What do we do about nepotism?
We've combined two questions here because the questions -- about spouses on boards -- require the same answer.
Dear Governance Matters,
I am part of a group of 15 individuals who are raising funds to drill wells in Africa. Although in existence for only a little over one year, we have successfully funded two wells.
With 15 people, making a decision can be challenging. We need to change our organizational structure. We are establishing a board and various committees. I am trying to avoid problems going forward but a situation has developed that makes me very uncomfortable.
We want to have a board of seven and I have taken the position that board members should not be related to each other. To me, having a husband and wife on a board each with voting rights -- could be a conflict of interest. I would really appreciate your input on this situation as well any documentation that would point out the pitfalls of such a practice.
Thanks so much for your help
Dear Governance Matters,
Is there a white paper that discusses the benefits/pitfalls of having spouses or other relatives serve together on the board?
Currently, I have a potential situation where I will be adding a voting board member's spouse to our advisory board.
To both D. and E., Hello,
The benefits and pitfalls of having a spouse or a relative of another board member are as you might expect: numerous. However, if the spouse will be on an advisory board rather than part of the official governing board, the downside may not be as great.
You are both absolutely right to put in place policies that will guide your board in the future. Generally speaking, having spouses on the board is not a good idea.
In the meantime, check out BoardSource for help on husbands/wives issue. I'll quote part of the material for you:
"One of the benefits of a diverse board is a multitude of perspectives. This kind of board tends to welcome new ideas and nontraditional thinking. Family members or close friends who are eager to serve on the same board often share objectives. In a small group setting, this approach may hinder innovation and keep the board from exploring new avenues.
To avoid nepotism, the board should pose the following questions:
- Does the organization have well-defined criteria for board service?
- Are these applied to each candidate?
- Is the board choosing candidates for their individual qualifications?
- Is the nomination process producing candidates whose qualifications and motives are genuine?
- Does the board have good processes in place to promote independent decision-making?
- Can the board trust that couples and family members leave personal issues outside of the boardroom?
- Can the formation of cliques be discouraged by not recruiting couples or family members together?
- Is the board small enough to be vulnerable if family members with similar interests make decisions?
- Is it limiting board diversity by inviting members of the same family to join the board?
- If one member of a family or couple leaves the board, will the other one follow suit?
- Is it unfair to focus on established relationships? Couldn't similar challenges affect other close friendships formed before or during board service?
- Is the board discriminating against candidates on the grounds of their family or marital status?"
I agree with BoardSource, that policies should be in place that apply to everyone. I'm not sure couples on the board is really a "conflict of interest," but it is bad practice.
It could lead to the perception of power cliques on the board and, although it may never happen, could create problems if the marriages go through rocky patches (most do!).
Editor, Ask the Experts