We all learn from one another. And showing respect for your fellow board members, acknowledging their differences, and accepting their views as valid will undoubtedly strengthen one’s position for a future date, as people tend to listen more carefully to someone they view as intelligent, well-informed, fair, and courteous. We get back what we give, and if we give others our unbiased attention and consideration, they are more likely to return the courtesy and perhaps change their vote to coincide with our own position on an important future issue.
2 Just What Do They Want from Me?
Now that you’ve left your hat at the door, and you understand the importance of impartiality and commitment to the board as discussed in chapter 1, you need to understand the principles behind board governance, and where you, as a director, fit into the scheme of things. What will your responsibilities (also referred to as “due diligence”) be as a director on this board? What are your rights as a director? And what is fiduciary duty? We will address each of these questions in this chapter.
Essentially, the board is the governing body of an organization and is a continuous corporate entity. Members of the board will come and go, but the board will remain as the ultimate authority of any organization or association. The duties of the board are to manage the organization and oversee senior staff, such as the executive director. Staff are employees and operate under direction from the board.
You, as an individual director, will likely assume specific responsibilities for a portion of the organization’s business and activities. As part of the board, you will help plan and implement the future path for the organization by becoming involved in the strategic planning and goal-setting of the group as a whole. You will also help manage the finances of the organization by developing the annual budget or approving the budget prepared by its staff. This is important stuff!
It is therefore your responsibility to find out as much as possible about the organization — whether you are just considering taking on a directorship or are already on the board.
Ethical Decision-making
Occasionally, while doing research on an organization, you may learn that it supports a cause or position you don’t or can’t ethically stand behind. It would therefore be your duty to decline the board position, as it is unlikely that you could fully support the organization’s goals or projects.
Just what is ethics all about? For a detailed explanation, visit the website of Santa Clara University (California) at www.scu.edu/ethics/practicing/decision/framework.html. Here, you will find an excellent interpretation of all the considerations that apply to making ethical decisions. A basic summary suggests that ethics is not about science, religion, feelings, or simply following the law. Making ethical decisions is about doing the “right thing” with respect to:
Bonnie Zink has extensive experience working in the healthcare/non-profit field in Saskatchewan, and helped put together a board manual for the Saskatchewan Association of Health Organizations (SAHO) in 2003. She is passionate about the issue of ethical decision-making: “As healthcare can be one of the most politicized issues of our day, ethical decision-making is an important component of every board-run organization.”
She adds, “We need to ask ourselves questions such as: Who receives a piece of the very limited resources available? How much ought they be entitled to? Why will organization A be successful over organization B in lobbying for the desired outcome? These are questions that remain central to any board decision with respect to the allocation of funds and other resources.”
Zink says that thinking and acting ethically as individual board members and as an organization will help ensure that each board decision is carefully deliberated and provides the fairest outcome possible. “Most healthcare boards are publicly funded, and decisions that determine where to allocate resources must be carefully thought out and validated in an ethical and transparent manner,” says Zink. “Thus ethics is an integral part of the decision-making process that both new and veteran board members ought to consider.”
For more on ethical decision-making, visit charactercounts.org, where you can sign up for a free e-newsletter from the Josephson Institute, a U.S.-based organization that develops and delivers services and educational materials that aim to increase ethical commitment, competence, and practice in all segments of society. A variety of resources are also available for purchase, including a thirty-three-page booklet written by Michael Josephson called Making Ethical Decisions.
It is tremendously important to fully understand the background and backbone of the organization you will be serving. Conduct your research by reading published articles about the organization. Does it have a media clipping service? If so, get a hold of the archived articles. Or simply perform an Internet search for the organization. This will likely provide you with all you need to know — and more. You can also talk to members of the staff or seasoned directors, and read the organization’s constitution, bylaws, or past minutes of the board. The more you learn about the organization, the more effective you will be as one of its new directors.
If you don’t understand something you have come across in your research, ask for an explanation. If you are thorough in your research, you will set yourself up for success. Engaging in a hurried or uninformed decision will make saying yes the wrong thing to do — both for you and for the organization. It is your obligation and due diligence as a director to be well-informed and engaged in the issues affecting the organization. You can only do this if you immerse yourself in its business, become fully aware of its concerns, and attend meetings regularly.
Most boards are not simply looking for “bums to fill the seats,” to use a popular expression. They are looking for individuals who care enough to educate themselves about the organization and to truly make a difference through their participation on the organization’s driving force.
Understanding Fiduciary Duty
When discussing board governance, due diligence, and responsibilities of the board of directors, you will often hear the phrase “fiduciary duty.” This means that you, as a director, must always act in the best interest of the organization.
We’ve already discussed how important it is for you to fulfill your due diligence by becoming highly knowledgeable about the organization you will be serving. In your fiduciary duty as a director, it is also important for you to act in the utmost of good faith, and be unquestionably honest and completely loyal to the organization.
Sounds a bit like we might be describing the family Fido, but I can assure you, the role of a director is not to be an obedient pet, but rather to be a leading force that will take the organization on to bigger and better things. Just as long as you remember that you are part of a team and must make all decisions in the best interest of the organization as a whole and not simply to make your life easier or to more quickly complete an assigned task.
I’ve sat on a board where a very well-meaning director acted without consultation and put the names of her fellow directors in a publication without getting their consent. It was clear that she meant well and that her intentions were good and honourable; however, it was her fiduciary duty to consult her fellow directors prior to proceeding with the action — even if she thought that her actions were correct and above reproach. Directors are part of a team and should never act unilaterally unless they have been given clear authority to do so.
Board Confidentiality