Q&A #167 – Does the Board of Directors have a responsibility to review staff policies?
Question: I serve on the Board of a nonprofit organization. Our Executive Director is in the process of revising and updating some of the staff policies in our employee handbook. The Executive Director handles most staff matters at our organization, so I’m unsure how much the Board should be involved in this process. Does the Board have a responsibility to review and approve policies that govern staff?
Answer: The chief executive of a nonprofit organization usually has the primary responsibility for managing staff and human resources issues, including the development and implementation of most employee handbook policies. With some exceptions, nonprofit Boards are not expected to review and approve staff policies, but the Board’s oversight role includes a duty to take reasonable steps to confirm these policies are in place and updated periodically.
For context, the Board of Directors of a nonprofit organization is subject to fiduciary duties including the duty of care. Traditionally, the duty of care requires Board members to exercise the care that an ordinarily prudent person in a like position would exercise under similar circumstances (the exact wording of this duty can vary from state to state). This duty of care is particularly relevant to a Board’s oversight function.
Many state nonprofit corporation statutes explicitly permit Board members to rely on information, opinions, reports, and statements of the organization’s management, staff, and others whom the Board member reasonably believes to be reliable and competent with respect to the matters at issue.
Consequently, most human resources matters are usually delegated to the organization’s Executive Director or other senior management staff, including the responsibility to create, disseminate, and implement policies on paid time off, remote work, and other day-to-day staffing issues. Most Boards rely heavily on the leadership of the chief executive on human resources matters, and excessive Board involvement in these areas is often seen as unproductive or a form of unnecessary micromanagement.
Nonetheless, nonprofit Boards have an important oversight role regarding these matters. Board members should take steps to ensure that adequate employment policies are in place and that these policies are being reviewed and updated periodically to comply with applicable laws and protect the organization from financial liability and reputational risk. In practice, this should include regular inquiries and assessments to confirm whether the organization’s staff policies are accessible to Board members, having management periodically present a summary of the policies and any significant updates, and ensuring that qualified legal counsel has reviewed these policies every few years.
Planning Tip – Consider including a summary report on significant updates to staff policies in the employee handbook when they occur with links to view the full current policies, in the consent agenda for Board meetings. This practice can help Boards strike the right balance when it comes to staff policies, providing a way to ensure that adequate policies are in place while avoiding excessive Board involvement in matters that have been delegated to the organization’s executive managers.
However, more active Board involvement is often recommended for certain staff-related policies that involve core Board governance functions or raise important issues impacting organization’s values and reputation. Common examples include whistleblower policies, executive compensation policies, charitable gift acceptance policies, codes of ethics, and conflict of interest policies. Since the Board (or one or more Board committees) typically has a role in the implementation of these policies, Board review and approval is appropriate.
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