Board behaviour, both collectively and individually, can have a far-reaching impact on an organisation’s reputation and success. While working on SCVO’s Information Service I have seen too many organisations seriously damaged by dysfunctional boards where mutual respect, integrity, openness and accountability have been woefully lacking. This is why Behaviour is a core principle in the Scottish Governance Code for the third sector.
All trustees must ensure that their behaviour, both collective and individual, is consistent with their organisation’s vision and values. A good starting point here, is for every trustee to always keep in mind why they’re on the board. They’re there to serve the best interests of the organisation, not to follow their own agenda, and they have to be able to put aside any differences to protect the future of their organisation. I recognise that sometimes you just can’t avoid differences of opinion, or even conflicts of interest, on a board. After all, trustees tend to be committed, energetic, and socially aware individuals, who have their fingers in lots of worthy pies and good causes. So it’s important not to panic if your board is faced with a conflict of interest. It’s not about trying to prevent it – it’s how you manage it that matters.
All charity trustees have a legal duty to act in their organisation’s best interests when making decisions. If a trustee has a personal interest, financial or otherwise, in a decision, then they may not be able to comply with their duties as a trustee. Similarly, if your duty to your organisation competes with a loyalty to another organisation or person, then again there’s a conflict of interest. So you must deal with perceived and actual conflicts of interest proactively. Here’s three tips to get you started:
- Identify– it’s good practice to have a written conflict of interest policy to tell your existing trustees (and help prospective trustees) how to identify and disclose potential conflicts of interest. Draw up a register of interests and keep it up to date. Have a standard agenda item at the beginning of each board meeting to allow trustees to declare any actual or potential conflicts of interest.
- Address – prevent any conflict of interest from affecting any decision making by finding an alternative way forward, or take appropriate steps to manage the conflict, eg make sure the person affected withdraws from discussions about the issue and does not vote on the matter.
- Record – keep a written record of the issue, which trustee was affected, and how you dealt with it in the minutes of your meetings. Note if the conflict of interest was declared in advance, outline the discussion, and record if anyone withdrew, and how you and the other trustees made the decision in your organisation’s best interests.
Ensuring a board behaves with respect and integrity is not just about dealing with conflicts of interest, it’s also about creating a constructive board environment where diverse, and at times conflicting views are welcomed, and decisions are reached collectively. We know that trustees tend to be passionate people who don’t always agree, and ultimately that’s what can make them good leaders. Which rather neatly, is the subject of tomorrow’s blog.