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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:

creating an optimum balance of good over harm;

protecting and respecting moral rights; and

acting with virtue to the best of the human condition.

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

Board confidentiality is another important issue that warrants discussion. The trusty Oxford Canadian Dictionary defines fiduciary as “based in trust.” When you are a director, it is your duty is to act in a most trustworthy fashion and hold board knowledge in trust and confidence until instructed to release it to the public, your constituents, or even someone as trusted (to you) as your spouse.

This can be very difficult. When you are on a board of directors, many people will come to you asking for information about what has been discussed at a meeting. You may have known them a long time. You may feel you can trust them. They will be very persuasive, and promise not to share the information with anyone else. But remember: now that you are a director, your first allegiance is to the board. Don’t let yourself feel pressured into acting improperly or without careful thought.

To help you to prepare for such enquiries, before you leave a board meeting be sure that you clearly understand what information can be released if asked, when it can be released, and to whom.

Using Tip Sheets

On one board I belonged to, the issues were so complex that the organization prepared “tip sheets” for its directors. These useful documents provided directors with clear and correct information — accessible at their fingertips — so that answers given by the various board members to the inevitable questions were all accurate and along the same wavelength. This was extremely helpful, and a practice I would recommend to any board dealing with complex or sensitive issues.

Maureen Cavan, executive director of Access Copyright, leads the progressive organization I am speaking of, and has been responsible for introducing many positive changes that have helped to streamline the collective, resulting in a more effective board for her to work with.

“Clear speaking notes defining facts and reasoning for decisions taken by the board of directors are an invaluable tool for board members in maintaining open communications with the community they represent,” says Cavan. “They ensure that all members of the community receive the same clear messages and they provide board members with the confidence to clearly present positions and answer questions.”

Some people may feel that providing directors with speaking notes is a form of filtering or influencing what is being said. In some cases this may be true, but when you are dealing with complex issues that can be easily misunderstood, it is my opinion that providing directors with clear, comprehensive information only makes the directors, and ultimately the organization, stronger and more effective.

As directors, we generally take quickly written brief notes at meetings, but are they written in the same language (with the same tone and accuracy) as what might be written by informed staff following a long and intense meeting? Not likely.

Having expertly prepared notes or an executive summary distributed to all directors at, or immediately following, a meeting will eliminate uncertainty and the dissemination of inaccurate or inappropriate information. It will still enable you to put your own personal spin on the information — as long as you don’t distort the facts.

The digital world has made it so easy for any organization to quickly forward an electronic document to all directors following a meeting. If this is done, there can be no excuse for directors to complain about insufficient time or information necessary to provide feedback or a report to their constituents following the meeting, as most of the work has already in effect been done for them!

What Are Your Rights?

We’ve now learned about the responsibilities of board members. But what are your rights as a director?

A director has the right to full and proper training in addition to a copy of the board manual containing constitution and bylaws, etc. This topic is covered in more detail in chapter 4.

A director has the right to full disclosure. Before you are asked to vote on an issue, make sure you have all the facts so that you can make an informed and enlightened decision. Occasionally, staff may be busy with other tasks or not see the importance of your request. Make it clear that you need the information (and by when), but be polite and considerate in your actions.

A director has the right to a safe and secure environment in which to conduct meetings. If you feel the location of board meetings or board accommodations is unsafe or undesirable, let the rest of the board and the key staff members know how you feel. Ask that an appropriate alternative location be considered. Be reasonable in your request and in considering the alternatives.

A director has the right to insist that improvements be made to the premises to correct unsafe conditions. If you notice that a railing is broken or missing, insist that it be fixed. If you notice that a slip and fall situation repeatedly exists at the premises of the association, insist that it be remedied, as directors may be held personally liable in the case of a lawsuit.

A director has the right to insist the organization engage outside help if the board or staff does not possess the time or expertise to address a certain issue or task. The use of external experts is quite common. Boards often hire lawyers, accountants, bookkeepers, tax professionals, and other experts to help them more efficiently and effectively deal with a situation.

A director has the right to insist that the organization carry sufficient general liability and directors and officer insurance to ensure that the organization and its directors are indemnified against risk. (See more on this topic in chapter 5.)