I had a very interesting discussion recently with a professional association's Executive Director (the chief staff officer). The association was having difficulty retrieving some important association documents from a member of their Board.
My first question was, "Why is a Board member in possession of the documents in the first place?" I was informed that in response to some difficulties with previous employees of the organization, the Board decided to have a Board member hold onto them -- someone they trusted. Clearly, that didn't work for them, did it.
This whole issue comes down to the Board's responsibility to ensure effective management. And, in my view, ensuring effective management simply can't be limited to identifying someone in whom the Board feels comfortable placing their trust.
Simply trusting that something (the right thing) will be done has burned more Boards than I could possibly identify if I blogged every day for the rest of my life. Trust is nice, but it provides little or no protection.
The failure here is that the Board has no policies in place to guide the both the staff and the Board on their financial management and administration activities. And I say Executive Director, because administration is a staff job, not the job of the Board. Policies are the rules - the Board needs to make the rules clear, then monitor the Executive Director's compliance with those rules. That is how they can ensure effective management of the association. Setting the rules (policies) and monitoring compliance with those rules is a critical governance responsibility that too often is overlooked - the failure of corporate, private, public and not-for-profit sector organizations can often be tied to this critical omission.
Sandi L. Humphrey, CAE
sandi@sandihumphrey.com
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Hello Sandi:
ReplyDeleteThanks for starting this Blog, which is very much needed I think and should stimulate some very interesting discussions.
I couldn't agree with your comments more. The responsibility for managing finances is the job of the ED/CSO with oversight provided by the Treasurer or an Audit Committee.
However, unless there are sound financial policies in place, things can happen, like the situation you described which has happened all to often and continues to happen.
Having sound policies in place and following them, provides oversight for staff and ensures the financial integrity of the association, thus allowing everyone, the board, staff and their members to sleep soundly at night.
Thanks again for this blog Sandi!
Leon:
ReplyDeleteThanks for your thoughts. Years ago I wrote an article on the subject of embezzelment in associations. Only when I promised anonymity and confidentiality could I get people to speak frankly about the subject. And I was astounded at how frequently not-for-profit organizations are victims of fraud.
Board members often feel comforted by the fact that insurance is in place to shield them from any such losses. But, it is highly likely that they have never read the actual policy - if they did, they would likely learn that they are required to have certain policies and practices in place. If they aren't, it is highly likely that an insurer would fail to honour any such claim.
The job of Board member isn't easy. Sadly, I am still hearing of not-for-profit organizations who fail to provide orientation and training to their Board members to help them truly understand what their job is. If we acknowledge that the performance of the Board is equally as important as the performance of the staff, it stands to reason that BOTH, not just the staff, should be subject to proven human resources practices: solid recruitment criteria, ongoing performance evaluation and professional development. As we progress in this blog, we'll get into lots of these issues in greater detail.
For me, the greatest competency a new member can bring to the Board table is a willingness to learn.
"For me, the greatest competency a new member can bring to the Board table is a willingness to learn"...totally agree in theory, but in reality are the STP ( same three or ten people) to busy to really have the time...given today's lifestyle
ReplyDeleteKim Mc CAE 100