This example illustrates a problem of corporate control. Who is in charge? What's your duty when learn of a problem? Some of the issues are reviewed at Discussion.
Barbara is a new board member; Jim has been a board member for several years.
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This example illustrates a problem of corporate control. Who is in charge? What's your duty when learn of a problem? Some of the issues are reviewed at Discussion. Barbara is a new board member; Jim has been a board member for several years. |
Example
Jim: So what did you think of your first board of directors meeting?
Barbara: I don't know. Of course I'm pretty new to the board...
Jim: What didn't you understand?
Barbara: Well the executive director, Bob, he kept interrupting the president. Sometimes I thought Bob was running the meeting and not the president.
Jim: They work together pretty well; when things get confused Bob will usually step in and straighten things out.
Barbara: But should Bob have been there when we were doing his evaluation?
Jim: I don't know why not. Bob probably wrote it.
Barbara: Bob writes his own evaluation?
Jim: Pretty much. Look, Bob has been here from the start. This organization wouldn't exist without him. The board of directors trusts him completely. He's not going to hurt us.
Barbara: I'd heard that.
Jim: If it weren't for Bob, the community wouldn't have the services we provide.
Barbara: I have a friend who works at the organization's offices as a counselor.
Jim: Who's that?
Barbara: She asked me not to say. Anyhow, she says that Bob comes on pretty strong to the women who work there. She says women who complain get bad reviews.
Jim: I don't believe it. Bob simply wouldn't do anything that would hurt the organization.
The board of directors has both responsibility and liability for overall corporate control. Those duties are not delegable; directors cannot instruct others to perform certain duties. If the board of directors abdicates its responsibilities, it remains liable to the nonprofit corporation, the members (if any) of the nonprofit corporation, and in some circumstances the creditors of the nonprofit corporation.
The executive director of a nonprofit corporation, sometimes called the chief professional officer, is the employee of the board of directors and typically serves at the pleasure of the board of directors. To the extent that board of directors fails to supervise and evaluate the executive director, the board and the individual members face liability.
Loyalty to a valuable employee is an important and worthy quality, but unquestioning loyalty, and loyalty in the face of accusations of serious misconduct is misplaced. The pattern of facts here suggests classic sexual harrassment. Ignoring sexual harrassment creates a grave risk of punitive damage awards against individual directors. The board should also have procedures in place to handle employee claims of harrassment, and should make certain that employees and volunteers are aware of those procedures.
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