July 09, 2012

University of Virginia Firing Offers an Important Lesson for Boards

Last month, after a dramatic and unusually public example of board governance gone awry, the University of Virginia's board reversed itself and reinstated the institution's president less than two weeks after accepting her forced resignation.

For board members of all types of nonprofits, this episode should serve as a cautionary tale about what can go wrong when a board and its leaders are not clear about their roles. Trouble often erupts when people forget that boards govern, board members do not.

The drama at the University of Virginia began in mid-June when the chairman and deputy chair of the board met with Teresa Sullivan, the university's highly regarded and popular president, who had been on the job for less than two years.

The board chairman, Helen Dragas, a University of Virginia alumna who heads a Virginia Beach homebuilding firm, told Ms. Sullivan that she had lined up enough votes on the 16-member board to fire her and asked her to resign. According to news-media accounts, Ms. Sullivan was taken completely by surprise.

Two days later, Ms. Dragas convened the executive committee to accept Ms. Sullivan's resignation. The emergency meeting was held on a Sunday afternoon with only a few hours' notice, and just two other board members—the minimum required for a quorum—attended.

After the news was announced, the university's students, faculty, and major donors almost immediately began asking why Ms. Sullivan had been fired and, perhaps more important, whether the board had handled her dismissal in a way that was consistent with the university's core values of honor and trust.

Over subsequent days, Ms. Dragas failed to communicate to almost anyone's satisfaction why she had asked Ms. Sullivan to step down, and the anger grew more bitter and drew nationwide attention.

As more details came to light, it became apparent that her dismissal had been quietly engineered by a small group of board members who believed that she was not acting swiftly or boldly enough to maintain the University of Virginia's position in the top tier of public universities.

But the way those board members acted on their discontent was so flawed that the board was forced to change course and give Ms. Sullivan her job back.

Ms. Dragas and other critics of Ms. Sullivan lost sight of the concept that boards make major decisions, such as firing the chief executive, only when meeting as a body at a duly constituted board meeting. Individual board members —including officers and even the chair—have no authority to make decisions unless authorized by the board.

Polling board members individually and tallying votes, as Ms. Dragas did before she asked Ms. Sullivan to resign, is not good governance and does not constitute a board decision.

Ms. Dragas's strategy of informally gathering proxies and using them to force a change in leadership would seem more appropriate to the board room of a publicly traded company but is rarely used in the nonprofit sector.

When making significant decisions—and no decision is more significant than firing the staff leader—boards should have the opportunity for substantive discussion that includes the viewpoints and perspectives of all board members. Anything less leaves board actions and decisions vulnerable to criticism for being secretive, manipulated by a few people, and perhaps not even reflecting the views of the board as a whole.

By most accounts (including President Sullivan's), Ms. Dragas is a committed and talented leader who acted out of a strong conviction that the University of Virginia needed a different leader to maintain its greatness. At the same meeting at which the university's board voted to reinstate Ms. Sullivan, it also expressed confidence in Ms. Dragas. And last month, Virginia's governor appointed her to another four-year term on the board.

Her future success as a board leader hinges on her ability to recognize that boards—not board members—govern. Board chairs, however strong their own views, should lead in ways that respect governance responsibilities reserved exclusively for the board and provide opportunities for thoughtful decisions informed by open discussion and occasional honest disagreement.

Anything less creates the potential for a huge distraction from mission, as the University of Virginia's board learned last month.