How to effectively communicate with your CEO

1
How to effectively communicate with your CEO

• Beth C. Koob, Esq.
• Chief Counsel and Corporate Secretary
• Temple University Health System, Inc.

2
Introduction

• Understanding Nonprofit Corporations
• Understanding the duties of Directors the
  responsibilities of the Board
• Understanding the responsibilities of the CEO
• Working together to create an effective
  organization

3
Nonprofit Corporations

• In Pennsylvania, nonprofit corporations are
  regulated by the Pennsylvania Nonprofit
  Corporation Law of 1988, which governs every
  aspect of a nonprofit corporations structure and
  operations.

4
Nonprofit Corporations

• Every nonprofit corporation in Pennsylvania has
  the authority to appoint and remove officers and
  employees of the corporation, and fix their
  reasonable compensation.

5
Difference between a nonprofit and a for-profit
corporation

• Nonprofit corporations have a charitable mission
  and are not profit oriented.
• Surplus revenues remain within the corporation
  and are used to further the nonprofit
  corporations stated mission, purposes and goals.

6
Duties of a Director

• I. DUTY OF CARE
• The Director stands in a fiduciary relation to
  the corporation
• The Director and the Officer perform their duties
  in good faith, in a manner they reasonably
  believe to be in the best interest of the
  corporation and with such care, including
  reasonable inquiry, skill and diligence, as a
  person of ordinary prudence would use under
  similar circumstances

7
Duties of a Director (cont.)

• I. DUTY OF CARE (cont.)
• The Director may rely in good faith on
  information, opinions, reports or statements,
  including financial statements and other
  financial data.

8
Duties of a Director (cont.)

• II. DUTY OF LOYALTY
• Directors must give their undivided allegiance to
  the corporation
• Directors may not use their positions or
  information gained concerning the organization or
  its property for personal gain
• Directors must keep non- public information about
  the corporation confidential

9
Duties of a Director (cont.)

• III. DUTY OF OBEDIENCE
• Directors must be faithful to the corporations
  mission
• Directors must follow the Articles of
  Incorporation bylaws
• Directors must insure the corporations
  compliance with laws applicable to its operations

10
Nonprofit Corporations Tax Status

• Under federal law, a charitable corporation is
  described under Section 501(c) of the Internal
  Revenue Code.
• Section 501(c)3 charities and charitable
  organizations are subject to various restrictions
  on their internal operations and external
  activities.

11
Nonprofit Corporations Best Practices

• I. Sarbanes Oxley Act of 2002
• Increases financial transparency and
  accountability
• Expands the role of the Board in the oversight of
  the finances of the corporation

12
Nonprofit Corporations Best Practices

• II. Governance Best Practices
• Executive Compensation
• Conflict of Interest
• Audit functions

13
What are the responsibilities of a Director

• The Board of health center is governed by
  specific regulations as defined by the Bureau of
  Primary Health Care (PIN 99-09) and the Public
  Health Service Act (42U.S.C.A. 254b)

14
What are the responsibilities of a Director
(cont.)

• Select the services to be provided
• Approve the health center budget
• Approve the Executive Director
• Establish and adopt health care policies,
  including scope and availability of services,
  location and hours of services and quality of
  care audit procedures

15
What are the responsibilities of a Director
(cont.)

• Evaluate center activities including utilization
  patterns, productivity of the center and patient
  satisfaction, achievement of project objectives
  and development of a process for hearing and
  resolving patient grievances

16
Responsibilities of Senior Management (CEO)

• The CEO has such authority to perform such duties
  in the management of the corporation as provided
  in the bylaws or pursuant to Board authorization
• Effective ethical operations

17
Responsibilities of Senior Management (CEO)

• Business budget planning
• Risk Management
• Financial reporting
• Public Relationships

18
Relationship of Board and CEO

• Develop a clear understanding of the Board and
  CEO roles, grant of authority
• Articulate the roles of the Board and the roles
  of the CEO

19
Effective working relationships through Board
oversight

• What the Board wants-
• Advise the CEO
• Ask hard questions
• Being involved in strategic planning

20
Effective working relationships through Board
oversight

• Encourage candid information flows to monitor the
  effectiveness of actions taken
• Request formal follow-up
• Promote full discussion of important corporate
  issues
• Develop written performance objectives
• Establish and monitor performance metrics

21
Effective working relationships through Board
oversight

• Expect the CEO to present issues to the full
  Board
• Streamline board materials

22
Creating effective working relationships with the
Board

• What the CEO wants-
• Be an active and engaged Board
• Back decisions that have been made
• Set clear performance expectations
• Maintain an open line of communication
• Keep sensitive information confidential
• Stick to the big picture not the small stuff

23
Pitfalls

• Be accessible to the CEO
• Attend and participate in Board meetings
• Educate yourself about the health care industry

24
Pitfalls

• Avoid undermining the authority of the CEO
• Respect the organizational structure and
  communication protocols
• Avoid handling day-to day operations and delegate
  responsibility

25
Conclusion

• To transform a corporation into a dynamic
  organization, define the roles of the Director
  and the CEO
• Establish best practices in corporate governance
• Keep the lines of communication open