The roles of the FQHC Board and the CEO in organization and compensation management

One of the trickiest situations I run into in my work with Federally Qualified Health Centers is helping to clarify the role of the Board and the CEO in decisions about organization design and compensation.  This is a crucial division of responsibility, because in situations where there is no clarity, there is most often conflict and ineffectiveness.  Practices I’ve seen run from giving the CEO complete autonomy and a “rubber stamp” — to Boards that must approve every change to every job description.

So what is the right approach?

The simple answer is that the FQHC Board has responsibility for hiring the CEO to run the health center, and having done so, should give the CEO authority to manage the organization consistent with its mission and objectives.  There are specific areas in which the FQHC Board maintains authority, but in general, the Board exercises oversight authority, rather than direct management control. The role of the Board is the same role as any other manager — to monitor performance and take appropriate actions. The Board should take this responsibility seriously, with meaningful and constructive feedback, and do so in a manner that is fair to the CEO.

The FQHC Board has significant responsibility, and exercises a great deal of authority, in organization design and compensation matters. By the decisions it makes to select and compensate the CEO, it determines the quality of senior management the organization will have. By requiring management to have an effective compensation program in place, it ensures that pay decisions will be made fairly and equitably. Approving a budget requires the Board to understand the costs that make up the budget, and for a health center, the biggest part is the number of employees and their pay. Ongoing performance management of the CEO is the way the Board deals with the actual management of the health center.

These broad stroke responsibilities are appropriate for an FQHC Board. The CEO should be hired because of his or her expertise in the day-to-day, detailed, management of a community health center. Unless the Board has a health center executive as a member, there will likely be no Board member with more expertise at health center management than the CEO. That means the Board should rely on the person it hired to do the job they’re hired to do. It’s not a question of blind faith, but of practical and reasonable management. There are very few situations where someone is hired to do something, but is then told they can’t perform basic tasks unless people with less knowledge of the situation approve. To put it in another context — asking the Board to determine whether the CEO has written a good job description is like an attorney asking a client for an interpretation of the law.

The truth is, it is unfair to ask members of a Board to pass judgment on whether a “Director” or “Supervisor” is the right role in an organizational structure, or whether every line of a job description has been properly written. Certainly individual Board members do not have the exposure to individual employees to determine how much each should be paid. Of greater concern is that by dealing with individual situations, the Board loses its objectivity and independence. Even the appearance that the Board is influencing individual pay rates will bring question as to the legitimacy of the organization’s programs and its governance.

There is no doubt that when major changes are made to the structure of the organization, the Board has the responsibility to keep itself informed, and where costs are involved, it will exercise its budgetary responsibilities. But when it comes to ongoing operational management, such as changes to organization charts, transfers of duties and responsibilities from one job to another, the compensation of individual employees… the Board should expect the CEO it hired to do his or her job. If the Board doesn’t like what the CEO is doing, it would be best not to micromanage individual decisions, but to find a CEO that’s a better fit for the organization.

For a more detailed description of the role of the FQHC Board in a “best practice” environment, visit our website at www.mercesconsulting.com.

About Edmund B. Ura

Edmund B. Ura, MAIR, JD, works with governing boards, executives and human resources staff to develop methodologies for ensuring fair and equitable compensation programs that support achievement of organizations' missions. Contact Ed at ebura@mercesconsulting.com.
This entry was posted in CEO Compensation, Compensation, FQHC Board Advice, Organization. Bookmark the permalink.

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