Expert Coaching. Practical Resources.

July 4, 2017

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Rose Mercier

Board To The Rescue…Or Not

From time to time I hear from a board chair who says something like this, “We have a crisis that needs to be dealt with and we’re not sure where it goes on the agenda.”  Inevitably, the image of a sea rescue helicopter comes to mind. I picture the board climbing down the ladder and jumping into the operational ocean to go to the rescue.

It’s not uncommon to want to” jump in and help” when we see something that seems to be going off the rails. So, it is hardly surprising that the board’s first inclination when it encounters a “problem” or “crisis” is to want to jump to the rescue. After all, if it’s important enough, it must be the board’s work.

Before your board hops into the rescue helicopter and jumps in the ocean, it’s wise to ask a few questions.

First, ask about the nature of the situation. Identify if it is related to one of the board’s jobs. If it is not related to ownership linkage, policy development or monitoring organizational performance, it is an operational issue and the domain of the CEO. Perhaps the board is concerned because a senior staff person left unexpectedly, the landlord has sold the building, there’s the threat of a significant liability lawsuit or the investment portfolio underperformed in the past year.

At this point it is wise to remember John Carver’s statement in Boards that Make a Difference (3rd Ed. p. 118): “The appropriate expression of the board’s legitimate interest is not to redefine a staff issue as a board issue but to curtail or confine the available staff choices to an acceptable range.” Wise advice.

Start by looking at your Executive Limitations policies. Do they clearly state the condition(s) related to the issue that the board would find unacceptable because of prudence or ethics? What has the board already said about the issue at hand? If the board thinks its policies sufficiently address its worries, it could ask for a special monitoring report to assure itself that there is sufficient evidence that the CEO’s reasonable interpretation has been achieved for the relevant policy statements. It is possible that the board might conclude that its policies do not address all of the unacceptable conditions related to the situation. If this is this case, the board can add to or change its policies…and then ask for a monitoring report. John Carver also makes clear that the board’s challenge is to “exercise oversight with respect to staff operations without obscuring role differences and without taking the staff off the hook for making decisions.”

It is, of course, possible that the board may encounter a crisis or problem related to its own work. The CEO has to retire or unexpectedly step away from the position; the board has learned one of its members has disclosed confidential information; or there is a ‘rogue’ director who insists on raising issues that take the board off track. These situations are definitely the board’s work and call for it to take action.

Where the crisis is related to the board’s work, the first question to ask is once again, “what do our policies say?”

Your board may have a Governance Process policy that states the process it will follow in the event of planned or unplanned absences of the CEO. Not a bad idea since the board is, after all, accountable for ensuring continuous chief executive services. If you don’t have such a policy, perhaps this blog will motivate you to consider developing one. Another place to start is by reviewing the CEO’s most recent monitoring report for the Executive Limitations policy that deals with emergency succession: what has been implemented by the CEO to assure continuity of service?

A board usually has a Governance Process policy that states the code of conduct it expects of directors during its meetings and its expectation about confidentiality. This same policy should also provide for the course of action that the board follows when there is a breach of the code. Sometimes this policy provides for the board member in question to present his or her views at the board meeting where the breach is to be discussed. It is also a good idea for the policy to identify the range of possible board actions.

Whether the nature of the crisis is operational or governance, it is unlikely that that board needs a rescue helicopter if it consults its policies and operates consistently with them.

 

 

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