A good general manager is an asset to any organisation.  They will keep the Board apprised of any changes, will be proactive and will implement the directions provided by the Board in an efficient and timely manner.  Boards can sometimes, however, place too much reliance upon that person and detailed systems of checks and balances, specific authority limits and close monitoring are essential at all times.

In recent times we have had to assist several not for profit boards in dealing with actions of long standing managers. What follows, is an example that is a composite of a number of instances we have assisted with recently.

The general manager had been employed by an organisation for over twenty years and had been general manager for the last fifteen years.  Each new Board came to rely heavily upon the corporate knowledge of the general manager.  The general manager grew in confidence and began to feel that she was able to manage the organisation effectively.  The general manager made decisions without reference to the Board and received information that is not passed onto the Board. On one occasion she assumed full responsibility for the implementation of government accreditation standards. The Board only found out about the new requirement when the accreditation process was failed.

At the same time, some members of the Board became concerned about certain financial notations that were appearing in the accounts.  Some of these related to staff benefits that the general manager said had been approved by previous Boards.  The current Board could find no record of resolutions being passed approving these additional staff benefits.  And, one of the major beneficiaries of the increased entitlements was the general manager.

Also the Board noticed a larger than usual staff turnover and was assured by the general manager that this was normal ‘in these economic times’.  There were rumours of bullying.  There was also disquiet arising amongst the staff that the general manager's son had been engaged to redesign the organisation's web pages and to take over basic IT troubleshooting issues, her daughter was doing part time reception work and the general manager's spouse was attending the office, on an unpaid basis, to help on various operational matters.

As a volunteer Board there was significant experience in the industry, but none that would compare to the twenty year 'hands on' experience of the general manager.  The Board did not feel confident in asserting its position, particularly when the general manager regularly dismissed their concerns or advised the Board "not to worry about that" as it was "all under control".

In the scenario painted above, the Board could find itself legally exposed. It could face claims in relation to the allocation of improper staff entitlements, thus creating a financial loss for the organisation but also potentially, breaching its funding arrangements.

There may also be work health and safety claims in relation to bullying to deal with along with potential stress and workers compensation applications being made by staff members.  Wages claims could be made by the spouse and wrongful dismissal issues could arise.

If there was a failure of due and proper corporate governance systems, or in the accreditation process, the organisation may see its funding questioned or withdrawn.

Board members must remember that the responsibility for the conduct of a general manager lies with the Board no matter how long the general manager has been with an organisation. A good relationship between the Board and the Board's general manager should always result in a positive outcome.  An unsupervised or dysfunctional relationship will soon become dangerous or toxic and put the Board at risk.