1. Governance: Roles and Responsibilities
Presented by:
Stacy Cantu, CAE
August 27, 2015

2. Why do boards exist?
American corporation statutes provide, with minor variations in language, that a corporation shall be managed by or under the direction of its board of directors.
American corporation statutes provide, with minor variations in
language, that a corporation shall be managed by or under the direction
of its board of directors. This board-centered model of corporate governance
is not only the universal norm in American corporate law, it is
also the prevailing model of corporate governance around the world. Yet, viewed in a literal and narrow manner, to say that a corporation shall be managed by or under the direction of a board of directors does not say that much.

3. Four Rationalizations for Board-Centered Governance
Need for central management.
Group decision-making.
Monitoring of management.
Representation of corporate constituents.*
*For profit only

4. Three Underlying Concepts
Relationship of the directors to the shareholders (stakeholders).
Relationship of the directors to each other.
Relationship of the directors to organization’s executives.

5. The trustee’s fiduciary duties include:
Three Legal Duties:
Duty of Care
Duty of Loyalty
Duty of Obedience
Trustees of a healthcare organization serve in a fiduciary role and provide guidance and leadership to the organization
The trustee’s fiduciary duties include:
Complying with mission, bylaws and policies of the organization and applicable laws
Exercising ordinary care in the governance and management of the organization
Remaining loyal to the organization and avoiding conflicts of interest

6. Duty of Care Consistently attending board and committee meetings
Being informed by obtaining and reviewing appropriate data and information
Participating in board discussions and decisions
Exercising independent judgment
Periodically examining the performance of executive and trustees

7. Duty of Loyalty Disclosing fully any potential conflicts of interest
Complying with the organization’s conflict of interest
Maintaining confidentiality as required
Avoiding using organizational opportunities for personal interest or gain

8. Duty of Obedience Adhering to the hospital’s mission and bylaws
Ensuring that all applicable laws are regulations are obeyed by individuals as well as organization
Understanding all documents governing the board and operation
Ensuring that board decisions further the organizations mission and comply with the scope of governing documents

9. Seat at the Table
Community leaders bring to the board table unique skills that match with future strategic needs to improve the health of the community.

10. Types of Boards For-Profit Boards Not-For Profit Boards 501c3 Boards
Public Boards (local, state, national)

11. Ten Core Competencies
Establish and maintain the organization’s mission and vision.
Ensure effective financial, legal, and administrative oversight.  
Hire, support, and evaluate the CEO
Ensure the organization has adequate funds to support its mission. 
Ensure effective organizational planning.

12. 10 Core Competencies (continued)
Serve as an ambassador for the organization and enhance its public standing.  
Maintain a healthy board through recruitment, mentoring, and self-evaluation.
Actively participate in board and organizational activities.

13. 10 Core Competencies (continued)
Ensure the organization operates in an ethical, accountable, and transparent manner.
Determine and evaluate the effectiveness of programs and services

14. Management or Governance Duties
Management Duties Governance Duties

15. CEO/Board Relationship
CEO’s only accountability is to full board as a body, rather than to officers or board committees
CEO works with AND for the board
CEO should be evaluated annually
- have prior agreement on objectives consider succession planning

16. Questions to Help Clarify Roles
Is it big?
Is it about the future?
Is it core to the mission?
Is it a high-level policy decision needed to resolve a situation?
Is a red flag flying or watchdog watching?
Does the CEO want & need the board’s support?

17. Best Board Meeting Ever
Agenda Important to Trivial Dashboard Financials Business of the Board Executive Summaries Agreement to Discussion Practices
Consent agenda
Agenda that focuses the meeting on the important matters
Agenda that is well thought out
Don’t meet if you don’t have to meet

18. Best Board Meeting Ever
75% Strategic

19. Effective Boards Emphasize mission and values
Set policy, direction and strategy
Participate in education
Ensure performance improvement
Act as advocates, local, state and federal
Focus on the big picture
Foster relationships with key constituencies

20. Ineffective Boards Running the Hospital
Investigating operational matters
Personnel other than CEO
Choosing equipment
Staff scheduling
Approving day-to-day operational policies or procedures

21. Questions?
We appreciate your invitation! Texas Healthcare Trustees Stacy G. Cantu, CAE 512/