Article XVIII: The Board – Executive Limitations on the Headmaster as CEO

The CEO/Headmaster is charged with the responsibility to achieve clearly articulated organizational ends. The means to achievement of such ends is at the discretion of the CEO without the need for guidance from the Board. However, the CEO may not violate executive limitations clearly articulated in the board adopted policy governance manual in the achievement of such goals. Following is a sample board policy governance manual section on executive limitations. Adherence to this approach releases leadership energy on the part of the CEO while satisfying the board’s fiduciary responsibility for maintaining organizational integrity. Rightly applied both the board and the CEO will do a better job and have a more enjoyable time doing it!

Board Executive Limitations Policies

The CEO, titled Headmaster, will not cause or allow any practice, organizational circumstance, activity, or decision that is either imprudent, illegal, or in violation of commonly accepted business or professional ethics.
1. Paid staff and volunteers will not be subjected to unfair, undignified or unsafe treatment or conditions.
2. Assets may not be inadequately maintained, unnecessarily risked or unprotected.
3. Actual financial condition and performance will not incur jeopardy or compromise the board’s ENDS priorities
4. Staff compensation and benefits will not deviate materially from market.
5. Board information will not have significant gaps in timeliness, accuracy or completeness.
6. The CEO will not cause or allow any financially related decision, action or activity that is illegal, imprudent or that places the organization’s financial health in jeopardy.
6.1. Fiscal year budgeting will not materially deviate from adopted Ends policies, risk financial jeopardy or be derived from other than a multiyear plan. Without limiting the scope of the aforementioned, the CEO shall not allow budgeting that:
6.1.1. Omits credible projections of revenues and expenses, omits separation of capital and operational items and omits disclosure of planning assumptions.
6.1.2. Fails to show the amount spent in each budget category for the most recently completed fiscal year and the amount budgeted for each category for the current fiscal year.
6.1.3. Plans for the expenditure in any fiscal year of more funds than are conservatively projected to be available during the year.
6.1.4. Fails to plan for hard income coverage of operational expenses at a rate approaching ninety percent. Hard income is defined as monies that are billed such as tuition, fees, and profits from auxiliary programs such as summer programs, or funds gleaned from interest bearing accounts (e.g., from an endowment fund) In other words the CEO shall not fail to pay for operational expenses primarily from operational income.
6.1.5. Fails to assure a current ration of at least 1:1.
6.1.6. Fails to add at least 1%/year to a reserve fund with target reserves equal to 15%-20% of one year’s operational budget.
6.1.7. Fails to reflect anticipated changes in capital or operational needs that are material.
6.1.8. Is not in a format understandable to the Board or that is presented in a manner that does not allow the Board to understand the relationship between the budget and the approved Ends policies.
6.1.9. Fails to be presented in a timely manner that would prevent prudent review prior to approval.
6.2. Actual financial performance will not materially deviate from approved budgets.
6.3. Financially related operational decisions, actions and activities will not be conducted in a manner that is contrary to commonly accepted business practices, professional ethics, governing law or that would be considered imprudent. Without limiting the scope of the aforementioned, the CEO shall not allow financially related decisions, actions and activities that:
6.3.1. Receive, process or disburse funds under insufficient controls.
6.3.2. Fail to settle payroll, debts, tax and other government ordered obligations in a timely manner.
6.3.3. Allow federal, state and other governmentally required filings to be filed inaccurately or not in a timely manner.
6.3.4. Fail to aggressively pursue receivables after a reasonable grace period.
6.3.5. Undertake a single capital project or capital purchase in excess of $50,000 without board approval.
6.3.6. Fail to use a competitive bidding process for purchase of equipment and contracted professional services in excess of $25,000.
6.3.7. Make any purchase without weighing reasonable precaution against and avoiding conflict of interest.
6.3.8. Fail to maintain adequate, customary insurance to protect against theft, loss, and liabilities to board members, staff and the organization itself.
6.3.9. Acquire, encumber or dispose of real property without board approval.
6.3.10. Establish compensation for staff or administrators that is excessive or materially outside industry norms for the responsibilities and geographic location.
6.3.11. Change his or her own or a relative’s compensation and benefits without board approval.
6.3.12. Invest or hold operating capital or invest funds in insecure instruments including uninsured checking or savings accounts.
6.4. Fiduciary reporting will not omit material information or be prepared in a manner that is not in accordance with professional standards. Without limiting the scope of the aforementioned, the CEO shall not allow financial reporting that:
6.4.1. Fails to keep complete and accurate financial records by funds and accounts in accordance with generally accepted accounting principles.
6.4.2. Fails to publish standard format monthly and annual income statement and balance sheet reports.
6.4.3. Fails to obtain an independent auditors review of the organization’s financial records and reporting on a basis less frequently than every two years.
7. The CEO will not cause or allow any human resources related decision, action or activity that is illegal, imprudent or that places the organization’s employment culture in jeopardy. With respect to the treatment of paid staff and/or volunteers, the CEO may not cause or allow conditions that are unfair, unsafe, unbiblical, undignified, or unlawful. Accordingly, pertaining to paid staff, the CEO shall not:
7.1. Discriminate on the basis of race, ethnicity, national origin, age, disability, or sex.
7.2. Operate without written personnel procedures and guidelines, which clarify personnel rules for faculty and staff, provide for effective handling of grievances, and protect against wrongful conditions.
7.3. Prevent staff from following the grievance procedure.
7.4. Fail to acquaint staff with this policy.
7.5. Fail to receive approval from the Board to hire a Board member’s spouse, family member or relative.
7.6. Fail to employ teachers that meet the approved qualifications. Accordingly, all faculty and staff must:
7.6.1. Profess faith in Jesus Christ as Savior and Lord and maintain a credible Christian testimony that does not reflect negatively on the mission of the academy. The CEO is not expected to pry into the private lives of employees but to supervise circumspectly.
7.6.2. Be an active participant in and subject to the authority of a local church whose doctrine is consistent with the Nicene Creed. There can be no harmful deviation in the belief system of the applicant from the Nicene Creed.
7.6.3. Possess other personal and professional qualifications that show promise of successfully discharging duties while in the employ of the School as assigned by the Headmaster.
7.6.4. Be able to evaluate his/her subject material through the light of the Old and New Testaments and to present a thoroughly biblical point of view in his/her entire professional and academic discipline.
7.6.5. Submit to criminal and reference background examinations, as well as such other examinations, tests or analyses as the Headmaster may require.

Upcoming Articles on The Headmaster as CEO Begin Soon:
When Chicken Little Cries, “The Sky if Falling!”
The Headmaster as Chief Financial Officer
The Strategic Academy Assessment and Action Plan
Leadership Agility