The document discusses the changing role of boards and principles for effective governance. It outlines 12 principles for boards, including constructing a partnership with executives, being mission-driven, engaging in strategic thinking, having a culture of inquiry, and being results-oriented. It provides examples of different types of healthcare boards and their fiduciary responsibilities. The role of boards is shifting from deference and micromanagement to being more engaged, prepared, and strategic in their leadership and oversight of organizations.

1. The Changing Role
of the Board
University of Sioux Falls
March 5, 2013

2. Introduction
• Governance Matters
• There is more to good governance than
compliance
• Boards are often underperforming assets
of the organization
• A frank and open relationship sets the
stage for leadership excellence
• Boards must be “intentional”
• Boards must “engage”

3. Types of Boards in Healthcare
• Nonprofit – 501 c 3
• Profit – Corporation
• Municipal/County Ownership
• District Ownership
• System Owned (Advisory)
• System Leased (Advisory)
• System Affiliated (Governance Controlled)

4. Fiduciary Responsibility
• Duty of Care
– Care that a prudent person would exercise
– In a like position and similar circumstances
• Duty of Loyalty
– The standard of faithfulness
– Undivided allegiance to the organization
– Not use information gained for personal gain
• Duty of Obedience
– Faithful to mission
– Never act in conflict with the goals of the organization

5. The Way it Used to Be – and
Sometimes Still Is
• Boards not challenged to know or be engaged in
meeting the compliance requirements for the
corporation
• More rich revenue-over-expense margin
• A deference for the ‘ceremonial’ work of the
leadership role
• Micromanagement – Boards ‘got involved’ in the
wrong way
• Long time service allowed for settled roles of
leadership

6. A Glimpse at an Exceptional Board
• Commitment to mission and the
organization as evidenced by:
– 100% meeting participation
– Prepared members sitting at the table
– Active committee participation
– Strategic thinking and visioning
– Enthusiastic ambassadors in the community

7. Principle #1
Constructive Partnership
• A partnership – not an subordinate relationship
– Respect distinct roles and responsibilities
– Demonstrate trust, candor, frequent communication and support
– Encourage questions, offer answers, share bad and good news
openly and EARLY
• An acknowledgement that the role of the Executive and
the board are interdependent
– Evaluate annually
– Encourage skill-building
– Set fair and competitive compensation
– Continually evaluate the organization’s needs – looking forward
– When in the best interests of the organization, undertake the
difficult task of replacement

8. Role of the Board
Role of the Executive
A Constructive Partnership
• A line custom to the organization
• Ebb and flow
• Shared responsibility for mission
• Continuous reframing

9. Principle #2
Mission-Driven
• Shape and uphold the mission
– Put into words why the organization exits and what it
hopes to accomplish
• Articulate a compelling vision
– Along with the Executive, develop a compelling
description of where the organization is headed
• Assure congruence between decisions and core values
– Use the mission, vision, and values as a guide and
litmus test for all board decisions
– Assure that the organization is meeting community
needs
– Help translate the organizational values into action

10. Principle #3
Strategic Thinking
• Allocate time to what matters most
– Frame and assess strategic planning
– Articulate and monitor progress against financial and
programmatic goals
– Use plans to assess Executive performance, drive
meeting agendas and shape board recruitment
• Hone the organization’s direction through
continuous engagement
– Make strategic priorities a part of regular, ongoing
board work
– Ask far-ranging questions to get at important new
strategic direction

11. Principle #4
Culture of Inquiry
• Cultivate a culture of inquiry, mutual respect, and
constructive debate
– Be an informed board
– Seek multiple sources of information – by requiring
the executive to present a variety of perspectives
– Make sure there is meaningful viewpoints to drive
robust discussions and healthy debate in the
boardroom
• Get to the best decision through meaningful assessment
and shared decision-making
– Give thoughtful deliberation
– Challenge assumptions
– Be attentive to group dynamics

12. Principle #5
Independent-Mindedness
• Place the interests of the organization above
ALL ELSE
– Resist decision-making unduly influenced by loyalty to
the Executive or the seniority, position, or reputation
of a fellow board member, staff member, or donor
– Seek to uncover all facets of an issue and distill
perspectives into an autonomous and informed
decision
– Rigorously adhere to conflict-of-interest policies with
clear guidelines and annual review

13. Principle # 6
Ethos of Transparency
• Ensure that donors, stakeholders, and interested
members of the public have access to
appropriate and accurate information regarding
finances, operations, and results
– Post key documents (990 and Annual Report)
– Assure internal transparency with all board members
having equal access to relevant materials
– Develop and maintain policies that allow staff to feel
comfortable bringing appropriate matters to the
board’s attention

14. Principle #7
Compliance with Integrity
• Promote strong ethical values
– Build a system of financial oversight
– Assure external review
– Assure adequate insurance and contingency
protection
– Articulate specific ethical standards
• Assure disciplined compliance
– Establish appropriate mechanisms for active oversight
– Review key documents
– Stay abreast of new rules and laws

15. Principle # 8
Sustaining Resources
• Link bold visions and ambitious plans to financial
support, expertise, and networks of influence
– Ask strategic “fit” questions before approving plans
that can be financed with existing or attainable
revenue
– Strive for a portfolio of diversified and sustainable
revenue
– Help shape the fund development strategy
– Open doors, attend events, generate contributions,
and make a personal meaningful contribution

16. Principle #9
Results-Oriented
• Measure the organization’s progress toward
mission
– Set clear metrics for measuring progress
– Integrate benchmarks against external measures
– Monitor mission return on investment
• Evaluate performance of major programs and
services
– Review programmatic and financial reports by
program
– Analyze qualitative and quantitative data
– Look for comparisons against plans, past
performance, and peer organizations

17. Principle #10
Intentional Board Practices
• Be intentional about making change in the board
to meet organizational duties and responsibilities
– Take ownership of your own operations
– Define whole-board and board member
expectations
– Set the board’s structure and change it as
needed to conduct business efficiently
– Make meetings matter
– Set standards and expect full readiness and
participation

18. Principle # 11
Continuous Learning
• Assess yourself and measure performance
– Regularly check and upgrade governance practices to
keep pace with the organization
– Gather feedback on performance through evaluation
– Use assessment to build structures and practices to
better meet the governance needs
• Build training to meet gaps
– Get orientation to programs and services at each
meeting
– Imbed learning opportunities in regular board
meetings
– Go outside for training resources and networking with
members of other boards

19. Principle #12
Revitalization
• Exercise planned turnover
– Honor the importance of fresh perspectives
– Acknowledge the risk of “closed groups”
– Respect the value of succession planning
• Thoughtfully recruit
– Seek a diverse mix of expertise and experience
– Seek a governance model that allows for ongoing
board profile development and recruitment
– Select for talent – build leadership skills – offer an
opportunity for leadership to strengthen the board as
a whole

20. An Example

21. Orchestral Governance Design
Grand Itasca Clinic and Hospital
Quality
Key Responsibilities
•Clinical Quality
Governance •Patient Satisfaction
Finance
•Compliance in all Medical
Practices Key Responsibilities
Key Responsibilities •Investment Strategy
•Board Roles and •Financial Records
Responsibilities Management
•Board Recruitment and •Budget Development
Nominations •Asset Management
•Succession Planning •Fiscal Oversight
•Board Policy and •Audit
Procedure •IRS 990 Compliance
•Board Orientation
•Board Education Executive Committee •State and Federal
Reporting
•Bylaws Revision Board Chair •Board Education on
•Board Member
Recognition •Vice Chair Finance Issues
Key Responsibilities
•Board Member
Standards of Behavior
•Treasurer •Board Leadership
•Secretary •Liaison to the CEO
•Leadership of Strategic Planning
•Recruitment, Selection, and Evaluation of
the CEO
•Crisis Management
•Grievance Process
Board of Directors

22. Margaret’s Top Five Tips
• Make rules when you are happy – so you can
implement them when you are not.
• Invest in a strong board – seek a board culture that
is self-sustained and self-disciplined
• Keep it skinny – Less is more
• Demand at least annual assessment –
Accountability coupled with clear direction
• Bring your leadership team along – Access is
comfort

23. Thank You!
818 S. Hawthorne Avenue
Sioux Falls, South Dakota 57104-4537
(605) 336-0244 or (888) 4-SUMPTION
www.sumptionandwyland.com