Tip #8 Be Clear About the Recipient of Board Delegation to Management
The first principle for effective board delegation to management is that there be clarity regarding the recipient of board delegation. If your organization has a chief executive, that is, a top management person with overall responsibility for organizational operations, then it is important to respect the singular authority of that position. This means that, in effect, the chief executive is the board’s only employee. The full board delegates to the chief executive all authority for organizational operations and holds the chief executive accountable for such. No individual board member, board committee or the full board goes around the chief executive and delegates authority to or provides direction to any staff of the chief executive or any staff function. For example, the board treasurer does not supervise the chief finance officer, a board human resources committee does not supervise the director of human resources, etc. If any individual board member, board committee or the full board bypasses the chief executive and engages in such direction, the chief executive’s authority to direct staff and his or her accountability to the board are compromised. How can the chief executive be effectively held accountable to the board for organizational performance if staff of the chief executive and staff functions are being directed by individual board members, board committees, or the full board?
What about organizations that don’t have a chief executive? While most organizations have a chief executive, some do not. For example, start-up organizations or other small organizations may not be able to afford to hire a full-time chief executive and/or other employees. The boards of such organizations may be described as “working boards,” that is, boards in which board members carry out management and/or staff functions. It is important to recognize that when board members are carrying out such functions, they are not functioning as board members but as staff accountable to the board. In addition, in such arrangements, the board needs to be careful not to delegate the same responsibility to more than one person. When delegated responsibilities overlap or are unclear, accountability to the board becomes compromised.
This first principle for effective board delegation to management is drawn from the principles of the Policy Governance® model of board operations. However, it can certainly be followed by any board whether it practices the Policy Governance® model or not.
For reference, the seven principles for effective board delegation to management follow.
Seven Principles for Effective Board Delegation to Management
1. Be clear about the recipient of board delegation to management.
2. Embrace the “group authority” of the board with delegation to the chief executive coming from the board as a whole. (This principle and the following principles assume the board is delegating to a chief executive.)
3. Clearly state the board’s expectations for performance of the chief executive.
4. Clearly delineate the scope of authority and discretion being delegated to the chief executive.
5. Empower the chief executive to make decisions within the defined delegated scope of authority.
6. Track and evaluate the performance of the chief executive in relation to the board’s stated expectations.
7. Recognize positive performance of the chief executive and take corrective action when indicated.
For information about the Policy Governance® system, please go to www.BoardsOnCourse.com/policy-governance.