Where does the board get its information?

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When a board has a decision to make, where does it get its information from? Most boards rely to a high degree on staff to provide information, but how does the board judge the goodness or comprehensiveness of that information?

The best board-staff relationships require a high degree of mutual trust and respect, so it might sound counter-productive to suggest that the board needs to check the quality of information provided by management,  but even high trust situations can benefit from periodically verifying that the trust is well-placed.

I would say, however, that if the board feels it can’t trust staff reports, then it either has the wrong staff or it has too many overly suspicious directors.

Misplaced trust hurts

Sometimes the board trusts staff so much that they do no checking at all. I know of several boards where their misplaced (or perhaps I should say unearned) trust came back to haunt them.

  • A board once discovered that its executive director was holding back external reports that the board should have seen, such as the auditor’s management reporting letter with some serious concerns about management practices.
  • Another board discovered that its executive director, who insisted on being the only staff member at the board meetings, was manipulating both the board and the staff because he was the only one who had the whole picture. He ran the ministry to his liking, blaming the board for unpopular decisions he made when speaking to staff, and blaming the staff for his own lack of performance when speaking to the board.

The board should do some of its own due diligence to assure itself that their understanding of the way things are is accurate.

The limitations of management information

As a CEO, I produce as good information as I can for the board. The other staff who prepare board reports do as well. But there is still a problem with management as the sole source of information even though it does everything it can to protect the board’s interests. Here are all the safeguards I use to protect the board. But my point is that in spite of all this being in place, the board would still benefit from having its own sources of information. So here is how I ensure management information is as good as possible:

  • I think like a director when preparing for board meetings. What should they know or be thinking about? That goes into the package.
  • I make sure the COO agrees with everything that I report to ensure it is not just my interpretation alone.
  • When I ask the board to approve something (which is very rare because we use Carver Policy Governance©), I highlight the key decision points or variables they should consider by presenting alternatives that management considered while developing its recommendation.
  • When I give an activity report, I report everything I think is important. Since I can’t report every single detail, I must make judgments about what to include, and I try my best to present an accurate overall snapshot of our affairs.
  • I also operate on a ‘no surprise’ policy with the board. If something bad happens (or is likely to happen) and I know about it, my promise is that the board will hear about it (hopefully first) from me.

However, no matter how open, honest and transparent I think I am, there is an unavoidable filtration of information by me or my staff. This is why the board should have its own information sources.

How much information does the board need?

The board shouldn’t duplicate information that is provided. Instead, it should only get the information it needs to verify its trust in management is well-placed, and to ensure it has well-informed discussions.

All charity directors are volunteers and unless they are retired, they are likely very busy people. (These days, though, I’m finding that retired folk are as busy as they’ve ever been!) As a director of The Evangelical Fellowship of Canada, I have time to fulfill normal board and committee responsibilities, but I don’t have time to be doing a lot of digging for information. I’m sure this is a widespread situation. So the board needs to carefully consider how much information it needs and get just enough, but not too much.

Suggestions for acquiring independent information

  • Review management’s reports for the last year. Has there been any admission of things not going well? Of disappointments? Of complaints from the public? Any indication that management reflects on its own performance? I really doubt that I’m the only leader to have some things go awry, or to receive a complaint (unfounded or not) about something the ministry has done. If management portrays itself as perfect with an unblemished record of absolute success, I would suggest that the board ask some probing questions.
  • Do spot checks from time to time to verify what management is reporting. This information is meant to check a few things so that the board can be confident in the trust it has placed in management regarding many things. For example, once a year the treasurer of my board verifies statements from CRA showing our payroll remittances are up-to-date and undisputed (because directors are personally liable if they aren’t). Go and see a program in operation and see for yourself how well it is working.
  • If a consultant is doing some work, the board could do a spot check and ask the consultant to send the report to management and a copy directly to the board. For example, we did a member survey and the staff asked the consultant to prepare the presentation for the board, so the staff had no hand in it.
  • The board can hold its own consultations with external stakeholders. Our board does this at the September board meeting.
  • An easy way to get access to good information is to recruit directors based on their experiences and type of work. If you have an accountant on your board, and a proposal is made about how to handle an accounting issue, the director likely already knows the issues involved in the decision or at least knows the right questions to ask.
  • If the board has a major decision, it might strike a committee to do its own research. It would be best to include some staff on the committee, but the staff member isn’t there as a resource person, but as an expert who can give a knowledgeable interpretation of what the committee is finding. But that contribution is just one contribution of many to ensure there is a well-rounded discussion.

Don’t go overboard

There are some potential problems with the board acquiring its own information.

  1. If it goes externally for information, which in most cases it would, then it could convey to outsiders that the board has lost confidence in the staff. Extreme care must be taken to avoid creating this perception.
  2. The board-staff relationship is crucial to organizational success, and the board must be extremely careful here too that it does not break trust with management. The best board-staff relationships are collegial, with full disclosure of information by both parties. Unless the board is dealing with a personnel issue regarding a director, staff should be consulted as the board determines what information it will seek and how it will get it. That is because management, if it is doing its job, is also seeking the same information and does not want to have board and management tripping over each other and causing confusion in the public or amongst staff.

Notwithstanding the board’s need for good information, the best service that a board can provide to the organization in my opinion is to ask really good, penetrating questions!

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