[Previously posted on dickerson-bakker.com...]
There are many things a board can do to make a bad situation worse.
Here is one example: a few years ago, I was hired to work with a client who was chronically stuck in crisis-reactive mode. The agency’s CEO had been fired by the executive committee (prior to my arrival). Over half the board members who were not on the executive committee quit when they heard the CEO had been fired. The departing board members were angry they were not consulted on such an important decision.
So, not only was the agency limping along without a CEO, it was also down a handful of valuable board members.
Now, I am not a fan of executive committees (that’s another blog). However, there is a bigger issue at play here. In the name of “efficiency,” the board abdicated a critical responsibility (hiring/firing the CEO) to another entity. This “efficient” structure worked well, until it didn’t. Unfortunately, it was a really important issue where the system failed.
What Your Board Should NOT Delegate
I recommend placing an article in your bylaws on what authority and responsibilities the board of directors may NOT delegate to other parties, such as committees or staff. Certain decisions have too much importance to delegate. Here are 7 important things your Board should NOT delegate:
- Hiring/firing/evaluating/compensating the executive director
- Purchase/sale/lease/acceptance of real property
- Final decisions/policies on the investment of key assets
- Final handling of legal matters such as lawsuits
- Changes to the mission or vision statements of the organization
- Changes to the bylaws
- Final approval of the budget
These are thorny issues that the board should have authority over. For example, you don’t want your CEO accepting the donation of a property, only to discover it was once home to an auto repair shop that for decades dumped its oil and antifreeze in the backyard.
The “generous” donation accepted by your eager CEO just cost your agency thousands of dollars in environmental cleanup. Having a statement in the bylaws that declares that only the board can accept property on behalf of the agency will make the CEO’s acceptance of that superfund property null and void.
Boards should discuss what limitations they want to put in place for their agency’s protection. Once your board reaches a consensus, be sure to secure those decisions in your bylaws. There is nothing wrong with boards delegating research, planning, and other processes to committees or staff. To govern intentionally, however, every board needs to decide for itself what to control and what to delegate.
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