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Working effectively as a team: the board of directors and manager.

Jim Kiley and Bob Schillerr, two of our industry's most experienced leaders, have collaborated on this article examining the requirements for an effective working relationship between the board of directors and the general manager. They have provided us with guide for creating a positive working environment, defining board and manager responsibilities, and a list of commandments for an effective relationship.

The relationship between the general manager and board of directors must be one of trust and respect. The board of directors, individual board members and manager may not always agree or have the same viewpoints, but always in the end the board of directors and manager must work together as a team in the best interest of the membership and the cooperative. Differences of opinion in the board room are healthy, but when the discussion is concluded and the board votes, each board member and the manager has the responsibility to carry out the decisions of the board of directors.

The Model Business Corporation Act describes the responsibilities of a director as follows:

"A director shall perform his duties as a director, including his duties as a member of any committee of the board upon which he may serve, in good faith, in a manner he reasonably believes to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. In performing his duties, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented."

The Model Business Corporation Act continues with responsibilities and authority of individual directors and the board of directors in many cases; however, we will discuss only one specific area: how the board of directors and manager must work together as a team.

The board of directors receives its authority and power from the Articles of Incorporation and Bylaws as adopted by the membership. Through these legal documents the membership delegates to the board of directors the responsibility to manage the day-to-day activities of the business. Directors are elected by the membership and function as individuals, but once board decisions are made they have only one voice--one which reflects the majority of the full board of directors' decision. The board of directors delegates authority and responsibility to the manager to manage the day-to-day operations of the cooperative.

Conflict or disagreement between the board of directors and manager or between an individual director and the manager must be resolved in open and honest discussion in the board room; otherwise it will lead to split boards, termination or resignation of excellent directors or managers. Unresolved conflict between the board and manager may create unrest and organization problems, and many times it takes years to rebuild trust and confidence. Most disagreements in the board room are not about the construction work plan or spending money on plant expansion, and they're usually not about financial forecasts indicating the need for future rate increases, power requirement studies, strategic plans or annual work plans and budgets.

Most disagreements between the board of directors, individual directors and managers take place over employee compensation, performance of individual employees or their outside activities, individual directors meeting with members or employees to discuss cooperative business or to find out how well the manager is performing. When the board of directors, individual directors and the manager understand and perform their responsibilities properly, these types of misunderstandings will be minimized.

How do successful boards of directors and managers create a positive working environment?

First, the board of directors and manager must understand and respect each other's authority and responsibilities. In order to accomplish this, the cooperative needs to have written policies that are clearly understood by every member of the board of directors and all management employees concerning:

* functions of the board of directors

* board/manager relationships

* delegations from the board of directors to the manager

When you have taken the time to develop these policies and annually review them for needed changes, the board of directors and manager will have a solid basis on which to discuss and resolve most problems.

Second, the board of directors and manager should establish a Strategic Plan for the cooperative. The Strategic Planning meeting is more than a "retreat"; it is a time to evaluate the strengths and weaknesses of the organization and develop a strategic direction that will strengthen the long-term success of the organization and provide a way to measure your success. The Strategic Plan incorporates understanding, direction and a statement of philosophy for the organization that are all incorporated in a Mission Statement.

Third, the board of directors should on an annual basis conduct formal written performance evaluations of both the board of directors and the manager. During these evaluations, specific development goals for the board of directors and manager should be established. Conducting a performance appraisal is a time to build relationships and foster improved performance; it is not a time to correct a problem that has been recurring over the past several months.

We have discussed in general the responsibilities of the board of directors and manager. Now let's review in more specific detail the responsibilities of each.


Responsibilities for rural electric managers can be divided into three major areas:

* Advising and assisting the board of directors.

* Managing operations.

* Establishing and maintaining effective external relationships.

Let's take a brief look at each of these key responsibilities.

The manager's most important responsibility is advising and assisting the board of directors. The manager plays the role of a staff advisor to the board in keeping them informed of their responsibilities as a board, providing them with information and data on plans and results, interpreting complex data in meaningful terms to the board, planning and promoting board training and development, and making adequate preparation for board meetings.

The second area of responsibility of a manager is to manage operations. The manager must have in place approved long and short-range plans which are designed to pursue strategic goals. The manager must have an approved organization structure which permits him to attract and retain qualified employees. The manager must permit employees to assume responsibilities through delegation to make sure that available resources are productively used. The manager must have in place the systems to monitor progress and performance compared to plans, and he must be able to predict results.

The third, and perhaps most neglected area of responsibility of a manager, is the establishment and maintenance of effective external relationships. The manager needs to be an informed and active participant in allied organizations, particularly with power supply organizations. Local, state and federal government relations are a must today, and relationships with industrial development and community development groups are required. Add to this consumer relations responsibilities and you have an understanding of the scope of this part of a general manager's overall responsibilities.

For mutual understanding, individual directors and managers must also understand the functional responsibilities of the board of directors. These are as follows:

Legal Entity--To assure the organization is in compliance with applicable state and federal laws, as well as the bylaws and all contracts and agreements.

Trusteeship--Although directors are normally elected in designated director districts, they need to understand that their trusteeship responsibilities require that they represent the interests of all the organization's member/consumers.

Planning--The board's responsibility for planning generally involves the review and evaluation of plans prepared and submitted by the manager. Once these plans are understood, the board is in a position to approve associated goals and budgets.

Resources--All the plans in the world are of little use unless the board adequately provides the human, physical and financial resources required to carry them out.

Control--For the board to really know how the organization is doing compared to plans and goals requires feedback. A good control system shows clearly how the organization is doing and points toward corrective or remedial action required.

Board/Manager Relationships--Rural electric managers and board members who have the best ongoing relationships all have one thing in common: there is a written board policy outlining board/manager relationships. This policy should be developed in draft form by the manager and discussed in detail with the board. Specific actions on the part of the manager or the board that would be considered as violations of the terms of this policy should be recited and discussed. The best time to develop and adopt such a policy and to discuss compliance with it is when you do not have a problem.

Delegations to the Manager--Without specific delegations of authority and responsibility from the board to the manager, nothing happens at your organization. This is a very important responsibility of the board and many boards utilize outside professional help in establishing these delegations. Whether you have just employed a new manager or whether you are putting these delegations in writing for the first time, it's important that the delegations be clearly identified and tailored to your manager.

Delegations should be tailored to the individual. There are three kinds of delegations a board can make and any one of the three is a legitimate delegation.

1. Complete and total delegation of a responsibility along with the authority to make decisions and take action.

2. Delegations of authority in coordination with others--this requires the manager secure agreement from others on the issue before he takes action. This is usually the management staff, or it could be a board committee or the corporate attorney.

3. Delegations of authority in cooperation with others--this requires the manager to discuss the issue with stated others before making decisions and taking action.

Delegations of authority in coordination or cooperation with others are usually reserved for the new manager, and generally the conditions of delegation are eliminated as the new manager matures. In any event, get the delegations in writing and make certain they are mutually understood.

Fifteen Commandments of Effective Board/Manager Relations

For the Board of Directors

1. Work with the manager to clarify organization goals and priorities.

2. Establish written policies on board/manager relations and delegations to the manager.

3. Don't attempt to settle employee, consumer, or public complaints--refer them to the manager.

4. Don't go directly to employees to check on the manager or the cooperative's performance.

5. Conduct regular appraisals of the board of directors and the manager at least on an annual basis.

6. The board room is the forum for expressing your questions, concerns and opinions--these discussions should not be held with the members or the public.

7. Ask questions until you clearly understand the issue being considered.

8. Regularly attend director training programs and conferences.

For the Manager

9. Work with the board as a team to establish goals and priorities. 10. Remember, the manager's most important responsibility is advising and assisting the board.

11. Don't "lobby" or "politic" individual board members.

12. Don't compromise board relations with key consultants.

13. Insist on a regular appraisal of performance by the board--at least annually.

14. Plan carefully for each meeting of the board of directors.

15. Don't surprise the board with important issues at the board meeting.


Boards of directors and managers who are successful work together as a team. Their relationships are based on mutual trust and respect. Their plans and accomplishments are based on strategic planning. Successful boards and managers don't dwell on the past--they learn from it and recognize that the past is gone and the future belongs to those who are willing to manage.

* Jim Kiley is general manager of Sioux Valley Empire Electric Association located in Colman, South Dakota. Jim has served as general manager for the past 9 1/2 years and has been employed at Sioux Valley for 39 1/2 years. In addition to his responsibilities at Sioux Valley, Jim currently serves on the board of directors of Central Area Data Processing Cooperative and the Food and Energy Council. He is a member of the Rural Electric Management Development Council, and is also an instructor in the Management Internship Program.

Sioux Valley Empire Electric serves approximately 13,000 members in eastern South Dakota. The cooperative is well represented with residential, farm, commercial and industrial loads.

* Robert Schiller is general manager at Adams Rural Electric Cooperative located in West Union, Ohio, a position he has held since 1990. Adams serves approximately 5,400 members in southern Ohio. Prior to joining Adams REC, Schiller was a senior management consultant for NRECA, managing and participating in the delivery of the Management Internship Program, developing and instructing director and management training courses and providing general consulting to rural electric systems. Bob continues to provide some consulting and training for NRECA.

Schiller holds a bachelor's degree in business administration from Morehead State University in Kentucky and has done graduate work at the University of Louisville.
COPYRIGHT 1992 National Rural Electric Cooperative Association
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Kiley, Jim; Schiller, Bob
Publication:Management Quarterly
Date:Sep 22, 1992
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