When I was practicing law, our firm offered our non-profit clients a corporate governance audit program. The program provided a fascinating opportunity to examine the governance dynamics of various non-profit organizations. The elements of the program included: (1) a review of the organization’s bylaws, articles of organizations, board of directors’ meeting minutes, and committee reports; (2) interviews with members of the board of directors and top management; and (3) an audit report of our findings along with recommendations to align the organization with corporate governance best practices. It was during one of our engagements that I had the misfortune of hearing what was the worst thing I have ever heard a board member say in regard to their board service.
Without going into too many details in order to protect the confidentiality of the client, the engagement was a fairly large non-profit organization in the health care field that had requested our audit after concerns had risen pertaining to the board of directors (specifically, the issue of potential conflicts of interest). Our audit progressed in a routine manner and we discovered several areas where the organization could tighten up their governance. As part of the program, myself and another attorney in the office appeared before a regularly scheduled meeting of the organization’s board of directors and presented our findings and recommendations. Not surprisingly, there was some push back from the board — a typical response from a board that had become too entrenched and stagnant. It was during the course of the subsequent discussion that ensued among the board members, that I heard the following from one of the board members: “this report makes me feel like we are the problem when in reality I feel our board is the best part of the organization.”
I stayed quiet in response to the statement and then relayed my concerns to the CEO after the meeting. The statement literally stunned me and in my opinion was the best example of the governance problems that had developed over time at the organization. It had reached the point that the board members, or at least some of them, considered themselves to be bigger than the non-profit itself – despite the fact that this was a fantastic organization that lived out its mission each day through the hard work of its employees and volunteers. I truly do not believe that this particular board member meant this to be an insulting statement, but how else were the members of management who were present supposed to take it?
Here is my advice for corporate board members who sit on a board (either for a non-profit, private or public company) where members of the board feel that the board itself is the best part of the organization: consider resigning. Even if it is just 1 or 2 board members who feel this way, it may be a symbol of the culture that has developed. I am usually not an advocate of boardroom defection as it is inconsistent with a board member’s responsibilities, but in certain circumstances a resignation can speak volumes and perhaps be a catalyst for change in the boardroom.
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