board leadership seminar: the corporation & its board september 15, 2015
TRANSCRIPT
Board Leadership Seminar:The Corporation & Its Board
September 15, 2015
Not-For-Profit Does Not Mean
The Enterprise is not intended to be profitable
The Enterprise does not need to be well-managed
The Board of Directors has less responsibility
The Board of Directors has fewer duties
Not-For-Profit Does Mean
Directors cannot directly profit from the Enterprise’s profitability
Actions are directed at providing service and value to the Enterprise’s constituencies
All of the enterprise’s energies must be directed toward achieving the mission
BOARD PURPOSE
To make sure the Enterprise is successful for the benefit of the stakeholders/beneficiaries
To represent and be the voice of the stakeholders/beneficiaries
To define and measure success To be visionary and provide long-
term leadership
BOARD AUTHORITY
Board has all authority Must strike a balance between
rubber-stamping and micro-managing
Boards Govern Provide oversight
Managers Manage
DUTIES
Duty of Care
Not-for-Profit Corporation Law §717 “Prudent man” standardGood faithBusiness judgment rule
Duty of Care
Keep informed, inquire, exercise independent judgment
Trust and confidence Ensure that the enterprise adopts,
maintains and achieves standards for operating efficiency and quality of service
Duty of Loyalty
“Punctilio of an honor the most sensitive” Corporate opportunities belong to the
Corporation Do not compete with the Enterprise Do not use Director position to gain
personally - conflict of interest Confidentiality The Board speaks with one voice
Duty to Add Value to the Enterprise and its Stakeholders/Owners
Beyond duty of care Duty to be an active and creative Board
member bringing new and different approaches and suggestions to management
External role Understand the views of the various
stakeholders/beneficiaries Be an ambassador for the goals and
interests of the Enterprise
RESPONSIBILITIES
Board Level Responsibilities
Select and provide oversight of the CEO Provide guidance to and demand
accountability from the CEO and, through him/her, the entire staff
Ensure that there is a Board-adopted strategic and operating plan that is being implemented
Responsibilities
Continually improve Board performance Establish clear goals and set standards
for the Enterprise Measure performance against those
goals and standards Ethics - Demand that all connected
with Enterprise act ethically
Responsibilities
Individual obligations Knowledge of the Enterprise Commitment to success of Enterprise
Time Effort
Board/governance arrangement and continuous improvement will be discussed later in the season
BOARD STRUCTURE
SIZE
As Large as Necessary As Small as Possible
CHAIR OF THE BOARD
A first among equals Primary Responsibility – Make sure
the Board stays on task and accomplishes it purpose
Make sure the Board adheres to standards
CHAIR OF THE BOARD
Manages the Board, not the Enterprise Review and approve meeting agenda Conduct meeting
Primary contact with the CEO CEO – Accountable to the board,
responsible to the chair
COMMITTEES
Committees - Purpose
Assist the Board in carrying out its responsibilities and functions
Increase the Board’s understanding of factors and options
Assist and advise the CEO and staff
Core Committees
Audit Compensation Governance Beyond these -- unique to the
institutions Hospital . . . Quality Committees Health Plans . . . Investment Committees Museums . . . Development Committees
Audit
Duties Oversee reliability and validity of financial
statements Independent Auditor – selected by and
works for the committee Study and identify possible sources of
fiscal jeopardy Establish and oversee control processes
and systems Sarbanes-Oxley requirement
Financial Literacy
Compensation
Duties Approval/oversight of compensation
and benefits Set policy for the enterprise
approve CEO compensation, pay, benefits, etc.
Assure market rates, pay for performance, human resource assets
GovernanceDuties Assess needs of Board and continuous
improvement and board education processes
Determine qualifications for Board membership and recruit new members
Develop and recommend to the full Board corporate governance principles
Oversee Board organization, including committee assignments
Oversee and approve succession planning for the Board
“Non-Core” Committees
Executive Not Mandatory Can act for the Board - - between
meetings Duties otherwise specified
Enterprise specific committees
“Non-Core” Committee Benefits
Assist in the efficient operation of the Board – Especially important for large Boards
Flexibility - Can be formed for a specific purpose and then dissolved
Role of the Board
Values Maintain commitment to Mission Operate as stewards of a social resource Assure that the diversity of stakeholder
interests and perspectives are brought to the table
Maintain productive working relationships
Role of the Board
Values Approvals
Hiring and evaluating the CEO Approving corporate policies Approving the operating/strategic plan
Role of the Board
Values Approvals Monitoring
Monitor compliance with respect to: Mission Corporate policies
Monitor with respect to the: Strategic plan Quantified performance objectives
Including budget
SUMMARY
Board is responsible for the overall direction of the Enterprise
Find good employees, appropriately delegate operational responsibility and monitor performance
Keep informed and exercise independent judgment
Always act in the best interest of the Enterprise