Board Error #3: Identify Vested Interests

Board members are chosen for their connections as well as their KSAs (knowledge, skills and attitudes) relevant to the organization's current needs. Organizations must attend at all times to the quality of their linkages to a number of critical stakeholders: members, competitors, other organizations in the same business space, vendors, suppliers, regulators, accreditors, funders, governments and their agencies, the press. Creating a ‘skills-based board' requires tracking the KSAs and the connections of all potential board members and choosing individuals that will augment the array of KSAs and connections already on the board.

By definition therefore, there will be vested interests on the board. Even if you are not carefully tracking connections, they are there and they should be discovered, disclosed and managed. The vested interest problem extends to staff as well; the remedy is the same: discovery, disclosure and active management.

The organization needs a set of policies to guide operations in these circumstances. Managing vested interests will vary in structure and process with the degree of confounded interest and the importance of the decision to be made. Significant related interests and substantial decisions (i.e. board member employed by agency under consideration for a large contract) will require entire recusal: the board member must withdraw from all discussion and decision-making on the issue. Other instances will present less personal self-interest: a board member recommending a consultant they had previously used themselves. Some shared interests should be actively encouraged, like a staff member recommending a friend for a position within the organization.

Organizations operate in an ever evolving web of relationships, so there will likely always be some level of interpersonal connection on some dimension involved most decisions and actions. Even the small ones should be made known to all involved however and managed according to previously agreed policies. Ignoring vested interests is Corporate Doom Flag #2!

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