Why Boards Can't Afford To Be Careless With Consent Agendas

I feel great when someone tells me they implemented ideas they got from me and the result makes their lives better and their work easier.

On the other hand, I cringe when I learn that the application of an idea opened doors for new concerns. The "consent agenda" or "consent calendar" as some call it, is an example.

Consent means that items on a meeting agenda are routine or non-controversial: the items do not require debate or discussion before the board's action on them. The key word here is "action."

Only items that require board action need to appear on the consent agenda. Since reports do not require board action, they should not appear on the consent agenda.

In recent conversations at conferences I listened to an increasingly familiar story. Directors explained how using a consent agenda had shortened their meetings. Shortening meetings is widely viewed as a good thing. They also explained that placing many if not all reports on consent helps avoid unnecessary discussions about historical information.

When I raised the question, "What is the reason for the board to approve those reports?" The directors said the board was not doing that. They believe that reports can be on the consent to avoid discussion and not be approved along with the other items on the consent agenda, for example minutes of previous board meetings, dividend rates, and charge-offs.

The myth, and the danger, is that the board's single act to approve the consent somehow treats reports differently. At the meeting you can think to yourself, "I am approving the minutes on consent agenda, but I am only acknowledging the presentation of the listed reports." However, a reading of the minutes, maybe in a future court case, will reflect that board took one action on the entire list.

I imagine that those directors and you reading this now, thinking, "Who cares that we are approving reports while we approve the minutes. What's the big deal?"

Henry M. Roberts brought this danger to my attention in his book, "Robert's Rules of Order Newly Revised." Roberts says that assemblies should not approve reports presented to them for information purposes alone. Boards need to heed that caution. Roberts uses the word "owns" when describing the impact of approving of a report.

The board's approving of a report creates a specific and unnecessary accountability, and thus personal liability may extend to the individual directors. Let's say I send you a consulting report. I signed it, making it my product. If there are errors of fact or judgment, errors of spelling or grammar, it reflects directly on me-my name is on it and you are right to assume that I examined and approved of its contents before signing it. It will not matter to you or the historical record that someone else may have written it or typed it.

Similarly, when the board approves a report it is saying that it agrees with all the content and makes that affirmative statement to all who should read that report subsequently.

What is the mission of the CEO's report, for example? Its purpose is to inform the board. What value does the board add to the report by approving it? Why should the board take the position that it is a fine report, accurate as to facts, and agree with its assumptions and judgments?

Boards need to let reports stand on their own as the product of those who prepared them. Directors, take the information and absorb it to carry out your duties.

Let's drill just a little deeper. Should we assume that a board will always approve what we put in front of it? We should not. Boards and individual directors expose themselves to regulatory and legal chastisement, and potential personal liability when appearing to approve things without completing due diligence. To avoid having to defend routine approvals without deliberation put them on the consent agenda.

The board that insists on approving the CEO's report, for example (not recommended under any circumstances), should diligently discuss the contents, determine that it is accurate, and determine that it reflects the feelings and opinions of the board before claiming ownership of it by approving it. But why insist on approving the CEO's report? The CEO provides information to edify the directors so they are aware of the major affairs of the credit union. The job of the report was completed when the directors read it and absorbed its contents.

There being no requirement to the contrary, the board should not approve any report including the ubiquitous balance sheet, income statement, and delinquency reports, to name a few. Let all reports to the board stand on their own with the authors accountable for their contents. Let the directors absorb and digest report contents to help them do their jobs as volunteer leaders.

If anyone needs to ask questions in order to absorb the reports' contents they should ask the author prior to the meeting. The time saving benefit is thereby preserved. The individual gets to ask as many questions as necessary to learn what he needs to know without seeming to be lacking in skill or to be attacking the report writer in public. Then again, if the report writer's work deserves to be questioned at the meeting the director will be more confident and targeted with his concerns.

Please help me out. I will pay $100 for the first-received citation of a law, regulation or rule -a requirement-that the board must "act on" a report prepared for its knowledge. Just include a copy of the page(s) with the citation and a copy of the report, if it does not contain confidential matter. All good-faith submissions will earn a $2 bill until I have paid out 50 of those.


Dan Clark is a consultant based in Tallahassee, Fla. He can be reached at www.danclark.com or 850-559-7094.