By Bill Dann, BoardGrowth Founder

Number of words: 990

Time to read: Three minutes.

Recently, I delivered workshops on governance at the Northwest Regional Primary Care Association, an association of federally-funded community health centers in the Northwest United States. Attendees were board members, CEOs, and providers.

While this particular conference was aimed at health care organizations, the questions apply to all kinds of boards, whether private or public. At the first session, I asked all attendees to do the following:

1. Recall a time when, as board members, they were uncertain about what to do.
2. Examine the circumstances surrounding the problem.
3. Formulate and ask a question about it.

Four major questions kept coming up in the responses. Those questions and their answers follow. I thought reading them might help you see that we’re all in this together.

Question 1:
How much information can we expect from our Executive Director or CEO to help us make decisions?

Response:
In my opinion executive directors and CEOs should provide the following kinds of information in a common format for each agenda item placed before the group:

• Agenda item
• Background
• Relationship to 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.

My thought is that the questioners didn’t feel they were getting enough information to be certain about issues. Also, that raising such issues has brought about some pushback from staff.

This question is particularly relevant to 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.)

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. 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:
First, look to any grant or funding requirements of your organization, State or Federal regulations, or other relevant standards in your industry for specific performance requirements. These are not really legal requirements, but rather regulatory.

Second, your board is held to the same legal standards as all other boards. There are two of them:

• 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 newsletter, 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 toward that direction. The board sets the purpose, vision, priorities, values and key policies of the organization. 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, including:

• What can be spent in a given year (the budget).
• How much authority is given to the executive director? (This should be prescribed in what we call board administrative policies, an area largely underdeveloped in most organizations).

In Conclusion

I hope these questions and responses have been helpful. Feel free to get in touch with us with follow-up questions you might have.

For more information on these or other questions, visit BoardGrowth™ at www.boardgrowth.com, and submit a question What’s On Your Mind.

- Bill