CR Board

I have had several questions lately about the responsibilities of Boards of Directors and whether there are ways to assess and improve Board effectiveness. In fact, Board effectiveness is one of the most important best practices an organization can undertake; just because a group of people have come together with a common purpose, often with community involvement and altruism in their minds and hearts, does not mean a Board of Directors will automatically run smoothly. In fact, any time you bring human beings together as a team means there will be sticky issues and competing interests and attitudes. Just like the teams working in an organization, Boards of Directors must be nurtured if they are to run smoothly.

What is a Board of Directors?

Boards of Directors have many responsibilities and obligations. They are not typically part of an organization’s daily management, but they are the highest management tier of an organization and oversee all activities from a governance standpoint. The chief purpose of a Board is to ensure that activities are conducted in the best interests of stakeholders, including the public and clients in not-for-profit organizations.

What does a Board do?

Although Boards can vary widely in their approach and policies around their responsibilities, they typically have 6 main functions, briefly:

1) Finance/Resource Management: Board responsibilities typically include overseeing the organization’s financial situation including the budget, in order to ensure stability and viability. This can also include ensuring that the organization has adequate resources and ensuring effective resource management. And in not-for-profit organizations it can even mean actually engaging in fundraising and developing fundraising principles and strategies.

2) Organizational Culture and Effectiveness: A Board must ensure the organization is performing as effectively as it can. A Board must also keep a finger on the culture of the organization and ensure that it is kept in line with organizational values and ideals. This includes, but is even more broad than HR, succession planning, and talent management. It is tied to achieving the organization’s mission and upholding its core values. Furthermore, Boards of Directors are typically governance-based as opposed to operations-based. This means that while they keep a finger on the culture of the organization, they do not ‘interfere’ in organizational operations unless it is specifically their mandate to do so (or their Executive Director/ CEO / President is unfortunately not doing this effectively).

3) Management of the CEO: Boards of Directors typically have an HR responsibility only in terms of the top executive, not other employees. This includes recruiting, hiring, and managing the CEO’s performance. The Board of Directors employs the CEO and is responsible for his or her performance and development. The relationship between the Board and CEO is an important one, and the CEO is typically an ex officio member of the Board with slightly different voting privileges.

4) Strategic Planning and Growth: A Board of Directors must participate in, oversee, and to some extent drive strategic organizational development, whether this means growth or something else.

5) Stewardship and Advocacy: The Board is responsible for advocating for the organization and communicating with the public. This responsibility may be shared with others in the organization such as the CEO, but it is a major Board function.

6) Board Effectiveness: Often forgotten in descriptions of Board responsibilities, Boards of Directors must engage in self-management, actively building and maintaining an effective Board of Directors, something that may be implicit in its policies, but can be taken for granted. This means developing and maintaining a Board profile that is suitable to the organization, ensuring that Board members are meeting their obligations effectively, and conducting an annual Board performance evaluation, to name but a few details of this responsibility.