Dear Governance Matters:
I am executive director and a voting board member of a nonprofit company with a budget just over $1,000,000 and a staff of four.
Our by-laws name me as the board-appointed executive director and then go on to state that the board may hire and determine the salaries of "associates" or assistants" for me as well as other staff who will, as noted in the by-laws, report to me.
This seems both unnecessary and inappropriate because hiring staff ought to be dealt with directly by me, as executive director, and not the board. The lawyer on our board, who drafted theses by-laws, says that this wording is legally necessary. Is it necessary that the by-laws deal with hiring staff that will not report to the board?
A lawyer and a governance consultant who work with nonprofit organizations have responded to your question. Both agree with you that the board's role in deciding salaries other than the executive director's is not a legal requirement at all. From a legal standpoint, by-laws should not deal with employment matters, other than hiring the chief executive, no matter what title that position is given.
Best governance practices, our experts concur, call for the board to hire, monitor and evaluate the chief executive but not any other staff. All other staff are hired and supervised by the chief executive.
Some arts organizations are exceptions to this rule in that both an artistic director and an executive director are hired and evaluated by the board. The responsibilities of these two directors are, of course, quite distinct and should be very clearly defined.
Our experts are concerned about the possibility of a hidden agenda by the lawyer who wrote your organization's by-laws, and would be curious as to why he/she added this unusual staffing responsibility to your board's duties.
Governance Matters "Ask the Experts"