One of the topics that I have been discussing with some of my career development clients is the comparison between a Board of Directors and the organization’s Officers. While I’ve heard some explanations to call them, Apples and Oranges; to me that suggests they are the same but different. Like Ford and Chevy or Nikon and Canon. I prefer to liken the comparison to, “Potatoes and Dumplings” where they’re different but related.
Board of Directors is the body of an organization that sets the strategic vision and culture of an organization. Individually, they have a voting right and no other power. The power and vision comes from the Board as a collective where duties are codified by state corporation laws. Each state has their own governance on the duties of a corporation. Though many states, if not all, require by-laws and articles of incorporation that clearly define how Directors are elected or appointed, how rulings are governed in an organization, and what are term limits.
Are term limits required? No, but here’s a good point:
Term limits offer the benefit of adjusting board membership to adapt quickly to changing needs. The IRS favors term limits, because they believe that static board membership leads to unhealthy attitudes, which can cause boards to govern out of self-interest rather than community interest.
Officers are the positions that focus on operational duties, the day-to-day tasks that take the organization to their Vision. They may not necessarily be on the Board of Directors (BoD), though the President or CEO is typically. They are usually appointed by the Board and report to the BoD. While sometimes, the President and the Chairperson of the Board are the same person, in a public corporation, that’s usually seen as a conflict of interest¹.
A simplistic consideration is that a BoD makes sure that the organization is doing the right work and the Officers are doing the work right. The BoD provides a prioritization for the Officers and the Officers make sure activities happen and the organization is on its path to its vision.
For my clients and students, even when the roles may be occupied by the same person, it’s helpful to keep thinking of the roles as separate. Just like potatoes and dumplings, they’re not the same though they are related. And while many dumplings can be made up of potatoes, like a pierogi or a potato gnocchi, many dumplings do not have potatoes like wonton or ravioli.
Potatoes
And Dumplings
¹ https://www.score.org/blog/directors-and-officers-understanding-roles-corporate-management
Volunteer officers are most commonly elected by the board, and compensated officers are commonly hired. The compensated executive director, president, or CEO (the Executive ) is generally hired by the board, and this is often identified as one of the most important duties of the board. Other compensated officers are generally hired by the Executive.
Yes, absolutely. And this is where a lot of small corporations want to work their way towards. At start-up or while they are small and annual activities are under $250,000, it is common that volunteer officers are appointed or where an individual may hold multiple positions. It’s helpful for small and start-up corporations to think in terms of scale and to remember that if they are in multiple roles, that as part of growth and organizational maturity, that the differing roles may be better filled by different individuals.