A necessary first step to solving any problem is defining it. Only by knowing the precise nature of the problem can one craft an appropriate solution that alleviates the problem without creating new, and perhaps greater, problems.
In a previous Musing, I discussed a nonprofit corporation whose efforts to prevent a husband and wife team from continuing to serve on the corporation’s board together may backfire and work to exclude a large segment of their membership from serving on the board and holding office. For the club, the perception existed that the husband and wife controlled the club and other club members could not participate in its governance.
The club’s “solution” to its perceived problem was to amend the club’s bylaws to provide that only one of two members sharing a household and holding joint household membership in the club may hold office at a time.
What, though, is the actual problem the club experienced and was a bylaw amendment purporting to take away a privilege of membership an effective way to solve it? As undesirable as it may be to some to have a husband and wife serving together on the board, it may be equally undesirable to have siblings, parent and child, other family members, longtime best friends, partners, business associates, etc., serving together. Closeness and collusion may occur between persons other than spouses or persons sharing a household.
In the corporate governance framework, bylaws generally follow the state corporation statute and the articles of incorporation in order of control and take precedence over policies, which are at a lower level of formality. Bylaws govern the internal management of the company, addressing matters such as how directors are elected and how and when meetings of directors and shareholders or members are conducted.
The club’s bylaws provided for a nominating committee and a nomination and election process. The election process contemplated the naming of candidates to the slate that were not proposed by the nominating committee. If the husband and wife were continuously reelected while their serving was seen as a problem, then the real problem rested with the nominating committee and the membership body that continued to elect the couple. The solution did not lie in amending the bylaws but rather in taking full advantage of the bylaws as written and addressing the policies of the club and nominating committee and in the abilities of the nominating committee and club members to act in the club’s best interests.
Perhaps the club members considered a bylaws amendment an effective cure. But why resort to a sledge hammer when a scalpel will do? With this change to the bylaws, the club has lost the flexibility to name to the board those persons who might be the best candidates to serve at a given time. And the husband and wife team? For a modest increase in dues, each may become an individual member of the club and preserve the full privilege of holding office. The bylaw amendment provided no solution because it was not tailored to the problem facing the club.
—Melanie S. Tuttle
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