The Changing Roleof the Board

University of Sioux FallsMarch 5, 2013

Introduction

• Governance Matters• There is more to good governance than

compliance• Boards are often underperforming assets

of the organization• A frank and open relationship sets the

stage for leadership excellence• Boards must be “intentional”• Boards must “engage”

Types of Boards in Healthcare

• Nonprofit – 501 c 3

• Profit – Corporation

• Municipal/County Ownership

• District Ownership

• System Owned (Advisory)

• System Leased (Advisory)

• System Affiliated (Governance Controlled)

Fiduciary Responsibility• Duty of Care

– Care that a prudent person would exercise– In a like position and similar circumstances

• Duty of Loyalty– The standard of faithfulness

– Undivided allegiance to the organization– Not use information gained for personal gain

• Duty of Obedience– Faithful to mission

– Never act in conflict with the goals of the organization

The Way it Used to Be – and Sometimes Still Is

• Boards not challenged to know or be engaged in meeting the compliance requirements for the corporation

• More rich revenue-over-expense margin• A deference for the ‘ceremonial’ work of the

leadership role• Micromanagement – Boards ‘got involved’ in the

wrong way• Long time service allowed for settled roles of

leadership

A Glimpse at an Exceptional Board

• Commitment to mission and the organization as evidenced by:

– 100% meeting participation– Prepared members sitting at the table– Active committee participation– Strategic thinking and visioning– Enthusiastic ambassadors in the community

Principle #1Constructive Partnership

• A partnership – not an subordinate relationship– Respect distinct roles and responsibilities– Demonstrate trust, candor, frequent communication and support– Encourage questions, offer answers, share bad and good news

openly and EARLY

• An acknowledgement that the role of the Executive and the board are interdependent– Evaluate annually– Encourage skill-building– Set fair and competitive compensation– Continually evaluate the organization’s needs – looking forward– When in the best interests of the organization, undertake the

difficult task of replacement

Role of the Board

Role of the Executive

A Constructive Partnership• A line custom to the organization• Ebb and flow• Shared responsibility for mission• Continuous reframing

Principle #2Mission-Driven

• Shape and uphold the mission– Put into words why the organization exits and what it

hopes to accomplish• Articulate a compelling vision

– Along with the Executive, develop a compelling description of where the organization is headed

• Assure congruence between decisions and core values– Use the mission, vision, and values as a guide and

litmus test for all board decisions– Assure that the organization is meeting community

needs– Help translate the organizational values into action

Principle #3Strategic Thinking

• Allocate time to what matters most– Frame and assess strategic planning– Articulate and monitor progress against financial and

programmatic goals– Use plans to assess Executive performance, drive

meeting agendas and shape board recruitment• Hone the organization’s direction through

continuous engagement– Make strategic priorities a part of regular, ongoing

board work– Ask far-ranging questions to get at important new

strategic direction

Principle #4Culture of Inquiry

• Cultivate a culture of inquiry, mutual respect, and constructive debate– Be an informed board– Seek multiple sources of information – by requiring

the executive to present a variety of perspectives– Make sure there is meaningful viewpoints to drive

robust discussions and healthy debate in the boardroom

• Get to the best decision through meaningful assessment and shared decision-making– Give thoughtful deliberation– Challenge assumptions– Be attentive to group dynamics

Principle #5Independent-Mindedness

• Place the interests of the organization above ALL ELSE– Resist decision-making unduly influenced by loyalty to

the Executive or the seniority, position, or reputation of a fellow board member, staff member, or donor

– Seek to uncover all facets of an issue and distill perspectives into an autonomous and informed decision

– Rigorously adhere to conflict-of-interest policies with clear guidelines and annual review

Principle # 6Ethos of Transparency

• Ensure that donors, stakeholders, and interested members of the public have access to appropriate and accurate information regarding finances, operations, and results– Post key documents (990 and Annual Report)– Assure internal transparency with all board members

having equal access to relevant materials

– Develop and maintain policies that allow staff to feel comfortable bringing appropriate matters to the board’s attention

Principle #7Compliance with Integrity

• Promote strong ethical values– Build a system of financial oversight– Assure external review– Assure adequate insurance and contingency

protection– Articulate specific ethical standards

• Assure disciplined compliance – Establish appropriate mechanisms for active oversight– Review key documents– Stay abreast of new rules and laws

Principle # 8Sustaining Resources

• Link bold visions and ambitious plans to financial support, expertise, and networks of influence– Ask strategic “fit” questions before approving plans

that can be financed with existing or attainable revenue

– Strive for a portfolio of diversified and sustainable revenue

– Help shape the fund development strategy

– Open doors, attend events, generate contributions, and make a personal meaningful contribution

Principle #9Results-Oriented

• Measure the organization’s progress toward mission– Set clear metrics for measuring progress– Integrate benchmarks against external measures– Monitor mission return on investment

• Evaluate performance of major programs and services– Review programmatic and financial reports by

program– Analyze qualitative and quantitative data– Look for comparisons against plans, past

performance, and peer organizations

Principle #10Intentional Board Practices

• Be intentional about making change in the board to meet organizational duties and responsibilities– Take ownership of your own operations– Define whole-board and board member

expectations– Set the board’s structure and change it as

needed to conduct business efficiently– Make meetings matter – Set standards and expect full readiness and

participation

Principle # 11Continuous Learning

• Assess yourself and measure performance– Regularly check and upgrade governance practices to

keep pace with the organization– Gather feedback on performance through evaluation– Use assessment to build structures and practices to

better meet the governance needs• Build training to meet gaps

– Get orientation to programs and services at each meeting

– Imbed learning opportunities in regular board meetings

– Go outside for training resources and networking with members of other boards

Principle #12Revitalization

• Exercise planned turnover– Honor the importance of fresh perspectives– Acknowledge the risk of “closed groups”– Respect the value of succession planning

• Thoughtfully recruit– Seek a diverse mix of expertise and experience– Seek a governance model that allows for ongoing

board profile development and recruitment– Select for talent – build leadership skills – offer an

opportunity for leadership to strengthen the board as a whole

An Example

Orchestral Governance DesignGrand Itasca Clinic and Hospital

Executive CommitteeBoard Chair

•Vice Chair•Treasurer•Secretary

Governance

Quality

Finance

Board of Directors

Key Responsibilities•Board Roles and Responsibilities•Board Recruitment and Nominations•Succession Planning•Board Policy and Procedure•Board Orientation•Board Education•Bylaws Revision•Board Member Recognition•Board Member Standards of Behavior

Key Responsibilities•Investment Strategy•Financial Records Management•Budget Development•Asset Management•Fiscal Oversight•Audit•IRS 990 Compliance•State and Federal Reporting•Board Education on Finance Issues

Key Responsibilities•Board Leadership•Liaison to the CEO•Leadership of Strategic Planning•Recruitment, Selection, and Evaluation of the CEO•Crisis Management•Grievance Process

Key Responsibilities•Clinical Quality•Patient Satisfaction•Compliance in all Medical Practices

Margaret’s Top Five Tips

• Make rules when you are happy – so you can implement them when you are not.

• Invest in a strong board – seek a board culture that is self-sustained and self-disciplined

• Keep it skinny – Less is more• Demand at least annual assessment –

Accountability coupled with clear direction• Bring your leadership team along – Access is

comfort

Thank You!

818 S. Hawthorne Avenue

Sioux Falls, South Dakota 57104-4537

(605) 336-0244 or (888) 4-SUMPTION

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