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well it's equally important as a board responsibility to set ethical standards that are expected of those who will work at accomplishing the mission of the organization and this is done by the board and they do this by developing and approving a director's code of conduct a ceo code of conduct and a conflict of interest policy trista mckyber here program advisor with amc npo solutions today on the strategic nonprofit i have invited again our ceo and founder tom abbott hey trista great to be back great to see you so today we're going to be talking about uh setting ethical standards so why is it important to set ethical standards well i can share with you why it's important to set them who should set them and what are some things that should be included right so you know in a previous podcast i defined the strategic plan of the organization and the responsibilities of the players with regard to the strategic plan well it's equally important as a board responsibility to set ethical standards that are expected of those who will work at accomplishing the mission of the organization and this is done by the board and they do this by developing and approving a director's code of conduct a ceo code of conduct and a conflict of interest policy so by doing so the board advises both the directors and staff as to what is expected from them in terms of their behavior right so what would you say uh some examples of a director's code of conduct would be yeah so i can share with you you know a few things that might be included in a director's code of conduct so we've got some really great templates which we're happy to share with uh our listeners but there there are a few in there that i think are are really important and it's important to point out that you know whether your organization agrees with the wording that i share here or not it's not important right the task is for your board to agree on a code and to ensure that directors know uh what it sets out and how they're required to observe and adhere to it because this will result in uh predictability and the behavior of the directors and less confusion as to what constitutes acceptable performance so for example we might have as a as a possible inclusion in a director's code of conduct could be directors shall endeavor to direct the activities of the organization as a whole rather than in their own interest or that of any specific group so that would be an example of something that could be included in the director's code of conduct you may also include something like uh regardless of their personal viewpoint directors shall not speak against or in any way undermine board solidarity once a board decision has been made this is so important you can't have rogue directors out there contradicting and undermining decisions of the board you may also want to include something like oh let's see what else could we put in here directors are expected to attend all board meetings and be prepared for the meetings having read pre-circulated material in advance so this just sets out the minimum expectation that you would have of directors so in some templates that we have we've got around 16 or 17 we've got close to 20 items that could be included in a director's code of conduct but i've just shared three that are some of the the more popular ones for example uh one other one the official spokesperson for the society would be the chair of the board of directors and the ceo consequently all public requests for comment on society policies shall be referred to them now i'm not suggesting that in your society you must have your spokespersons be the chair and the ceo but the point is you need to determine who the spokes person or spokespersons are and have that clearly laid out in your director's code of conduct thank you so much no that's great uh some clarity there definitely so what about with the ceo so trista you're going to want to have in addition to a director's code of conduct have a separate one for similar reasons the board should develop and approve a ceo's code of conduct so for example you might want to have a clause that says the ceo shall adhere to the society's conflict of interest policy more on that later avoid in fact and perception perception conflicts of interest and immediately disclose possible conflicts to the board so you're going to want to have that in the ceo code of conduct you may also want to include something that says the ceo shall advise the board of any staffing changes at the senior level so yes the ceo can do whatever they want as it relates to admin operations implementation staffing but it's important that the ceo does advise the board on staffing changes at the senior level because that can have a very large impact on the organization as a whole you may also want to have something that says the ceo shall not change their own compensation benefits or holidays now that should go without saying but of course you've got to put things in writing so there's no confusion so those are just a few of the clauses that you could have included in the ceo code of conduct great thank you and then the conflict of interest well you know the the third policy tool to establish uh for setting effective standards for personal performance is what we call a conflict of interest policy that would apply to both the directors and the ceo so you'll want to make sure that you have that as well okay so what um what can you give an example of maybe a conflict of interest guideline yeah well i mean i guess you know what you want to have within your policy would for example be a definition of conflict of interest so a lot of people get this wrong so a common definition could be any situation where your personal interests or those of a close friend family member business associate corporation or partnership in which you hold a significant interest or a person to whom you owe an obligation could influence your decisions and impair your ability to act in the society's best interests or represent the society fairly impartially and without bias now it's important to note that a conflict of interest exists if the decision could be influenced it's not necessary that influence takes place so you definitely want to have a definition of conflict of interest in that policy and then also some some other guidelines in there as well and it's important to note that a conflict of interest exists if the decision could be influenced it's not actually necessary that influence take place that's a really interesting distinction tom so what would a director do if they found themselves in a conflict of interest well that's a great question right so there there are once a director realizes they're in a conflict of interest or suspects that they might be uh they must immediately take some steps to resolve that conflict or remove suspicion that may exist so they do this by promptly declaring to the board of directors any conflict of interest as defined by their policy and asking that such declaration be recorded in the minutes so they've got to reveal this to the board number two excuse yourself from the portion of the meeting where the matter giving rise to the conflict of interest is being discussed so you've got to uh recuse yourself recuse yourself and remove yourself they also need to refrain from all discussion of the matter giving rise to the conflict of interest at any meeting of the board of directors or elsewhere so they've got to reveal they've got to recuse themselves and remove themselves from that meeting and from all discussion and they need to refrain from voting on the matter giving rise to the conflict of interest at any meeting of the board so they've got to declare it they've got to excuse themselves they've got to refrain from discussion and of course refrain from voting on the matter giving rise to the conflict of interest at any meeting of the board of directors that is some great information thank you so much now would there be any last thoughts that you had or anything that a director could do i think a great a great next step for any board is to start looking at you know do we have a conflict of interest guideline or policy if we don't you know let's start building one uh they can reach out to us for some templates that they can use to kind of get them started and also to take a look at do they have a director's code of conduct and a ceo's code of conduct is it updated is it accurate is it current does it include everything that it should so i think reviewing those documents is probably a great next step for them thank you so much for all of this great information tom thanks for joining me on the podcast today and we'll see you again next time if you want to take your knowledge skills and non-profit organization to the next level by mastering governance and strategic planning join amc's npo academy the link is in the notes