Have you ever looked out of an airplane window and marveled at how differently everything looks from an aerial view? You noticed which highways were jammed with traffic and which roads were barren. Maybe you detected a few important landmarks. As a member of a board of directors for a nonprofit organization, you have a duty and a responsibility to examine your organization’s landscape to ensure that the current (and future) landscape is healthy and productive.
In recent decades, it’s a whole new world regarding the responsibilities and compensation of corporate board members. New trends are developing as to how various size companies are paying their boards and how they are breaking down the compensation.
Corporate boards and nonprofit boards are different in many ways. Knowing how to get an “in” to the board of your choice might be easier than you think. In either case, learn as much as you can about the existing board, including what talent or expertise they are missing.
Having term limits is a good way to ensure that a board is actively working on recruitment and succession planning on a continual basis. Boards with and without term limits find that board turnover is a little like the changing of the guard. It’s a regular event. It’s inevitable. It can be somewhat entertaining and you hope it’s never embarrassing.
In July of 2016, thirteen of the top corporate CEO’s issued an open letter to the public entitled Commonsense Corporate Governance Principles. Despite the diversity of the group and varied opinions on specific principles of corporate governance, the group felt it was important to find some common ground at the highest level of corporate structure. Commonsense Corporate Governance Principles is intended to be a starting point for constructive dialogue within all levels of corporations to foster the economic growth among shareholders, employees, and the greater economy.
When a board member accepts a new position on a board, it’s rare that the board member knows exactly what to do and how to do it. Active board members will get up to speed quickly on their own, but there’s no question that a strong orientation primes new board members for their duties. Regular training keeps them invested in staying active and fulfilling their roles on the board, in committees, and networking outside of board duties. Orientation and training creates opportunities for new members to get acquainted and begin networking with other board members, management, vendors, and employees.
Only about half of boards use a formal, written self-assessment tool to evaluate their board’s effectiveness. That number is surprisingly low considering that doing self-assessments can be the catalyst that takes a board from stagnant and boring to vibrant and thriving. Non-profit organizations may think they don’t need to perform evaluations on the board or the board members, but non-profit boards have just as much to benefit from a productive board of directors as any other organization.
On the surface, it may seem that board members don’t need any training. After all, they were likely recruited to join the board because of their knowledge and expertise of the organization and its business. Yet, no one can know everything that there is to know about a business or organization, especially in the fast pace of today’s business world. While some board members may be knowledgeable about running board meetings and following parliamentary procedure, it’s almost impossible to remember every facet of the rules, especially when unusual circumstances arise. That means there are no board members, officers, SEO’s or managers that are exempt from needing board training.
When it comes to the culture of an organization, it’s hard to fool the public. A healthy public image is often a sign of good corporate governance. The aftermath of the bankruptcies of major entities such as Enron, WorldCom, and Tyco sent a fury through the financial industry. The shock of their demise sent plenty of financial advisors and consultants back to the board room to evaluate where it all went wrong. Congress moved swiftly to protect shareholders by requiring higher accountability of key board members by passing the Sarbanes-Oxley Act in 2002.
Board candidates that seek a position on the board of directors of non-profit organizations are typically passionate about the organization that they want to serve. It’s important that all board members of non-profit organizations understand the legal responsibilities that they hold relative to their positions on the board. Failing to fulfill their responsibilities according to the law may have dire consequences to the individual, as well as to the organization.