Governance practices in the for-profit sector are not much different from those in the hospital/health system not-for-profit world. Consider this on board education from Deloitte Center for Corporate Governance: “Today’s boards of directors are facing an unprecedented level of scrutiny and pressure from shareholders, the media, institutional investors, and other stakeholders. Boardroom training and development are fundamental elements in enhancing board effectiveness and can help board members be better prepared to tackle uncertainty. An effective board education program offers ongoing educational opportunities that help board members continuously cultivate skills that enhance the overall effectiveness and performance of the board.” (“Hot Topics: What does an effective board education program look like?” Deloitte Center for Corporate Governance, Corporate Governance Monthly, June 2013.)
- Board “negligence,” both in not-for-profit and for-profit organizations, makes headlines.
- Board education continues to be the most effective antidote to board underperformance/negligence for both for-profit and non-profit boards.
- The amount of information available to boards is so voluminous that often it is counterproductive.
- Education experts recommend that the information be delivered in small increments rather than a deluge of white papers, special reports, presentations and seminars.
- In the not-for-profit hospital governance arena, new Internet-based technologies allow individual board member education sessions that can also migrate to full board education presentations.
- These technologies require true engagement on the part of the individual board member—personal initiative to keep up-to-date on the most pressing issues organizations face both today and in the future.
The Deloitte authors wrote that many for-profit company boards only recently began formal board education programs, primarily because risks have increased and board members have come under increased pressure—and boards under increased scrutiny.
Board “negligence” involving for-profit companies as well non-profit organizations makes headlines. Consider the many corporate scandals over the last decade, and then consider the recent news about hospital/system CEO incentive bonuses and the moderate firestorm it has ignited in the media and in Congress.
Board education continues to be the most effective antidote to board underperformance/negligence for both for-profit and non-profit boards. Effective board education, however, requires full board participation and engagement in the education process, not a perfunctory nod to board orientation manuals and other traditional “check the box” education activities.
Deloitte writes that effective board education includes both initial and recurring director training on a wide range of topics—from “onboarding” to continuing education to updates on emerging issues. Board education allows organizations “to continuously invest in and significantly enhance the knowledge and readiness of the board and the overall organization.”
But board orientation should go beyond the basics (organization charts, charters and bylaws, code of ethics, financial statements, meeting minutes) to include information about the roles and responsibilities of board members themselves and how to govern effectively. And for new board members as well as those who have served on the board for several years, the amount of information available is so voluminous that often it is counterproductive.
Information about how to govern and, equally important, information about the environment in which the organization conducts its business (including laws and regulations, market dynamics, strategic issues, etc.) should feature prominently on the board education curriculum. For any board education program—either orientation for new board members or continuing education for experienced board members—providing the appropriate information can be tricky. Too much can be counterproductive; too little ultimately is useless. Education experts recommend that the information be delivered in small increments rather than a deluge of white papers, special reports, presentations and seminars.
Use of Technology in Board Education
The Deloitte authors noted the emergence of technology as a delivery mechanism for board education, “allowing for more options in the delivery of training and development programming.” Technology, along with in-house facilitation of education sessions (taught by someone on the board or within the organization), learning events facilitated by a third party and external sessions (symposia, conferences, etc.) provide a hybrid approach that tends to be most convenient and effective for the board.
In the not-for-profit hospital governance arena, new Internet-based technologies allow individual board member education sessions that can also migrate to full board education presentations. A board member can view a short program (typically interactive) on his/her own time and that same program can be presented to the board as a whole for further discussion and application to the organization’s own specific issues/challenges. These technologies require true engagement on the part of the individual board member—personal initiative to keep up-to-date on the most pressing issues organizations face both today and in the future.
“There is widespread agreement that ongoing education is important for maintaining an up-to-date and effective board,” the Deloitte authors noted. The New York Stock Exchange (NYSE) Corporate Governance Rules require listed companies to publicly disclose their policy on continuing education and orientation for directors. While the NASDAQ does not currently have a similar mandate, it does suggest as a recommended practice a comprehensive orientation and continuing education of board members.
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The iProtean library of both foundational and advanced courses for board members offers in-depth education and information on basic practices and emerging issues of critical importance to hospital/health systems. The importance of board education itself is covered in several of the Governance courses featuring Barry Bader, Lawrence Prybil, Ph.D. and Anne McGeorge.
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iProtean Symposium & Workshop
Mark the Date!! October 2 – 4, 2013 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Michael Irwin (Citigroup), Todd Sagin, M.D., J.D. (Sagin Healthcare Consulting), Dan Grauman (DGA Partners), Pam Knecht (ACCORD LIMITED), Barry Bader (Bader & Associates), Ed Kazemek (ACCORD LIMITED). For more information, click here.
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