Board member roles and responsibilities Bill Schankel VP, Marketing SCTE

A Quick Parable A circuit preacher and his young son traveled the countryside on horseback. When they approached a small town the preacher would offer to preach a sermon at the small church in exchange for what the congregation could afford to pay. At one such small church, the preacher and his son entered the church and the preacher casually threw a quarter into the poor box. After a fine sermon, one of the congregation stood and thanked the preacher and said, "We're a small church and we can afford to pay you only what's in the poor box." He opened the box and dropped the contents into the preacher's hand...a quarter. As the preacher and his son were riding away, the preacher was grumbling about the meager pay. The son listened for a bit and said "Dad, if you wanted more out, why didn't you put more in?" We always get out of life (and volunteering) pretty much what we put into it!

Agenda The Role of a Board SCTE Structure Overview and Fiduciary Duty Pitfalls – Areas of Concerns What is a Strategic Board Board / Committee Structure Role of Parliamentary Procedure

The Role of a Board

What is a Board? Fiduciary – to hold in trust. Wall Street Words defines as: “A person or organization entrusted with the property of another party and in whose best interests the fiduciary is expected to act.” The board of directors is the governing body responsible for the ultimate direction of the organization

Fiduciary Responsibility Legal Responsibilities Duty of Care Association’s best interest Protect confidential information Duty of Loyalty Undivided allegiance Avoid conflicts of interest Duty of Obedience Bylaws compliance Aware of affairs of the chapter Fiduciary Responsibility The fiduciary responsibilities (legal duties) of nonprofit association directors have been established by case law, liability insurance practices, as well as state corporation law. The duties are : The Duty of Care The duty of care requires the director to do what would be expected of any prudent person in the same position. It requires the director to read relevant documents, prepare carefully for board meetings, pay attention to what is going on, and ask questions to clarify actions that are being taken. The duty of care permits the delegation of certain responsibilities to experts, staff, committees and task forces, but requires the director to stay informed of their activities and take appropriate action when indicated. The Duty of Loyalty The duty of loyalty requires the director to give undivided allegiance to the organization of which he or she is a director, without regard to personal interest, business interest, or the interest of any other region or organization. Furthermore, it is a breach of the duty of loyalty for a director to use inside information gained in the performance of his or her responsibilities for personal benefit, or to benefit his region, business or any other organization. This constitutes conflict of interest. The Duty of Obedience The duty of obedience requires the director to act within the scope of legal authority, including the organization's articles of incorporation, bylaws and mission.

SCTE Financials Tax Status – 501(c)6 Each Chapter is under our IRS Tax ID Your Chapter Financials are reported to the IRS Form 990 Legal Your chapter and board members are covered under our liability insurance however board members have a responsibility to the chapter and the entire society (SCTE) as a whole.

Your chapter bylaws Legal – The chapter shall comply with all federal, state and local laws, rules and regulations governing chapter operations. Also, the chapter shall comply with all applicable policies and reporting requirements to Headquarters in order for SCTE to maintain its tax exempt status. Liabilities – Except in cases of fraud or acts of bad faith, the directors and officers of this organization shall not be held personally responsible for debts, obligations, or liabilities of the organization or for their actions on behalf of the organization.

Fiduciary duty of the board Directors owe duties of “care” and “loyalty” to the organization. These duties required the board of directors to: act in good faith. with the care of an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner he or she reasonably believes to be in the best interest of the organization and its members.

Fiduciary Responsibilities Funds used to accomplish SCTE Mission Keep accurate financial records Enforce financial internal controls Follow policies, procedures & bylaws Safeguard funds Keep chapter board informed Whistleblower policy

Gotchas! Pitfalls for Board Members Personal Liability Risk - All board members are covered under our liability insurance.  That said, the liability insurance covers everything but “acts of bad faith”.  An act of bad faith can be something malicious such as lying to board members or preparing false documentation.  “Acts of Bad Faith” can also happen when a board member does nothing.  If a board member is aware that something happened that was wrong (such as the treasurer stealing money) but doesn’t say anything then that would also be consider an “act of bad faith”. Anti trust - Chapter boards bring together various individuals from various companies.  It is important that these individuals keep to chapter related topics and technical training/cable industry issues.  If a chapter board ever got into a discussion about product pricing either during a board meeting or after a board meeting that would be consider anti-trust.  All pricing and product purchase discussions should be kept outside of chapter board meetings. Apparent Authority - The condition that arises if a third party believes that an agent has the authority to act for another person or company (called the principal) when that authority has not in reality been granted. If an agent acts with apparent authority, the agent's acts legally bind the principal. For example, a customer may believe that an employee who presents a contract on company stationery is authorized to sign that contract on behalf of the company. Even if the employee does not have the authority to enter into contracts, the company will be legally bound by the signed agreement. This typically comes into play when signing contracts.  Chapter leaders are allowed to sign hotel contracts, etc. on behalf of the chapter.  Chapter leaders need to keep in mind that they are signing contracts on behalf of the society at large and therefore the individual themselves cannot profit from the contract.  Sometimes it seems harmless to add a free round of golf or a complimentary hotel stay to a contract.  However, those contract perks should go to the benefit of the chapter and not an individual.  A good example of abusing authority would be negotiating hotel points in your chapter contracts.          

The Role of a Board Member

Qualities of a GOOD Board Member Integrity Open mind Competence Sense of humor Enthusiasm

Attributes NOT Desired Johnny-one-note Devil’s advocate Authority figure Off-the-wall artist Board hopper Taken from Welcome to the Board, by Fisher Howe

Responsibilities of a Board Member Provide Direction for the Organization Mission-Focused Goal Creation Fiduciary Responsibility Program oversight and support Evaluate events Assist in Logistics Board effectiveness Attend Follow Policy/systems 1. Provide direction for the chapter. The board has a strategic function in providing the vision, mission and goals of the organization. 2. ) Fiduciary duty to protect the organization’s assets and member’s investment. The board has a fiduciary responsibility to represent and protect the member’ss interest in the chapter. So the board has to make sure the assets of the chapter are kept in good order. Attendance – To attend board meetings and participate in some committee work Mission – To define the mission and participate in strategic planning Finances – To assure financial responsibility Program oversight and support – To oversee and evaluate all programs Board effectiveness – To assure the board fulfills the governance responsibilities and maintains effective organization, procedures and recruitment Recruit, supervise, retain, evaluate and compensate the manager. Recruiting, supervising, retaining, evaluating and compensating the CEO or general manager are probably the most important functions of the board of directors. Value-added business boards need to aggressively search for the best possible candidate for this position. Actively searching within your industry can lead to the identification of very capable people. Don’t fall into the trap of hiring someone to manage the business because he/she is out of work and needs a job. Another major error of value-added businesses is under-compensating the manager. Managerial compensation can provide a good financial payoff in terms of attracting top candidates who will bring financial success to the value-added business. 3) Establish a policy based governance system. The board has the responsibility of developing a governance system for the business. The articles of governance provide a framework but the board develops a series of policies. This refers to the board as a group and focuses on defining the rules of the group and how it will function. In a sense, it’s no different than a club. The rules that the board establishes for the company should be policy based. In other words, the board develops policies to guide it own actions and the actions of the manager. The policies should be broad and not rigidly defined as to allow the board and manager leeway in achieving the goals of the business. 4) Govern the organization and the relationship with the CEO. Another responsibility of the board is to develop a governance system. The governance system involves how the board interacts with the general manager or CEO. Periodically the board interacts with the CEO during meetings of the board of directors. Typically that is done with a monthly board meeting, although some boards have switched to meetings three to four times a year, or maybe eight times a year. In the interim between these meetings, the board is kept informed through phone conferences or postal mail. 6) Monitor and control function. The board of directors has a monitoring and control function. The board is in charge of the auditing process and hires the auditor. It is in charge of making sure the audit is done in a timely manner each year.

Board Management Develop a list of specific qualities that should be contained collectively within the board Evaluate where your board is weak Use elections to fill upcoming voids Succession Planning Do a periodic self-evaluation of board performance

What is a Strategic Board?

Strategy Implementation Strategic Planning Mission & Objectives Environmental Scan Strategy Formulation Strategy Implementation Evaluation & Control

The Strategic Plan answers: What are we doing today as a chapter that we need to be doing different in the future to sustain success? What are we not doing today that we need to be doing in the future to sustain success?

Characteristics of a Strategic Board Right sizing of the Board Strategic vs. Tactical What’s on your agenda? Reports vs. discussion Priority-based order of business Use of the Consent agenda

Board / Committee Structure

Value of Committees PROs Can improve efficiency Reduce frequency or time of board meetings CONs Arbitrarily establishing committees is a recipe for disaster Committee structure must be tied to priorities of the board Must have definitive goals and timelines

Consider using a “Zero-based” approach to committee formation Committee Types and Alternatives Standing Committees Ad-hoc Committees Advisory Councils Consider using a “Zero-based” approach to committee formation

Role of Parliamentary Procedure

Reason for Parliamentary Procedure “Parliamentary procedure is not intended to intimidate anyone or stifle debate. Rather, its goal is to enable deliberative bodies to practice good governance. It ensures that the will of the majority is established and the voice of the minority is protected.” (Leigh Wintz, Soroptimist International of the Americas)

Reason for Parliamentary Procedure Don’t let it get in the way Unnecessary motions Unneeded seconds Unclear motions Ineffective use of time

Key Questions

Final Exam How is your board doing in carrying out their fiduciary responsibilities? What are you and your peer board members contributing to the board? How are you ensuring that the road you are on is the correct one? Are you leveraging the full value of the board members on your board? Have you made plans to implement an idea or concept you heard today?

Parting thought There is only one thing worse than training your volunteers and having them leave - and that's not training them, and having them stay.

Questions/Comments?