Staff on the Board – Is it a conflict of Interest?

Board-Staff Conflict?
Board-Staff Conflict?

You Asked

Question: The institution where I work has a long-standing tradition of having a number of staff members on the Board of Directors. Recently this has caused some hard feelings within the staff, because someone got a promotion that we thought someone else deserved. Some of us think it happened because staff members who are also on the Board pressured the CEO. What do you think about having staff members on the Board? Is it a conflict of interest or an abuse of power?

Answer: I think you just asked me to open a can of worms. There are many different traditions and practices in various kinds of organizations. Therefore, this is a very complex question. Although it may be a pretty straightforward conflict of interest in your case, I don’t have enough information about your institution to determine that. Here’s some information that may allow you to answer your own question. Read more

Board Confidentiality

Board Confidentiality
Board Confidentiality

You Asked

Question:  We seem to be have some “leaks” of information from our Board.  It’s causing some controversy among our board members.  What is your opinion on the obligation for board members to keep the business of the board confidential?

Answer:  There will always be some discussion, debate and differences of opinion that are a normal and healthy part of the governance process.  In fact, without such discussion I would suggest that the governance process isn’t as mature and effective as it should be.  The answer to your question lies in the relationship between this discussion and the decisions that are reached as a result of it. Read more

Dealing with Anger

Dealing with Anger
Anger

You Asked

Question:  At our Board meeting last week one of the Board members let me have it right in front of the rest of the Board.  Was he ever angry!   I’m the Chairman, but I just didn’t know how to deal with it.  I just let him go on, but it really spoiled the meeting, and the others didn’t know what to do either.  This person gets angry easily, but this is the worst it’s ever been in a meeting.  And it was over nothing.  How should we deal with anger like this?

Answer:  Well, first of all, there’s a lot that you haven’t told me about this particular incident.  Without knowing what was said, what the context was or what this history of this issue is, I’m afraid I can’t give you very specific direction.  The most I can do is give you some basic information about anger, what it is and how to handle it in yourself and others. Read more

Governance is Like Parenthood

Governance Responsibility
Governance Responsibility

Imagine that you are a young child again. School is out for the day. You’ve been home, but now you are outside playing with your friends. You are well aware of your limits and you respect them. They define your freedom. In my case I knew that I was free to play anywhere in the small town we lived in. I also knew that I couldn’t go past the cemetery to the south, across the tracks to the west, beyond Swan Creek in the north and Bell Road to the east. I also knew that I couldn’t stay out after dark, and I couldn’t miss supper.

Ironically, it was those limitations that gave me freedom. It is this simple principle that makes governing more like parenting than managing.

A governing board gives its CEO freedom to pursue the strategic direction that it has defined in the strategic plan. Instead of micro-managing by asking the CEO to come back for specific permission on a host of management decisions, the board simply states the limits of the CEO’s authority. Within his/her circle of authority, defined by those limits, the CEO is free to be excellent and creative in reaching for the strategic goals.

This governance principle has its root in the Old and New Testament. The basic “job description” of every human being has two components: Love God and Love your neighbor. Here God gives us a great deal of freedom to choose how we will fulfill our responsibilities. Instead of requiring us to come back again and again for permission for all of life’s decisions, He gives ten straightforward limitations: the Ten Commandments. They are stated in the negative, and they define our freedom.

The first three Commandments relate to our responsibility to love God. The other seven refer to the limitations placed upon us in loving our neighbor. As long as we stay within the limitations expressed in the Ten Commandments, we are free to pursue our love for God and our love for our neighbor as we wish.

Governing boards will achieve far more if they follow God’s example of delegating authority with limitations that produces freedom to fulfill responsibilities.

It is frequently the case, however, that board members bring their management experience into the board room instead of their experience of parenting or memories of being parented. That is why boards fall naturally into the bad habit of making management decisions instead of setting governing policies that define the strategic objectives and the limitations of the authority they delegate to their CEO.

Many boards begin life as advisory boards. They act as “cheerleaders” and in some cases don’t even make management decisions. This is particularly true when a founder recruits his/her personal friends as a founding board. In these cases, the boards may rubber stamp decisions that the founder has already made. After all, he/she knows more about it anyway.

As boards mature and the organization grows, the board may take on more management responsibility. There comes a point in this stage of an organization’s growth and development where growth cannot progress further. The board simply can’t handle the volume of information or decisions required, given the time they have as volunteers. It is at this point that a board is well advised to make the transition to becoming a governing board.

The board does this by creating policies to define the desired strategic results and by delegating the authority and the responsibility to the CEO to achieve them within the limitations of authority and available resources.

The Relationship Model™ was developed to apply God’s design of relationships to the governance of faith-based non-profit organizations. You may learn more about this model of governance, leadership and management by visiting relationshipmodel.com.

Les Stahlke, President

Board Chair – CEO Relationship

Board Chair CEO Relationship
Board Chair CEO Relationship

Imagine that you are having a quick lunch by yourself in a crowded café.  Seated at a table next to yours are two men in heated debate that is animated to put it mildly.  You can’t avoid being distracted by their conversation, particularly when you hear the words “board chair” in the conversation.  At that point you actually start listening.  One says to the other, “I don’t report to you. I report to the board.”

“Yes,” the other replies, “but you report to the board through the chair.”  “I will continue to report directly to the board,” comes the reply.  They are actually debating the flow of authority from the board to the CEO and the accountability back to the board.  Imagine that.  It doesn’t sound like a happy relationship.

At that point you begin to think of your own situation.  You are the chair of a not-for-profit organisation or NGO, and you begin to wonder, “To whom does the CEO report?”

To solve this debate we must first understand the relationship between the chair and the board.  The chair is the chief servant of the board, not the most powerful member of the board.  The chair’s primary role is to lead the process of governance, not to supervise management.  Stated another way, the chair’s focus is on the board and its decision making process, not on the CEO and her/his leadership and management of the staff.

The delegation of authority and responsibility from the board to the CEO should be expressed in the job description of the CEO.  That job description should be part of the Board Governance Manual.  The specific direction that delegation takes is expressed in the Strategic Plan, which is also part of the Governance Manual.  It is also possible that authority from the board to the CEO may be contained in a specific motion passed by the board, although this should not normally be necessary.   In other words the authority of the board flows to the CEO in the form of written statements, not spoken directives from the chair or any other individual or committee.

All authority has limitations associated with it.  The authority that the board delegates to the CEO is no exception.  Words like “limits”, “boundaries”, “constraints”, “parameters” are used to describe these limitations to authority.   In the Relationship Model these limitations are stated in the negative, like the Ten Commandments, and serve to define the Circle of Freedom that the board gives to the CEO to fulfill his/her responsibility.

Accountability flows directly back to the board, not to the chair, not through the chair.  The accountability process should also be defined in the Board Governance Manual.  The process includes the same two components that are contained in the delegation of authority and responsibility.  First, there should be a process of annual review of the strategic results of the organization and the tactical goals of the CEO in his/her annual performance review.  Second, the Governance Manual should define the times and details of monitoring the policies that limit the authority of the CEO to ensure that the CEO stays within her/his Circle of Freedom.

When these processes are in place and practiced, there is no need for supervision or direction, authorizing or monitoring of the CEO by the Chair.

The chair and the CEO are peers.  One focuses on the governance process, the other focuses on the management process.  Each has a specific role within the organization.  Authority and responsibility do not flow from one to the other.  Nor does accountability flow from one to the other.

The Relationship Model, summarized (here), is designed to define all of the direct working relationships between the stakeholders and the board, the internal board relationships and the relationship between the board and the CEO.  Direct working relationships are defined as relationships where authority and responsibility flow from one to the other and where accountability is mutual, flowing in both directions.  The relationship between the chair and the CEO is an indirect working relationship.  It is a very important one, but one that will work smoothly only when it is defined carefully and understood in the same way by the board, the chair and the CEO.

Any comments?  Let me know what questions this raises in your mind as you think of how to apply these principles in your organization.

An Organization is Like a Tree

Looking up Tree

Imagine that a friend of yours described his experience of working in a Christian organization this way:

“Ten years ago I was at the bottom of the organization, but I was determined to climb the ladder until I reached the highest position I could.  I never expected that I would be the top dog in just ten years.  Imagine that, me on the top rung.  Now I have a dozen people working directly under me, and I have authority over a budget of $20 million.  Now I’m in a position to make changes from the top down to the lowest employee.”

This organization is NOT like a tree.  Take a closer look at the language that we hear so frequently in Christian organizations.

“Ten years ago I was at the bottom of the organization, but I was determined to climb the ladder until I reached the highest position I could.  I never expected that I would be the top dog in just ten years.  Imagine that, me on the top rung.  Now I have a dozen people working directly under me, and I have authority over a budget of $20 million.  Now I’m in a position to make changes from the top down to the lowest employee.”

Contrast that with the teaching of Jesus to His disciples, the soon-to-be leaders of the Christian Church.  “You know that the rulers of the Gentiles lord it over them and their high officials exercise authority over them.  Not so with you.  Instead, whoever wants to be the great among you must be your servant.”  Matthew 20:25-26 NIV

Imagine that an organization is like a tree.  The more the authority, the closer to the base you will find it.  The root structure that supports the entire tree is the membership along with the donors who supply the nutrients, but who are seldom seen.  Together they are the final source of authority and resources.

Above ground is the trunk that bears the weight of the entire tree, the Board of Directors.  All the nutrients pass through the strong trunk on their way upward to where the fruit grows.  Connected to the trunk and looking like part of it, is the Chief Executive Officer, the only employee employed directly by the Board.

Then comes the Senior Management Team, the cluster where the trunk branches out into the departments of the organization.

Above them are the branches that in the case of organizations represent different branches of the operation.

The leaves reaching the highest part of the tree, supported and supplied by all that is below them, represent the staff.  Each leaf is able to photosynthesize light, just like the staff member who adds value to the organization though his/her own set of competencies.

Somewhere long ago we adopted the “top-down” vocabulary of the world.  We have copied the Pharisees, instead of Jesus, in the way we think and speak of our organizations.

We will understand far better the way that God has designed the relationships in our organizations, when we make a conscious effort to make the paradigm shift from “top-down” thinking to “bottom-up” thinking.  Your organization is like a tree.  Imagine that.  What was it that your friend said?

“Ten years ago I was at the leading edge of the organization, but I was determined to reach my full potential until I had the heaviest load I could possibly carry.  I never expected that I would have this much responsibility in ten years.  Imagine that.  I feel like I’m part of the trunk of a tree.  Now I have a dozen people looking directly to me for support, and together we share the responsibility of managing a budget of $20 million.  Now I’m in a position to serve everyone in the entire organization from the base of the tree to the highest employee.”

I think this is also called “servant leadership.”

Les Stahlke