board leadership seminar: the corporation & its board september 15, 2015

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