Why Board Members Sometimes Go to Jail, For Real!
August 13th, 2010 Filed under: Business Management Tips — Business Management Author
There are many reasons why people choose to serve on boards. Maybe a friend, family member, or co-worker asked you to serve to help out. Maybe you wanted to share your years of knowledge and expertise with an organization to strengthen your community. However, it is highly unlikely that you joined so that you can get fined or thrown in jail! But it is no secret that board members have been fined for neglecting their duties as director and sent to jail.
But Why?
1. Some are simply are unaware of their responsibilities and roles and avoid fulfilling them which leave them and their organization at greater risk for liability issues. How can a they fulfill their responsibility if they are unaware of what is required of them? By not ensuring that your directors are fully aware of what is expected of them in their role and responsibilities the organization may be at risk for conducting itself in a manner that is illegal.
2. Some forfeit their responsibilities by not attending meetings and/or rubber stamping decisions made by other board members. Just because a board member is absent from a meeting or several meetings does not prevent them from being held liable for the bad decisions that other directors make during their absences.
3. Some knowingly put their personal interests in front of the organization’s best interests. Boards have the collective responsibility to ensure that none of the board members are working in their self-interest. How do you do this? What standards need to be established to prevent this from happening? These are some of the issues that need to be addressed to help you develop a board that is high-performing. If a board allows one or even a few other board members to work in their own self-interests, it runs a great risk of having to pay severe fines and even do jail time. The IRS and attorney generals do not take these matters lightly, so invest into laying a great foundation for your organization.
Rodney D. Walker, M.B.A., M.A., is a professional life and business coach. Visit him today at http://www.waa.bz to sign up for his coaching newsletter, coaching blog, and receive his coaching tips. Copyright, 2010, Walker & Associates
