HR Toolkit


HR Planning

The Board's Role in HR

As the governing body of a nonprofit, a board of directors provides oversight to ensure that the organization meets its mission and is operated effectively and in the best interests of the stakeholders: members, clients, funders, employees, and the community at large.

The board has overall responsibility for strategic planning, finances, organizational operations, community relations and human resources. This section of the HR Toolkit focuses on the board's responsibilities for HR.

 

Governance and board structure

As the oversight body of a nonprofit organization, the board of directors is ultimately responsible for an organization's HR management activities. However, the level of involvement in HR management practices will depend in part on how long the organization has been in existence and the governance structure (model) used. In most established organizations, the board is charged with hiring and managing the performance of an executive director to which the responsibilities for operational HR management are typically delegated.

The Institute On Governance identifies three distinct roles in an organization:

  • Governance - The interface with stakeholders, the source of strategic decisions that shape the organization and its work, and the ultimate accountability for the work and actions of the organization.
  • Management - The link between governance and work. The organization of tasks, people, relationships and technology to get the job done.
  • Work - Performing the tasks required to fulfill the mission.

 

Recommended Reading

Grassroots Governance: Governance and the Non-Profit Sector (PDF)

Developed by the Certified General Accountants of Ontario, this free guide provides a great starting point for volunteers and board members who want information on good governance for their grassroots organization. The guide addresses the top issues facing volunteer boards of directors including the role of volunteers in good governance, ways to balance transparency and accountability, and how to guide the organization as it matures and grows.

 

Newly established organizations often have a working or administrative board where board members are directly involved in the day-to-day operations of the organization. These organizations often have no staff or they may hire a small number of staff to do work however the board volunteers take on the management role and some of the work as well.

As organizations grow, the board will eventually hire a person (executive director, administrator or coordinator) to manage the day-to-day operations of the organization. Even with a manager in place, the board of directors is usually still involved in some aspects of management which is reflected in a mixed board structure.

Mature organization usually develop a governance structure where the board of directors provides oversight on human resources management issues and only has direct involvement in the human resources management activities required to hire, supervise, and evaluate the executive director. Usually, one of two models of governance is adopted by mature organizations: Traditional Policy Board or a Policy Governance Board (Carver model).

 


 

Governance and HR management

 

Working/administrative board

Board members are involved in all aspects of HR management.

Advantages Disadvantages
  • Directors with expertise in HR management provide hands-on management of human resources
  • Consensus driven decision making can be time consuming and conflict ridden
  • Heavily dependent on board members to volunteer for additional responsibilities
  • Limited ability to respond quickly to employment issues

 

Mixed board

Board is less involved in management but remains involved in the work of the organization.

Advantages Disadvantages
  • Board committees can be established to work on areas such as HR management
  • Overlap in responsibility for HR management between the board and staff
  • Potential for role ambiguity
  • Tendency for the board to micro-manage operations
  • May be hard for board members to give up management responsibilities

 

Traditional policy board

Board establishes the organization's mission and goals; board provides oversight of the HR management practices to achieve the mission and goals; executive director is accountable to the board for human resources management; The board through its executive committee or President is responsible for HR for hiring, supervising, and evaluating the executive director.

Advantages Disadvantages
  • Committees made up of board members and senior staff may be established to develop HR policies and practices
  • The roles and responsibilities of the board and executive director for HR management are clear
  • Quick changes in HR management practices are difficult to make if approvals are required at the committee level

 

Policy governance board (Carver)

Board develops policy to set the ends to be achieved by the organization, the means to achieve those ends and the limits on the executive director for HR management; board as a whole directs the executive director; the board needs to establish a thorough reporting structure so that it can fulfill its oversight function for HR management.

Advantages Disadvantages
  • Responsibility for HR is delegated to the executive director within the limits set by the board
  • Executive director develops and implements all HR policies and practices
  • Issues with the executive director may be hard to deal with in a timely way when the board as a whole has to be involved in the process
  • The board is not involved in the development of policies and practices for HR management, yet as the legal employer, the board and individual members can be held legally accountable for breaches of law

 


 

Legal duties of directors

Each board member has a fiduciary duty to the organization. This means that the board is acting on behalf of the membership or stakeholders in directing the affairs of the organization. The fiduciary duty of the board is the same for all types of governance structures. This fiduciary duty covers all areas of responsibility, including HR.

In law, a duty is an obligation to act in a certain way and to a certain standard of care.

Duty Standard of Care
Duty of diligence

Directors are required to:

  • Act reasonably, prudently and in good faith
  • Educate themselves about the organization
  • Make reasonable inquiries into the day-to-day management of the organization, consider explanations and to make informed decisions
  • Diligent directors also seek the advice of qualified professional, when necessary

 

Duty of skill/competence

Directors with a special skill or knowledge have a duty to use that expertise in their role as a Board member, and to practice the standard of care expected of their professional abilities. For example, HR professionals and lawyers will be held to the standard of their professions on issues related to HR management and the law respectively.

Board members without specialized skill or knowledge are expected to act as a prudent person would act. Prudent directors are cautious and careful. They try to foresee the consequences of a course of action before taking it.

Duty of loyalty

Directors have a duty to always place the interest of the organization first. This means acting honestly, in good faith and in the best interest of the organization. Directors must fully and promptly disclose any potential conflicts of interest and take action to avoid perceived or real conflicts of interest.

Duty of obedience

Directors have a duty to act within the scope of the governing documents of the organization and to ensure that committees and staff do so as well. Governing documents include the organization's constitution, bylaws, policies, rules and regulations. This duty includes ensuring that governing documents are kept up-to-date.

Directors also have a duty to obey all laws and statutes that apply to the organization.

 


 

Role and responsibilities for HR management

In a mature organization, there are three participants in HR management: the board, executive director and line managers who directly supervise the work of other staff.

 

Note

The level of autonomy of a line manager for HR activities will depend in part on the size of the organization. Also, in larger organizations which have a dedicated HR management position, some of the roles assigned to the ED and the line manager will be the responsibility of the HR manager.


An organization with good governance practices clearly establishes the division of authority and accountability among the board, executive director and line managers. The role of the board is governance and the role of the executive director is management. Sometimes the roles can get blurred. In clarifying whose job it is, the board and the executive director must always keep in mind the board's legal responsibilities and liabilities as the employer.

 

Example

HR Responsibility Chart (PDF 155KB)

Outlines who is responsible for different HR tasks

 

 


Legislation related to employment and the responsibility of the board for compliance

Each board member is liable for ensuring that legislation is complied with. The executive director is hired by the board to manage the day-to-day operations of the organization. However, the board can not delegate its ultimate accountability for compliance with legislation.

Most organizations are provincially regulated and therefore must comply with provincial legislation. Some organizations are regulated federally and therefore must comply with federal legislation. All organizations must comply with federal legislation in specific areas such as Income Tax, Employment Insurance, and the Canada Pension Plan.

 

Note

Employment legislation changes regularly and it is incumbent upon the board to ensure that the organization has access to the HR expertise to keep current with these changes (either in-house or external HR expertise).

Provincially regulated organizations receiving funding from the federal government to deliver a service may be subject to Employment Equity Legislation under the Federal Contractors Program depending on the amount of money received and the size of the organization.

  In addition to the federal and provincial legislation, municipal regulations can also influence the workplace. For example, bylaws on non-smoking in the workplace must be upheld.

 


 

Fulfilling your obligations as a board member

How can directors of the board demonstrate good governance?

  • Fulfill your director's duties of diligence, skill/competence, loyalty, and obedience
  • Know your legal responsibilities and liabilities
  • Educate yourself about HR management
  • Regularly attend board meetings
  • Read all documents in advance of the board meeting
  • Ask questions
  • Take care when voting
  • Register your dissent if you believe the board is acting improperly and ask to have your dissent recorded in the minutes
  • Review the minutes of each meeting
  • If you were not in attendance at a meeting where a decision was made that you disagree with, ask to have your dissent recorded in the minutes at the next meeting
  • Establish sound organizational human resources management policies and practices
  • On a regular basis, ask the executive director to report on the organization's compliance with all legislation
  • Seek a legal opinion before important human resources management decisions are made
  • Purchase director's and officer's liability insurance

 

Links and Resources

Primer for Directors of Not-for-Profit Corporations (Rights, Duties and Practices)

Government of Canada website

Directors' Liability - A Discussion Paper (PDF 69KB)

Volunteer Canada

20 Questions Directors of Not-for-Profit Organizations Should Ask about Human Resources (PDF 1.3MB)
The Risk Oversight and Governance Board of the Canadian Institute of Chartered Accountants commissioned this briefing to assist not-for-profit boards in discharging their responsibility for the stewardship of the human resources of their organizations. This publication will assist directors of not-for-profit organizations with their key responsibilities: hiring, evaluating and planning for the succession of the executive director or chief staff person; setting the compensation of the executive director and approving the compensation philosophy of the organization; and overseeing the human resources policies and practices of the organization as a whole.

 

Next Section: HR Policies & Legislation