Consequences of Disharmony Between the Board and CEO
It doesn't make a difference if it's big or small, when a board and the CEO don’t see eye to eye it causes massive problems. Here is one example.
This time this issue arose in my home state of Nebraska. A recent story in Becker’s indicated a riff between the CEO and Board in an open board meeting. It was not good. The overall issue dealt with where the Board’s interactions should be in comparison to the CEO’s responsibility. And they did not agree.
Several years ago, Texas Tech University professor, Russell James, wrote about how nonprofit boards were morphing into advisors and supporters of the CEO, from a philosophical perspective, versus being the boss of the CEO. I wrote at the time, and still agree, that's a dangerous precedent as the board represents the ownership stake of the community in any nonprofit. But there are limitations.
The board’s responsibility is strategy and overall direction. The board shouldn't be involved, in particular if there's enough staff, in the daily operations of a nonprofit organization. And there's no doubt that a hospital in middle Nebraska has plenty of staff to deal with the daily operations.
Thus, the crux of the problem from the original article. Apparently, the local hospital had some challenges with its IT system, as well as some undisclosed expenditures. There was nothing criminal or overly malicious as the CEO wasn't fired. However, the board began a process of adding detailed information to its board agendas under the auspice of performance improvement plan options. And that's when the CEO indicated there was a major problem.
What is discouraging is that the board thinks it should be involved in the detailed aspects of IT issues in a modern mid-sized hospital, or in individual expenditures (unless they are criminal in nature). What was encouraging was that at least one board member indicated that this level of detail within a performance improvement plan could be construed as micromanaging and not allowing the CEO to do their job.
There's no doubt there is a fine line between leadership and management versus overstepping that line. While board members may want more involvement in the process and details of an organization, particularly a bigger one, their role and best practice is not that at all. A board has the right to hire. It has the right to fire. It has the right to do a CEO evaluation. It has the right to set strategy. At the end of the day knowing where those limitations lie, and end, is essential in best practice governance.
