SHOULD AN HR EXECUTIVE BE ON YOUR NONPROFIT'S BOARD?

DATELINE: December 16, 2009, Chicago

By now, anyone who has thought about nonprofit governance has come the conclusion that every board should have at least one person with financial and accounting knowledge on the governing board.  Should it be a banker, CPA, or an investment manager?  Most would argue that if you can get all three, so much the better.

Although getting someone with financial experience to serve on a nonprofit board proves difficult for many organizations, we suspect finding an employment practices lawyer who is willing to serve is far more difficult.  Yet, we regularly advise nonprofit groups that if you can get...

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an employer practices lawyer, so much the better.  The anecdotal statistics support our reasoning.  We have read time and again that when a nonprofit is hit with a lawsuit, the majority of the time it involves employment practices—wrong termination, sexual harassment, some form of discrimination, violation of the medical leave act, or invasion of an employee’s privacy.  

We have had the good fortune to serve on a board with an employment practices lawyer.  Based on that experience, we can confidentially say he was worth his weight in gold.  He reviewed the employee handbook, advised on how to conduct performance reviews, and oversaw terminations.

This past Monday, the Wall Street Journal carried an article supporting our thinking and experience.  Joann S. Lublin, HR Executives Suddenly Get Hot: Profession is in Demand for Board Seats as Firms Seek Guidance on Pay, Deals (December 14, 2009) The article didn’t focus on employment practice lawyers, but rather, on executives who headed human resource departments.  

The article focuses on publicly traded companies.  According the article, 65 current and former HR managers serve as outside directors on 101 boards of publicly traded companies.  One consultant told the Journal that ten years ago the number would have been more than a half dozen.  Spencer Stewart, a search firm, told the Journal that 7% of its U.S. board placements in the first 11 months of 2009 were present or former heads of HR.

The remaining portion of the article provides a number of anecdotes.  One indicates that the HR person was helpful with executive succession planning.  Another notes that the person provided insights into issues surrounding workforce reductions.  The article makes a good case that an HR manager may be better than a employment practices lawyer.  While we have focused just on the litigation aspects in the past, the article focuses on a number of difficult business issues that go beyond just legal considerations.  And so maybe nonprofit boards should seek both employment practice lawyers and heads of HR.  As the old saying goes, if you can get both, so much the better.

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THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NONPROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL. If you liked this post, please visit http://www.charitygovernance.com for a description of our training and consulting services. You will also want to acquire a copy of Jack Siegel's book, A Desktop Guide for Nonprofit Directors, Officers, and Advisors: Avoiding Trouble While Doing Good." Copyright 2009, Charity Governance Consulting LLC. All Rights Reserved. You may not copy any portion of this post to a computer "clipboard" for re-posting anywhere or e-mailing, or otherwise reproduce this post. If you want others to review this post, you may provide them with a link to this web blog. Any use of the material or ideas in this post by reporters or other publishers shall make reference to Jack Siegel, author of "A Guide for Non-Profit Directors, Officers and Advisors: Avoiding Trouble While Doing Good" and this web blog. For additional information call 773-325-2124