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Unit 3 Board of Directors Activities

Starting up

1. Review the following words and phrases and remember their meaning (consult Unit 1).

mission

Articles of Incorporation

Bylaws

yearly budget

2. What two types of committees within Board of Directors do you remember? Give the example for each type (consult the article “Legal Requirements…” from Unit 1)

3. To use the time spent on meetings more effectively and to plan it a number of simple questions have to be considered. Put the following considerations into a proper logical order.

  • Who should be invited to attend?

  • How can we prepare for this meeting?

  • How long should the meeting last?

  • Is a meeting necessary to deal with this issue? (i.e. could a telephone call, fax or a memo suffice?)

  • How long should the meeting last?

  • What is the purpose of the meeting?

  • How will action points be captured and dealt with?

  • How can we ensure that the meeting is going to be worthwhile to those attending?

Reading

1. A) Read Part 1 and explain what the author means by:

  • startup activities

  • vision and values statement

  • charter document

b) make a list of phrases with the verb approve. Use this list to speak about Board of Directors startup activities.

Part 1. Board of Directors Activities Startup Activities

When forming a new corporation or association the board of directors typically has several specific activities they must conduct, including:

1. Approve the mission statement (may include vision and values statements, as well)

2. Approve Articles of Incorporation (or whatever charter document is required in your country)

3. Approve Bylaws (these are not always required in every country; you should consider having them anyway)

4. Select officers for the board including the chairman, vice chairman, secretary and treasurer

5. Approve (probably very rough drafts of the) strategic plan and yearly budget.

2. A) Read Part 2. Find the answers for the following questions:

  1. How does a Board of Directors meet their responsibilities?

  2. What determines the time of conducting certain activities?

  3. How often are the regular board meetings conducted?

  4. What are the most common activities conducted by Board of Directors?

  5. Should the Calendar be improved every year?

  6. Why can the Calendar be modified by a company?

  7. Who is to be provided with this Calendar?

Part 2. Yearly Activities — Board of Directors Calendar (specifies typical yearly activities and timing)

A Board of Directors meets their responsibilities usually by conducting certain major activities at certain times of the year. Often, the bylaws specify the time when certain activities will be conducted. Activities include, for example, conducting regular board meetings (every month, two months, etc.), conducting the board self-evaluation, evaluating the chief executive, reviewing and updating board and personnel policies, conducting strategic planning, recruiting new members, holding an annual meeting, reviewing and authorizing the yearly budget, etc.

Sample Board of Directors Operations Calendar

The following calendar is a template that can be modified by a company according to its specific needs. It should be updated yearly and provided to each board member and to the CEO.

• NOTE #1: There are certain one-time activities that the board should conduct during the startup of the organization, (see the Startup Activities List above).

• NOTE #2: There are also certain activities that recur in each regular board meeting. Regular board meetings might be held once a month, every two months, once every three months, etc.

• NOTE #3: The timing for each of the following activities should be relative to the timing of the beginning of the fiscal year. In the following sample table, the fiscal year begins January 1.

Regular Board Activity

Approximate Dates

(see NOTE #3 above)

1.

Fiscal year begins

January (fiscal-year timing is often specified in the bylaws)

2.

Conduct Board Self-Evaluation (do once a year and in preparation for first board retreat – there are 2 per year)

March-April (do shortly before the evaluating chief executive)

3.

Evaluate Chief Executive (by referencing his or her progress towards last fiscal year’s goals and his or her job description)

April-May (do shortly after completion of last fiscal year)

4.

Review and update board policies and personnel policies

April-June (do concurrent to board and chief evaluations)

5.

Conduct first board retreat (address board self-evaluation results, team building, begin strategic planning, etc)

April

6.

Begin recruiting new board members

April-May (in time for June/July elections)

7.

Conduct strategic planning to produce organizational goals and resources need to reach goals

May-June-July (start planning in time for setting mission, vision, values, issues, goals, strategies, resource needs, funding needs, (nonprofit-specific), and time for getting funds before beginning of next fiscal year)

8.

Elect new board members

June-July (per By-Laws)

9.

Establish chief executive’s goals for next year (as produced from strategic planning)

August (as organizational goals are realized from planning)

10.

Hold annual meeting

July (per By-Laws)

11.

Draft next year’s budget (based on resources needed to reach new strategic goals)

July-August-September

12.

Develop fundraising plan (nonprofit – specific) (with primary goals to get funds needed for budget)

July-August-September

13.

Conduct second board retreat (address board orientation/training, re-organize or form new committees based on goals from strategic plan, develop work plans, update board operations calendar, review planning status, etc)

August (in time to orient new board members soon after they join the board)

b) Look through the Calendar carefully. Discuss the following:

  1. What is included in strategic planning?

  2. What questions may possibly be examined at annual meetings?

  3. What is necessary to draft a next-year budget? Complete the text below with the phrases from the box and use the information from it in your answer.

A Sales Budget A Production Budget A Cash Budget

A Capital Expenditure Budget Forecasts

A budget is a statement, usually expressed in financial terms, of the desired performance of an organization in the pursuit of its objectives in the short-term (one year). It is an action plan for the immediate future, representing the operational and tactical end of the corporate planning chain. Budgetary control takes the targets of desired performance as its standards, then systematically collates information relating to actual performance (usually on a monthly basis) and identifies variances between target and actual performance.

The steps by which a budgetary control system is built up are basically as follows:

__________ for key aspects of the business are prepared. These are statements of probable sales, costs and other relevant financial and quantitative data.

__________ is prepared based on an analysis of past sales and a forecast of future sales. It is an estimate of sales for a given budget period.

__________ is prepared on the basis of the Sales Budget. This involves an assessment of the productive capacity of the enterprise and will include output targets, and cost estimates relating to labour and materials.

__________ is drawn up to cover estimated expenditure on capital items (fixed assets) during the budget period.

__________ is prepared by the accountant to ensure that the organisation has sufficient cash to meet the on-going needs of the business. This budget reduces the organisation’s transactions to movements of cash and indicates shortfalls or excesses of cash at particular periods of time.

c) Read Part 1 and 2 and complete the chart below.

One-time activities

Basic recurrent (regular) activities

Personnel matters

Financial matters

Strategic matters

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