When discussing a nonprofit board’s role in human resource management, it is important to understand the difference between board and management. The main difference between the two is that only the executive director is responsible for hiring and managing staff, while the board of directors is responsible for managing the organization. In this article, we will highlight several major aspects of human resource management in which the board plays a role.
One of the responsibilities of the board of directors is to find and hire a candidate for the executive director or board member role. In addition, the board is responsible for negotiating a compensation package for the executive and assisting with hiring for other subordinate positions if requested. What is worth remembering, however, is that the board of directors acts as a supervisor and advisor in this matter, and the primary decision rests with the CEO. Direct intervention and hiring are out of their hands.
The board of directors ensures that their organization has a thoughtful set of workplace policies that comply with applicable laws and regulations. This ensures that your organization is less exposed to various risks. The board is free to review the content of the labor policy, but the CEO is responsible for creating, communicating, and enforcing it. If any board members know a related field of human resource management, they can use it during the proposal process to amend and update the policy. After every few years, the board should refer the labor policy document to legal counsel and supervisors to determine whether it needs to be updated.
The board shouldn’t have anything to do with employee compensation other than make and approve a compensation plan. So, the board should ensure that this plan is consistent with the company’s existing organizational values, is realistic concerning its budget, and supports its efforts to attract staff. The board should not look at an employee’s salary with their compensation. However, some participants look at employee salaries on a macro level to ensure they are consistent with the organization’s plan.
The board’s responsibility for performance evaluation includes a process for evaluating the CEO’s performance each year. Evaluation criteria may consist of the quality of feedback from employees, board members, partners, financiers, and customers. But the board does not evaluate the performance of other company participants. Nevertheless, the board should oversee and coordinate the CEO’s evaluation process in the community with the company’s KP specialist.
Complaints and whistleblowing
Complaint management rests on the shoulders of the CEO, but there are exceptions where a company employee may bring a complaint directly to the board because it cannot be handled through the normal grievance process. For such cases, companies should have a whistleblower to confidently report such complaints. The board of directors protects the employee from retaliation and harassment by doing so.
Boards of directors don’t usually interfere in human resources unless the CEO asks their board, so they don’t have human resources committees. But if you decide you do need one, then its responsibilities should include:
- Monitoring compliance with ethical standards and guidelines
- Creating competitive salaries for employees and a plan for attracting and retaining staff
- Deciding certain processes regarding complaints in their direction