Directors often have a lack of clarity on their roles and responsibilities. As a result, Board fiduciary responsibilities may not be fulfilled leading to a host of issues including conflicts of interest and a blur in between the role between Board members and senior staff, often resulting in confusion and unnecessary stress.
The solution can be achieved by Board orientation or in some cases a board training refresher.
Board Fiduciary Duties
Fiduciary duty equates with loyalty and encompasses the four main principles:
- The duty to act in the best interests of the organization
- The duty to disclose other interests and avoid conflicts
- The duty to maintain the Organization’s information in confidence
I consistently get asked a question by a directors and senior staff to clarify the duty to act in the best interest of the organization, as compared to acting on behalf of their own personal interests.
The duty to act in the best interest of the organization is extremely broad, requiring directors, and officers to exercise ordinary care in performing their duties. When acting on behalf in their capacity of serving the organization, they must put the organization’s best interests ahead of any other interests.
There are certainly some grey areas in dealing with this however if for example, the director has volunteered to speak on behalf of the Association and the volunteer spends the time promoting his business, he (or she) is defiantly not acting in the best interest of the organization hence not following his or her) board fiduciary duty.
Over the next few weeks, we will be addressing other solutions in a series of one-minute videos. If you haven’t already, follow me on Twitter to be notified when they are available.
If you have questions or areas that require immediate attention, please contact me at terry@realboardsolutions.com.
