BishopAccountability.org
	Policing the CEO Is Board's First Duty By Robert Weisman Boston Globe May 25, 2006 http://www.boston.com/business/articles/2006/05/25/ policing_the_ceo_is_boards_first_duty/ At businesses and nonprofit organizations, hiring and policing the chief executive has become the number one priority for boards of directors, and charges of sexual harassment should jump to the top of a board's agenda, governance specialists say. While boards also have responsibility for financial stewardship and upholding the reputation of their company or nonprofit, evaluating the chief executive is paramount, said Paul S. Grogan, president of the Boston Foundation, a community foundation. "Boards should meet the highest standards in the nonprofit world because, if anything, nonprofits are more fragile," he said. "You don't have access to the capital markets. You have to convince people to fund you, and those relationships are subject to severe damage." The responsibility of directors came into sharp focus when the Globe reported Sunday that the board of the nonprofit Caritas Christi Health Care System had privately reprimanded Robert M. Haddad, its president and chief executive, for allegedly hugging, kissing, and touching four female employees, as well as phoning them to talk about their personal lives. Senior advisers and the Caritas senior vice president for human resources recommended that Haddad be fired. The initial response of the Caritas Christi board stood in contrast to the decision of the board of technology services company Keane Inc. of Charlestown, which said on May 10 that chief executive Brian T. Keane would step down after two female employees accused him of sexual harassment. Keane denied the allegations, but admitted to conduct that "reflected poor judgment," according to the board. "When this situation surfaces, when you're a publicly traded company, it's critical that you focus the board's attention on it," said Larry Begley, a director of Keane Inc. Michael Useem, professor of management at the Wharton School of the University of Pennsylvania, said that boards in recent years have become far more vigilant about improprieties by top managers. "In this era of squeaky clean commitment to good governance and good ethics, it's incumbent upon boards -- and directors feel this these days -- to very quickly ensure that they walk the talk, that they act according to the ethical principles of the firm before problems fester, get out of hand, or even develop along these lines," Useem said. William F. Pounds, dean emeritus of the MIT Sloan School of Management, said the responsibility of a board to address a charge of sexual harassment or other improper conduct is unambiguous, whether it's a public company or a nonprofit organization. "Nonprofits are established to serve a public constituency, and the trustees of such an institution have a responsibility to the public welfare," he said. "If a question arises, the task of the board is to judge what would be in the best interest of all of the constituents involved in an institution," Pounds said. "That doesn't mean it's easy." While boards of public firms answer to shareholders, Grogan suggested that nonprofit boards are responsible to the mission of the organization, whether it's serving the poor, building affordable housing, or, in the case of Caritas Christi, providing healthcare. Questioning whether the Caritas Christi overseers can be considered a true board of directors, Grogan pointed out that the organization is run by the Catholic Archdiocese of Boston, where the cardinal has the ultimate power to hire or fire the system's president. "It really matters where the power is in an organization," he said. "If you don't have the power to fire the chief executive, then you're really more of an advisory board." Robert Weisman can be reached at weisman@globe.com.
Any original material on these pages is copyright © BishopAccountability.org 2004. Reproduce freely with attribution.