension of user life possible. Vivix is described in a previous blog under the title "My Experience With Vivix". This blog also provides more description as well as ordering information .
