Some Boards are really perfunctory and accomplish little. Other Boards are highly effective.

What makes the difference? It’s a combination of people, process and planning.

People
The people chosen to sit on the Board of Directors should have the best interests of the organization at heart, and have the time, talent and motivation to work for the good of the organization. Avoid Board members who are too busy or too narrowly focused in their views.

Effective Board members understand their responsibilities and commit to active participation in Board meetings.

Legally, Directors have a “duty of loyalty” and “duty of care.”

Duty of loyalty means that Directors are required to act in the best interests of the organization. Directors are not allowed to use their positions for private gain. Any conflict of interest, or potential conflict of interest, must be fully disclosed.

Duty of care means that Directors must act with the care of a reasonably prudent person under similar circumstances and in a manner that they reasonably believe is in the best interests of the organization.

Effective Board members attend meetings, prepare for meetings by reviewing information, ask questions and review the financial information of the organization.

Process
The Board should operate with some structure and formality – including a schedule of meetings, notice, agendas and minutes.

The Board Meetings are the forum for discussion – respectful, orderly discussion.
There should be an opportunity for consideration of all the points or view, including the pros and cons of different issues.

The Board is supposed to make decisions as a group, and a quorum is required (a specified minimum number of Board members present at the beginning of the meeting).

As a general matter, Boards must meet to make decisions in person. Electronic meetings may be acceptable as long as all members present can simultaneously hear each other. Directors with a conflict of interest should abstain from voting on the matter.

Minutes provide a record of what happened at the meeting – and should include date, location, attendees and a summary of the decisions and votes taken. Minutes from the prior meeting should be reviewed and approved at the beginning of each Board meeting.

Planning
The Directors need to understand the goals of the organization and the constituencies it serves.

Together, the Directors should annually review the organization’s purpose, priorities, financial standing and accomplishments. Out of that discussion, they will identify goals and strategic initiatives for the coming year.

At their meetings, effective Boards review progress against the strategic plan and current year goals.

Effective Directors deal with problems and complaints proactively, and try to learn from what happened to prevent recurring problems. They also establish Committees to successfully implement initiatives.

In conclusion, the Board of Directors can be a powerful tool for an organization. If your Board has been doing things the same old way for years, it may be time to take a fresh look at the purpose and plan of the organization. A strategic planning retreat can help to focus and re-energize your Board. Such a “retreat” need not be expensive or lengthy. Much can be accomplished in a half-day session, with a focused agenda and committed participants.

Jean D. Sifleet, Esq., CPA
Business Attorney

120 South Meadow Road
Clinton, MA 01510 USA
t. 978-368-6104
f. 978-368-6105

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Jean Sifleet, business attorney, CPA and three-time entrepreneur, is pleased to announce the release of her new book, Advantage “IP”: Profit from Your Great Ideas. Visit the Smartfast Bookstore for details, and to order the book.