I recently attended a board meeting where a formal conflicts of interest policy did not exist. Thanks to a long-standing senior board member reminding everyone that the financially conflicted board members should not vote, at least some semblance of propriety was maintained.
Good governance depends on board members speaking up: about implementing policies; about issues that arise that do not seem right but are not covered by policies; about anything that seems relevant to good governance. Written policies are important, but they are useless if not actively applied. Good governance requires proactive participation at meetings, as well as communication in-between meetings in smaller groups, to monitor implementation of decisions and unexpected issues.
The Speak Up Questions. Before going into a board meeting, ask yourself what your formal opinion is on any issues for debate – and why – whether or not a formal vote will take place. What are potential alternative solutions and/or modifications of the proposed solution that might increase efficacy, mitigate risk, result in a tighter link to strategy, or improve the ethics/accountability/transparency/governance? What information are you lacking in order to speak up effectively? Then, as this blog always asks a 20/20 foresight question, what are the consequences (immediate and medium- and longer-term) of your preferred outcome and other options?
This does not that mean you should express every thought at every moment. It means you will be prepared to express relevant thoughts. Pick your battles. Depersonalize the suggestions. Assure they are all in the best interest of the organization and its stakeholders. Speak up if important questions are brushed aside or you feel moved too far in the future for reconsideration, and follow through on oversight of decisions taken. Rely appropriately on committee work or board members who are particularly expert in a given field to keep discussion efficient, but remember that in the end all board members are responsible for everything.
The Speak Up Challenges. There are several potentially challenging scenarios for the “speak up” mandate.
(a) Speak up even if you are new to the board. All board members have equal governance responsibility and therefore equal obligation to speak up, even those new to the board. Whilst clearly it takes time to understand the dynamic of the board and the workings of the organization, at the very least new board members have an affirmative obligation to ensure that they understand fully the discussion and the votes. You may not have answers or a full picture of an issue, but you are responsible for asking questions. If you are not comfortable doing so in a full board setting, or this would be disruptive or inappropriate, then do so separately with committee chairs, the board Chair or other board members particularly expert in the specific area. Speak up even about issues arising before your arrival to the board. A corollary of being new is being intimidated by management team members, board colleagues, or “board bullies”. It is every board member’s responsibility to speak up. Period. If there is a terribly uncomfortable situation, it is important to address this with the board Chair or the appropriate committee.
(b) Speak up about issues that seem outside the scope of classic governance or outside the organization’s formal policies. The line between governance (i.e., board oversight) responsibility and management responsibility is increasingly caught in the challenge of keeping up with rapidly changing times. Regulation is lagging behind technological, business, and social developments (e.g. the recent US internet piracy debate), and some issues seem outside the scope of classic procedural governance. This is true both of business realities such as unforeseen consequences of Face Book (e.g. cyber bullying leading to teen suicides) or a non-profit reality (e.g. backlash on interest rates in micro-finance). In theory, many of these issues fall within management responsibility. However, in practice – and in ethics – the board should step in and at the very least ensure these issues are being handled proactively, with appropriate outside expertise, and with a commitment to finding solutions and remaining transparent. Speak up when there seem to be holes in the ability to govern properly for reasons of regulatory lag, unforeseeable social risk, difficulty predicting the consequences of new business models, or simply issues slipping through the formal governance cracks. If there are not always answers, outlining the questions and a plan for continued thought and oversight (and thoughtfully including those in the minutes) demonstrates solid governance.
(c) Speak up before the vote…then again after the vote to clarify the consequences. Most board members understand their obligation to express well-argued views before a vote or other decision. However, one governance weakness is failure of the board to review, immediately after the vote, the risks and weaknesses of every outcome. After a discussion or decision, all board members must maintain appropriate confidentiality and a unified front relative to management and the external community. However, in addition to unified action to implement the vote, good governance calls for proceeding with a clear list of the potential risks and problems in hand. Governance responsibilities do not end with the vote or decision. They continue through follow-up, monitoring, risk management, and evaluation.
As always, questions and comments are welcome.
Copyright© 2012 Susan Liautaud. All rights reserved