A couple of days ago, I was reviewing a report from a non-profit I assist. The kind of statement, that takes you hours to work through and contains a lot of financial attachments. Everyone who read it was supposed to sign off on it electronically, and of the nine signatures, mine was the second to last. The first person signed 9 minutes after the document was made available. A fellow board member later asked me, why it took me 13 hours to sign a report prepared by a professional. Thus here are my thoughts about Trust vs. Due Diligence.
Trust
First of all, by now I like to trust people. If you cannot trust people working for or with you, you quickly descend into micromanaging every once activity. The first time, I had responsibilities for a team, back as a student, I had the feeling I needed to supervise everything others did, so they achieved the same level of excellence.
However, there is a difference between, control, trust, blind trust and stupidity. Being controlling would be to verify the rounding and sourcing of every figure and maybe do a complete spell checking of the report. Blind faith would be not to verify any of the numbers. Stupid is not to read the document.
Professionalism
Maybe you liked the glamour of a board appointment and the exposure it gives you. You never thought that there was any work involved in it. You are born some decades too late. While it is true, that in the 20th century, celebrities, politicians, and people with a glamor factor comprised most of the boards, apart from company founders, in today’s world most boards have become much more professional. Even for non-profit organizations, it has become essential, that the board understands the tax laws and can efficiently control the management.
Thus, boards are not just a hobby, but you should treat them as a job. They require the same kind of professionalism and acuracy that you should display every day. Only because boards might pay less per hour than your regular career does not mean, that they do not deserve attention.
Additionally, you do not know, whom you will meet during your tenure on a board. There could be the person, who offers you the next significant career change. Are you ready to give it up by displaying content for any work?
Consequently, you should treat a board appointment, no matter whether paid or unpaid, with the same amount of professionalism you show everywhere.
Organizational Continuence
Most board members want to see their organization continue to grow and prosper. Directors play an essential role to help shape the organizations future. For new board members it is often hard to understand, what is part of the job and what not. Especially, as boards commonly only meet twice a year and their regular career is occupying their mind most of the time.
However, if the nature of the position causes you to slack on its duties, it might affect a lot more people. Additionally, as the meetings are infrequent and often filled with agenda points, a single mistake might take a long time to correct or require people from around the world to come together for an extraordinary board meeting to approve a fixed document, while the organization moves full steam in the wrong direction.
Thus, it is crucial not just for you but the organization you serve, that every board member shows their due diligence.
Liability
If nothing else has convinced you, let me say a quick word about liability. While the risk of independent board members is limited and often covered by insurances, it nevertheless exists. It is your responsibility to perform the correct amount of oversight over the organization and its management. Negligence to do so can result in you being held accountable.
Do the Job
Between trust issues, professionalism and our wish to grow with the organization we serve, it becomes clear that you cannot slack off on your appointments. The excuse that professional audit firms, tax consultants and lawyers have prepared the documents is no excuse. After all, Enron hired Arthur Andersen, and both companies are now history.