By: David Zitner
Constituencies, individuals, and investing groups have different reasons for investing money money into a profit or a not-for-profit organization and different expectations of what they expect in return. The role of the board of directors of an organization is to assess the accomplishments of the administration and ensure that proper activities are taking place.
For example, long term care (LTC) governance includes determining whether the means to mitigate infection warrants the harm from the methods. Prohibiting social contact with visitors to mitigate infection spread was believed to be warranted despite the harm of isolation in LTC communities.
Obtaining maximum benefit from the human and financial resources dedicated to healthcare requires that health services administrators and governance boards understand their responsibilities and take them seriously.
The role of the board of directors is to define the goals of organizations and the metrics that will be used to measure whether administrators are meeting those goals. Boards of directors are also responsible to inform the chief executive officer (CEO) and the health services administrators what steps they should take to meet these goals. While the CEO is responsible to the board of directors, the board of directors is responsible to stakeholders, which are groups with an interest in the goals and activities of the organization. Stakeholders include people and organizations that provide or impact funding, including clients, client families, shareholders (for-profit organizations), wealthy benefactors (not-for-profit organizations), foundations, and governments.
Boards of for-profit organizations are responsible to customers, investors or shareholders, and the employees of the organization. Boards of not-for-profit organizations are also responsible to the customers, employees and to the constituencies that allocate resources to the organization. It is a misnomer, or anthropomorphic mistake, to consider that organizations have motives. Organizations and organization charts do not profit. Only individual human beings have a profit motive.
Greed and altruism are not exclusive to people working in either for profit or not for profit organizations. The CEOs of some not-for-profit organizations earn millions of dollars, while the CEOs and executives of some very successful for-profit organizations take-home very little and invest any operating surplus in growing the business and serving customers.
It is important that we hold the boards of directors of LTC organizations accountable to their residents. Successful LTC organizations must meet spiritual social and health care needs of their residents. They must engage with patients, their families and relatives in a way that maintains health and satisfaction.