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Board Confidentiality

The Relationship Model

You Asked: We seem to be having some “leaks” of information from our Board. It’s causing some controversy among our board members. What is your opinion on the obligation for board members to keep the business of the board confidential?

Answer: There will always be some discussion, debate and differences of opinion that are a normal and healthy part of the governance process. In fact, without such discussion I would suggest that the governance process isn’t as mature and effective as it should be. The answer to your question lies in the relationship between this discussion and the decisions that are reached as a result of it.

Decisions of the Board are usually, but not always, the kind of matters that can be made known outside the boardroom. That is particularly true of strategic decisions and decisions that affect staff inside or outside of the organization. These decisions should be announced in a process that the Board has chosen. It may be in the form of a memo from the CEO, a press release, or an official verbal announcement by the Board Chair or CEO. Decisions made in these ways are transparent. No one needs to wonder about the status of such news.

The Board speaks with one voice. Board members are obligated to support the decisions of the Board, unless the member’s conscience prevents him or her from doing so. (More on this exceptional circumstance later.) It is not appropriate for an individual board member to gainsay a decision to the public just because the decision didn’t go his or her way.

The details of the process that go into making the decisions are another matter. In order to preserve an open process, one in which each person on the Board is free to mention information relevant to the debate, there should be an understanding that the details of the discussion will not be discussed outside of the boardroom. Breaking this confidentiality should not be tolerated, or trust will be broken and the quality of discussion and debate will be adversely affected. Any dissent that a board member has should be expressed openly in the meeting during the debate on the matter, not outside the boardroom to others afterwards.

There may be a time when a Board member cannot for reasons of conscience or a personal sense of responsibility vote with the other board members on a given matter. It is appropriate for an individual member to register a negative vote on a motion, particularly if the individual thinks that there is a risk of personal liability in the matter. That negative vote should be recorded in the minutes with the person’s name. The other board members should respect this personal privilege. In my opinion, however, the dissenting board member should still not gainsay the Board’s decision in public.

In extreme cases it may be necessary for a board member to be a “whistleblower” in the case of serious abuse of power or irresponsible governance. In such cases the individual needs to decide, first of all, whether he or she can remain on the board in good conscience. If the individual decides to go to a higher authority, such as a regulatory body or the membership at an annual meeting of the organization, the individual should realize that depending on the outcome of the matter, it may result in his or her removal from the Board of Directors.

This is not to say that a board member should not take extreme action when conscience dictates, but it does mean that it may result in a decision that will dramatically affect the organization or one’s future role in it. It takes a lot of courage to be the voice in the wilderness, but it also takes a lot of careful judgement to discern the difference between responsible “whistle blowing” on the one hand and pride and stubbornness on the other.

Finally, every board member must decide how important the organization is to him or her. Many board members resign their positions too easily, rather than taking a stand on issues during the debate on issues. That is unfortunate. But the other extreme is also tragic. That occurs when an individual stays too long and attempts to force the organization into following a personal agenda that the majority doesn’t want to follow.

The best approach to dissent of any kind is to be transparent within the meeting itself and to rely on the confidentially and good judgment of the other board members to see the most difficult issues through to a conclusion that will enable the organization to realize its Mission within its moral and legal limitations.

Les Stahlke, President/CEO
GovernanceMatters.com Inc.