Change management is not a particularly exciting topic; it lacks the “Gee Whiz” attributes of a major new IT project or an ingenious new program offering. Indeed, many nonprofit executives view the process with as much excitement as planning their own funeral.

However, from an administrative perspective, the lack of transition planning can prove to be an organization’s Achilles heel. Without cohesive guidelines, a new CEO’s, CFO’s, or COO’s desire to inject fresh ideas and focus can quickly cause confusion or other unintended consequences.

Organizations can spend years developing a certain internal style regarding things like budget preparation, hiring practices, and the manner of board oversight. In order to provide for an orderly transition from one senior manager to the next, it is wise to codify the entity’s broad administrative principles in a cohesive Board-approved policy document.  The idea behind the Board-approved policy document is to provide clarity to new management team members as to how the Board desires important transactions or decisions to be handled.

Naturally, management is always free to bring to the Board ideas for updating or replacing older policies. An approved policy manual simply offers a framework for management and the Board to have a constructive, orderly dialogue as to how the organization should handle its internal affairs.

A Board-approved policy manual should not be a detailed set of instructions for how to perform daily tasks. Rather, it should address high-level items such as:

  • How often should the Board review the entity’s budget versus actual financial performance?
  • How detailed should the budget submission to the Board be?
  • How does the Board wish to be notified of significant anticipated budget variances?
  • Who should be authorized signers on bank and investment accounts?
  • What positions should have contract approval authority?
  • Does the Board wish to see a periodic listing of contracts and commitments?
  • How should senior managements’ expense reports and credit card charges be reviewed?
  • Does the Board wish to approve significant changes to the organization chart?
  • What are the guidelines for adding/deleting staff positions and setting salaries?
  • And, how often should the policy manual be reviewed and approved by the Board?

Organizational change is always hard. A Board-approved policy manual can be an important part of minimizing the disruption when there is transition within the senior management team.

Doug Boedeker is a partner in Tate & Tryon’s Audit and Assurance Services department and can be reached at dboedeker@tatetryon.com.

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