Boards: Working for the CEO?

Becker’s Healthcare, an association that provides an amazing amount of information and data including daily or weekly emails about specific subject areas, recently published a fascinating, yet bewildering, article. This one came from Kelly Gooch on September 14. The news story, not an editorial, reported on a June 24 published study by Strategic Management Journal. The article indicates that boards in nonprofit organizations, specifically hospitals and medical centers, have a common view of themselves as “CEO supporters.“

From the article. “Our analysis of these interviews suggests that directors view their CEOs as generally acting in the best interest of their firms,” the researchers wrote. “In return directors consider strategically collaborating with their CEOs as critical to their board service.”

One of the study’s authors continued. “The overarching finding was the directors generally said they viewed their jobs as primarily supporting managers, not monitoring them. In fact, we were surprised by just how uniform the sentiment was amongst directors, regardless of demographics like gender or time spent on the board,” said Stephen Bovee, professor at the business school at Texas A&M.

Here’s my quote…. “WHAT?”

Having worked in this industry for nearly a quarter-century, I find this article staggering and disappointing at incredible levels. Having served on boards of both small and large nonprofits, I am dismayed. The purpose of the board is to set the vision of the organization and hire a good leader to take the organization in that direction. The CEO works for the board, not the other way around.  While collaboration between a CEO (and executive team) and a board is essential, there should never be confusion of who is the ultimate authority.

This kind of attitude is when we get CEOs who stay too long or takes the organization somewhere away from its mission, or the organization “stagnates” because of bad business practices.  It is when board members who are not engaged don’t “lead” when greater problems arise. The board is the constant because employees come and go depending on a great deal of employment and personal reasons.  It is the board that represents the community the nonprofit services.  

I don’t know if this is exclusive to healthcare or not, but what the study found is not what I’m familiar with.  It’s not what I am knowledgeable about. It is not what I teach.  And I know it’s not what other really smart people who know the “in’s and out’s” of nonprofit work say.

This is worthy of a major conversation in board rooms across the country, with associations like the American Hospital Association and the Advisory Board, to ensure that good governance is always at the forefront of a board’s fiduciary responsibilities.