Transcript Healthy Board Governance

For
NAPSEC Organizations and Schools
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Regulatory agencies are becoming more
focused of the governance of non profits
Regulatory agencies have raised their
expectations for the fiduciary conduct of
board members
The press and constituents are voicing
concerns
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There is no Committee on Trustees or
Nominating Committee
There is a Nominating Committee but it is
inactive so current members invite their
friends to join
Risk of the board becoming “an old boys”
club
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Too rapid turnover of the board chair and
board members creates a loss of
institutional memory and often board
instability
Too little turnover creates complacency and
the perception of insufficient board
oversight
Board members are involved in daily
operations
Board members cross boundaries
Chairs who stay on TOO long
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Boards that are between 9 to 18 members
Boards that have enough outsiders
Boards with stability
Boards with an appropriate relationship with a
founder or long-term leader
Boards that manage change well
Boards that have at least one CEO of a publicly held
company
Most important: wise and well-trained board
members
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Three to five is too small to allow for
discussion, a committee structure and
regular meetings
A board that is too small tends to become
too “cozy” and lax
Over 20 can become too unwieldy and the
“real” power can become concentrated
within a small subset of the board
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Reflects the expertise and perspectives
needed to achieve the mission
Several members with clout, power, influence
and wisdom
Has members who attend regularly and
participate fully
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Understand that their focus is primarily
mission definition, clarity and support
Select, support, nurture and reward the
Executive Director until a decision is made to
terminate him/her.
Are knowledgeable about fiscal issues and
provide oversight but do not micromanage
operations, personnel or programs
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Have deep board governance experience
and knowledge of the principles of good
practice
Undergo new board member orientation
and regular board governance training and
know it is necessary annually
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Review, maintain and update by-laws
consistent with the mission
Actively involve all members of the Board in
subcommittees
Discipline board members who are “out of
line”
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Provide for the annual written evaluation of
the Executive Director by the full Board
Provide for annual evaluation of the board
chair and of individual board members
Limit terms of office within reason
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Have members who understand that when
they learn of an issue, they have the
obligation to bring it to the Board Chair or
Executive Director and must not deal with the
situation individually
Understand that each member must be
knowledgeable about the budget and cannot
rely just on the finance committee
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Respect board decisions and board
confidentiality
Guard against conflicts of interest, whether
business or personal related
Understand that authority is invested in the
board as a whole
Understand how to engage in thematic
“generative” discussions
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Separate the interests of the organization
from the specific needs of a particular person
or constituency
Have the obligation to support the
organization and its Executive Director and
demonstrate that in the community
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Choose board members to ensure balance,
wisdom and a wide array of skills sets
including strategic vision
Evaluate the executive director annually
Conduct a professional review of the
executive director’s contract
Manage effectively: manner, pace and
content of board meetings
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Have a Committee on Trustees (Governance
or Nominating) that cultivates, screens,
invites, trains, evaluates and if necessary,
disciplines and removes board members
Board members should have rolling threeyear terms with no limits BUT this assumes
annual evaluation of board members
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Conduct regular meetings (about 8-9
annually)
Conduct regular subcommittee meetings:
Finance, Governance/nominating,
Advancement, Strategic planning, CEO
support
Require each board member to sign a
conflict of interest statement
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These leaders want to leave a legacy
They need appropriate board oversight but
may be wary of it as well
Board members (especially parent or past
parents) feel indebted and loyal to these
leaders
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The most dangerous transition is a new
executive director
The second is a new board chair
The third is the loss of key trustees
Boards who mismanage these changes put
the institution at risk
Search and succession planning along with
healthy transitions define a wise board
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Evaluate the executive director’s
performance annually and document the
result to a file
Form a compensation committee
Review the contract every three year’s
preferably with the assistance of an
objective professional to ensure that the
total compensation package will pass safe
harbor’s muster
Balance transparency with confidentiality
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The head support committee of the board
should oversee director
compensation/contract renewal and
evaluation
There should be a goal setting process
discussed with the director and this
committee
The board as a whole should approve these
goals, limited in number to 5 or less
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Every board member should undertake an
end of year evaluation of the director
against the agreed upon goals.
The director should write a self evaluation
against goals.
The head support committee should, with
the director, discuss the summation of
these evaluations.
The chair should write up a final summary
for the file and report on this to the June
session of the board.
Strategic boards minimize the internal and
external risks to the institution and provide
for smooth leadership transitions
essential to the health of the organization
Strategic boards avoid constant threats and
crises and focus instead on long term
vision/mission issues and on ensuring a
financially sustainable model of operations
Global Issues - Local Solutions
John C. Littleford
1-800-69-TEACH
[email protected]
www.JLittleford.com
Confidential: Intellectual Property
of Littleford & Associates