As an organization with a board of directors grows, it often turns more of the day-to-day operational responsibilities of the company over to its business manager. This is especially true of nonprofits. Understanding how to set the duties and responsibilities of a chief executive officer and a board will help you get the most efficient management while ensuring the board meets its fiduciary responsibilities to govern the organization.
Read Your Bylaws
The first step in defining the roles of the board and CEO, often known as an executive director in the nonprofit sector, is to read to the organization’s bylaws. Bylaws lay out the mission of the organization and provide rules and procedures for the board to help it meet its responsibilities. Using the bylaws, a board can determine what duties it must handle and what tasks it can turn over to its business manager. Create a broad list of duties and assign their primary responsibility to either the board or the CEO. Give the board governance and strategic planning and management responsibilities, assigning the execution of board goals and objectives to the CEO.
Write Job Descriptions
Once you have created your list of duties and responsibilities, write job descriptions for the CEO and each board member. Get more specific by moving from what each person will do to how they will do it. Find and use credible references for organizations such as the American Society of Association Executives and the Council on Foundations to locate sample job descriptions. Have the CEO sign an employment contract with his job description attached and initialed.
To ensure the CEO knows the limits of his authority, create controls over the operations of the business office the CEO manages. For example, you might require your treasurer to sign all checks. You can require that a board committee approve any employee hires. Institute a purchasing process that requires competitive bids for larger expenditures and requests for proposals on large contracts. In addition to including what a CEO can do in his job description, list what actions he can’t do without written board approval.
Appoint a Liaison
To ensure effective communication and to enhance the board’s oversight of the CEO, appoint a liaison between the board and CEO, with that person being the CEO’s main contact. This is often the chairman of the board. You might appoint more than one liaison in the event the CEO needs information and his main contact is incommunicado. Consider allowing an executive committee to act on behalf of the board when it is not in session so that quick decisions can be made without having to convene an official board meeting.
Hold Regular Meetings
Have the CEO and board liaison conduct a weekly meeting, even if it’s just a short update over the telephone, to ensure that the board is aware of the activities of the CEO. Either have a Monday meeting to discuss what the CEO’s plans are for the week, or a Friday meeting to recap what the business office accomplished during the week.
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