Hoffman Management: Accountability

THE BIG PICTURE

Fiduciary responsibility. That is a concept every board member must understand, if everyone wants to govern responsibly. In simple terms, fiduciary responsibility means that the board must act to benefit the majority of shareholders in every decision that it makes. When a board member is either self-dealing or working on a situation that will benefit him personally more than it will benefit the whole corporation, that’s very bad – and dangerous for the building.

BE SMART

I managed a building where there was a change of board members. The new board president lived in a penthouse apartment and wanted to start making decisions for the building that directly affected her shares and her unit. I believed her decisions were a detriment to the overall community. In cases where an issue directly affects a board member, the appropriate action would be for that board member to recuse him- or herself from the decision-making process, rather than drive the decision. She refused and was very involved in the decisions. This board president’s actions were a huge problem.

I had worked there for 15 years, and it was a building in which I had taken a tremendous amount of pride. Nonetheless, because of this lack of fiduciary responsibility, I resigned the account.