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What To Do When Board Members Step Down Unexpectedly

What to Do When Board Members Step Down Unexpectedly

Under the best of circumstances, board members will have a little bit of a heads-up when one of their fellow board members is considering resigning from the board. On occasion, though, a board member steps down from the board unexpectedly and with little notice, leaving the remaining board members at a loss for what to do next. As with anything, unexpected news is much easier to deal with when you have a plan ahead of time.

Regardless of the circumstances that brought about the resignation, how the board responds to the resignation and to the board member who steps down is a reflection of the board’s overall health and professionalism. An organization’s stakeholders and the public usually receive the news positively when the board relays it in a positive manner.

Boards should have formal policies and procedures in place for handling board member resignations, including how resignation relates to their fiduciary duties, when a resignation becomes effective, and knowing any laws that pertain to board member resignation. In addition, boards should be prepared to take steps immediately following a resignation and to make plans for moving forward.

Can Board Members Resign Whenever They Want To?

Board members usually step down at the end of their designated terms. However, any number of situations may cause a board member to resign before their term is over.

A resignation may come about because of personal or professional reasons. Board members also sometimes resign because their opinions are too often contrary to those of the rest of the board, rendering their participation ineffective. Board members also resign under even more difficult situations, such as an organization that’s having financial difficulty. Board directors may be particularly concerned about an organization that can’t afford to pay the premium for the Directors and Officers’ insurance policy, which offers them protection for the decisions they make.

In the vast majority of cases, board members have the right to resign whenever they want to. One rare, but notable, exception for board resignations is when resigning would cause a breach of the board member’s fiduciary duties. Board members agree to place the interests of the organization above their own, which means they agree to stay on and resolve problems. In a few cases, courts have ruled that board members had breached their fiduciary duties by resigning rather than staying on and working to rectify problems.

Planning for Board Member Resignation Before It Happens

If a board member stepped down tomorrow, would your board know exactly what to do? If not, creating policies for board member resignation should be added to the next meeting’s agenda.  Boards need to make sure they have policies for removing past board members from communication lists. They also need to make arrangements for the return of board documents and materials. They should also consider establishing the following policies:

  • Change the resigning member’s passwords and restrict access to confidential board materials.
  • Change email addresses that were exclusive to the resigning board member.
  • Add a redirect to the resigning member’s new email address.
  • Update communication and email lists.
  • Change letterhead or websites to reflect correct information.
  • Make arrangements to retrieve board handbooks, official books and records, documents or other sensitive board information.

Some boards may also want to send out a press release announcing the member’s resignation. It’s appropriate to use the same press release to announce the appointment of a new board member, along with statements about how the new member intends to enhance the board.

Responding to the Resigning Board Member 

It’s not enough for a board member to resign orally. If the resigning member doesn’t offer a written resignation, the board president or other board member should request one and note the effective date of the resignation. The board will then need to formally accept the resignation at a board meeting and make sure that the secretary includes it in the minutes.

Remaining board members should respond to the outgoing member with tact and decorum and wish them well.

Can a Board Member Rescind Their Resignation?

It’s possible for a board member to rescind a resignation if they’ve only made the resignation orally. For example, if a board member made an oral resignation during a heated moment or debate, and then reconsidered the following day, the board might agree to rescind the resignation.

In all cases, board members must follow state and common laws. Once the resignation is official, the board usually accepts it formally at a board meeting. The board can’t rescind an official resignation without approval from the board. The board should hold off on nominating a replacement board member until the board accepts the resignation.

Assessing the Reasons for the Resignation 

Board directors often spend enough time with each other to develop friendships or other special relationships with each other. The circumstances around some resignations can make it difficult for the board to move forward without first resolving the issues that led to the resignation.

Whether the resigning member moved, didn’t have time for board duties, had a problem with someone or some issue on the board, or just didn’t feel like they had a purpose on the board, it’s best to clear the air and discuss it among the remaining board members.

Losing a Board Member Often Yields an Information Gain

In discussing the loss of a board member, the revised board should review how the change may affect them individually and collectively.

The loss of a board member may change the balance that makes a quorum. The board will need to review their bylaws for the number of directors the board should have and make a decision about whether they want or need to replace the outgoing board member. They’ll also need to weigh the decision about the number of board members as it pertains to regularly meeting the requirements for a quorum.

Having one less member may also affect board dynamics and morale. This is a good juncture to relate the reasons for the board member’s departure to what the board can learn from the event.

A sudden and unexpected board member resignation may signal the need to do a more comprehensive job of vetting candidates or provide them with a better orientation. A sudden departure by a board member may also highlight a significant problem with a board member, board chair or manager. The loss of a board member may also alert board members that they need to work harder to maintain financial sustainability.

The loss of a board member may point out the need for having a governing or nominating committee that will be responsible for recruiting and interviewing board member candidates so that there is always a pool of fresh talent available from which to choose.

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