Follow the Money - Conflict of Interest Part 2

Following last week’s blog post about conflict of interest, we received some excellent feedback from insightful readers who provided additional points for consideration. In response, we’ve decided to defer the post we had planned and instead produce a follow up.

Last week’s post was written for the director who wants to self-declare a potential conflict of interest. Today’s post will discuss undeclared conflicts of interest and the problems created between board members by a lack of transparency.

Based on the responses we received, this is clearly a hot topic. So, let’s follow the money.

Governance courage, transparency, and the savvy director

When I served as chair of the local chapter of the Institute of Corporate Directors (ICD), there were times I needed to counsel volunteers to step off the program committee because their primary reason for being there was to generate business or find board appointments for themselves.

From experience, I know...

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"Oh no! I have a conflict of interest."

Relax!  Having a conflict of interest with respect to something on the board’s agenda need not interfere with your ability to function as a high quality board director.  It’s okay to have them.  It doesn’t make you a bad person or ineffective board member.  The real issue is whether your board has a good process/policy/practice to manage and mitigate any actual or potential conflicts.

What is a Conflict of Interest? 

Let’s get the definition out of the way.

A conflict of interest is a situation in which a director’s duty to the organization conflicts with their own interest or duties to others.  A conflict of interest can come about  either as a result of a personal conflict between the director’s own self interest and their duty to act in the best interest of the organization, or as a result of a conflict of duties that the director owes to the organization and to another organization. Such conflicts of...

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"What about our customers?"

Today’s edition of >> The Savvy Director™ << is focused on the challenges faced by a successful business person who is asked to serve on a government-sponsored agency, board or commission.

You might assume that the shift from a single bottom line (private for-profit) to a double bottom line (government revenue + social benefit) would be the most significant adjustment for the new director. You’re right. That’s part of it. The director’s role is essentially the same regardless of ownership scenario. I would suggest the main difference is how the income is put to use at the end of the year. Government entities may receive revenue targets for funds to be transferred to government coffers, while for-profit companies have targets for their owners or shareholders.

You would expect both types of organization to have a customer focus, wouldn’t you? But what if one entity has a monopoly in its market?

Meet Bob.

Bob has been a successful...

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"Are we in the kitchen again?"

Being on a governance board is like running a restaurant. Let’s say you are the original owner but now you have other investors.  You’ve hired a renowned chef to run the kitchen. If you keep going back there and adding salt to the soup, you will be looking for a new chef before you know it. You know what I mean? On the board, you represent the owners' interests. It’s time to get out of the kitchen and leave the cooking to the pros.

You may have started the business as a successful food truck operator doing everything but now you have investors and a board of directors who want you to be the best restauranteur in town. The investors want more locations, maybe even to franchise. Succession planning for the chef will become your core business if you’re not careful.

Your role on the board

So what is your job on the board then? I’d suggest it’s to act and govern like the owner/director that you are. Sure, there may be times when you need to...

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W.A.I.T. "Why Am I Talking?"

Have you ever returned home or back to the office from a board meeting and asked yourself, “Why did I say that?”

Me too. In fact, it happened a couple of weeks ago and it wasn’t the first time. But the frequency has gone down considerably since I’ve discovered and put to good use the acronym W.A.I.T. (Why Am I Talking?).

As we’ve noted in earlier blog posts, the art of asking questions includes waiting for the right time to contribute. And contribute you will with a timely, relevant question that has the potential to influence the discussion toward a successful outcome.

Those who are known to their peers as savvy directors seem to have their listening skills on high alert and their mouths figuratively fastened with Velcro. They break down barriers and encourage dialogue with good follow-up questions. I’ve seen this time and time again and admired how the technique works to influence the discussion.

The savvy director doesn’t feel the need...

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"Do I need a motion for that?"

Robert’s Rules of Order? I’m not a big fan of Robert’s Rules. Who is this guy Robert anyway? Who made him king?

Okay, you’re right, my tongue is planted firmly in cheek. Boards do need to have a way of conducting their meetings and making group decisions. Robert’s Rules provide that framework.

That said, an overly strict adherence to the parliamentary procedures outlined in Robert’s Rules of Order can really be a buzzkill at board meetings. I’ve seen great discussions get derailed by uncertainty about procedural details. (Hence the title of this blog post, “Do I need a motion for that?” – a question I’ve heard more often than I care to count.)

Details of the board’s decision-making processes – especially the rules of voting – should be outlined in the organization’s charter documents, its bylaws, policies and/or governance manual. Some organizations’ bylaws actually mandate the use of R...

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"Has anyone EVER had a good board orientation?"

I’m happy to welcome back Alice Sayant as today’s guest blogger. Alice is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com.

Alice’s thoughts on board orientation

Lately, my guilty pleasure is binge-watching old episodes of Friends on Netflix. Something that happened in the first season prompted me to think about board orientation for new directors.

I know, I know. It’s quite a stretch to compare the characters in a 1990’s sitcom to board directors. And the Central Perk coffee shop is not exactly a board room. But bear with me. There’s a connection.

Early in the series, Phoebe Buffay (played by Lisa Kudrow) reveals that sometimes she feels like an outsider from the group, as the other five have a long history which she doesn’t share. Well, it occurred to me that, when I have been the newest director around the board table, I’ve felt like Phoebe. It has seemed to me - rightly or wrongly - that all the other...

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"Why do my questions make other board members angry?"

“It’s not the question you asked, but how you asked it.”  Ever heard that one before? 

Thankfully it happens much less these days.  But it took an experienced director to pull me aside after a board meeting one time to help see the light. 

Body language, tone of voice, choosing your words with care, and simply waiting for the right time to jump into the discussion have all made a huge difference in my ability to have influence over others in the boardroom.  But not every time.  I still manage to mess up when I’m not conscious of listening first or not putting myself into the other person’s shoes.


W.A.I.T. “Why am I talking?” is a helpful acronym to tuck away into your savvy director toolbox.  Try using it sometime before blurting out your question or interrupting someone who is talking.


Ask yourself, “Do I really need to speak to this agenda item? Or is it just my ego wanting to hear myself...

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"Why do I have this sinking feeling before my board meeting?"


Remember that feeling just before walking into your first board meeting? That combination of excitement and trepidation? You were wondering what you had got yourself into. But you couldn’t wait to make your mark.

So what happened? You’ve been sitting on this board for a while now. And instead of feeling excited and energized, eager to add value and make a difference, you have this sinking feeling before every board meeting. You actually dread attending the meetings. But you’re not sure why.

I’ve been there. We probably all have. But why?

As human beings, our knee-jerk reaction is to blame something or someone outside of ourselves. That’s just ego talking. When I asked our community of board directors in a recent survey, “What do you think holds you back the most from achieving more satisfaction as a board director?” the single most frequent response was “lack of time”. Not enough preparation time, not enough time for development,...

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"Which board committee is right for me?"

From time to time in this space, I’ll be asking guest bloggers to share their thoughts about various board-related topics. Today’s blog is written by Alice Sayant. Alice is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com.

Alice’s thoughts on board committees

Recently I was asked to join a board of directors. I was already serving on a couple of other boards, where I was quite busy with committee work, and so I agreed to join the new board but declined to sit on any committees.

Mistake! By not sitting on any committees, I had automatically excluded myself from some of the most interesting, important and engaging work that a board does. You see, boards have such a broad range of responsibilities that they delegate some of the heavy lifting to the committee level. And while that means more work for committee members, it also means that they get to interact with management, delve into details, and really learn about the organization in a way...

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