Fulfilling duties includes actively engaging in practices that promote good governance. A review of best practices enables the board to reflect on opportunities for improvement.
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One of the most difficult aspects of effective governance is understanding the distinction between the roles of management and the board, and how that demarcation varies among different organizations. After three decades of working for boards and serving on many myself, I have learned that clarifying these roles is imperative to well-functioning organizations and their boards.
While the board and management share overall responsibility for organizational leadership, essential duties can and must be clearly defined as either the board's or management's responsibility.
The trustees of one health system were divided over how to structure the board. Some favored proportional representation from its acute care, nursing home and elder services divisions; others wanted all at-large members with no interests to promote. The CEO of another health system had restructured so facility executives were directly accountable to corporate management for finances and operations. He wanted local boards to focus on strategic direction and oversight of quality, but local boards continued monthly monitoring of finances as they’d always done. Some trustees wondered what their role was.
In industries where safety is critical and quality must come first, such as airlines and nuclear power, “red rules” refer to protocols that must be followed “to the letter” – all work stops until they are. A commercial airliner doesnʼt leave the gate if the pilot spies a possible leak or flat tire; a nuclear plant operator or even a Toyota assembly line worker can “stop the line” when he spots a critical flaw.
Great organizations have great leadership— at the top and throughout their ranks.
Over the last decade, and especially since the Enron failure, boards of all types have been working to enhance their performance. They ensure their composition is competency-based; they align their structures with their strategies; and they have robust, written governance procedures.
Throughout my years of serving on boards, I typically have done so as an outside trustee, someone who brings knowledge about health care issues in general and about governance in particular, to the board table. Boards composed primarily of community members, as hospital boards traditionally have been, often incorporate outside trustees within their membership to bring a fresh, external perspective into board discussions.
When someone walks into your hospital, his first impression is created by the physical architecture. But his lasting impression — and what he is most likely to talk about when he returns home — will be determined by what we call the “invisible architecture” of core values, organizational culture and behavioral expectations.
Don’t overlook the importance of CEO-board etiquette — it’s a pillar of good governance. The relationship between boards and chief executive officers can be fraught with challenges, and trustees often are unsure of how to handle certain delicate situations. But using a framework of etiquette can provide guidance.
The relationship between boards and chief executive officers can be fraught with challenges, and trustees often are unsure of how to handle certain delicate situations. But using a framework of etiquette can provide guidance.
“What is the difference between governance and management?” is by far the question that not-for-profit executives and directors ask most often. Effective boards understand the difference between governing and managing; dysfunctional boards do not.