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.
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
Board members are involved in all aspects of HR management.
Board is less involved in management but remains involved in the work of the organization.
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.
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.
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:
|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.
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.
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.
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.
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
Government of Canada website
Directors' Liability - A Discussion Paper (PDF 69KB)
What not-for-profit board directors need to know about human resources
Next Section: HR Policies & Legislation