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Board Governance

for the rest of us non-lawyers
Rick Sutcliffe

Disclaimer: The contents of these pages are offered as general principles, but not as legal opinions. Statutory law and entity policy on board structure, lines of authority and board discipline vary widely. Some of the comments here may not be applicable, or may be wrong in some situations, depending on the regulatory and organizational environment. When in doubt consult competent legal counsel. See the further disclaimer at the end.

Definitions and basic concepts for board governance are on the starting page.

Some scenarios illustrating fiduciary misconduct are collected on a separate page.


Directors Direct and Managers Manage

A board delegates operational management to the COO, and holds that COO accountable for the meeting of goals. It does not subsequently interfere with said operational management.

The only exceptions to this are the other COs that the board itself hires and supervises (usually none, but in some organizations a board may reserve this to themselves in specific cases.)

One common way of sharpening this distinction is to make the board chair the CEO and the president the COO. The titles then send a message that the board, once it has delegated operations, never by-passes its COO by managing staff directly.

In positive terms, this means:

  • directors stick to directly managing:
    • their own affairs as a collective Board
    • the fundamental documents (mission, vision, values, goals)
    • the employee(s) they themselves hire (usually only the COO)
    • the receipt of reporting on budget and goal fulfillment
    • auditing and other legal requirements
  • once they appoint a COO, they publicly support that person in the role.
  • they confine any questions, concerns, complaints, or criticism to board meetings.
  • they raise any personell or other issues at board meetings and let the COO deal with them and report on the disposition.
  • the Board applies discipline only to itself (including fiduciaries who have resigned) and the managers it directly hires; they in turn deal with all performance and disciplinary matters for other staff.

In negative terms, this means

  • the board does not interfere directly in personell decisions beyond the level of the managers it hires or appoints.
  • neither the board nor individual board members convene meetings of stakeholders except as required by the governing documents or approved by the board as a whole.
  • individual board members never raise staff issues outside a board meeting.

Note that bypassing a manager to exert what was supposed to have been delegated authority is an expression of non-confidence, constitutes changing that person's job description, and could be interpreted by the courts as "constructive dismissal" in a suit for damages.

For an individual board member to assume the authority to deal directly with a perceived personell issue or to call a stakeholders' meeting without being specifically required by the board to do so is a breach of trust and gross misconduct. Moreover, a staff member so treated has an almost automatic right to redress on a complaint of criminal harassment.

Go back to the starting page.

Last updated 2013 02 06
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