A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?
By: Eugene Fram
With some possible variations, is the following scenario one that is frequently repeated elsewhere?
• The nonprofit board had engaged, Joe, an experienced ED, as President/CEO of human services counseling agency. The prior ED had been in place for 25 years, and was evidently unwilling to move to meet changing client
needs. For example, the agency only offered counseling services five days a week, 9 am to 5pm, with hours extended to 8 pm on Thursday night. There were no client options for emergency calls during nights or during
weekends.
• Joe had been in place for about 6 months making some changes, evidently in an authoritarian manner. The board heard about the staff’s dissatisfaction with Joe’s management style, met with Joe and the staff together
and decided to leave Joe in place. It was assumed that he and the staff were capable of healing the rift.
• However, three outside forces then came in to play. First, a trade union heard about the staff’s dissatisfaction and assigned a recruiter to enroll the professional staff as a chapter of the union to bargain
for wages, benefits and working conditions. (The union already had a local governmentally supported human services unit as a member chapter.) Second, the agency was a very old one, and a group of community leaders,
fearing this problem would cause the termination of the agency, formed an unrequested advisory group called, “Friends of ABC.” Third, the United Way gave the agency 6 months to provide evidence that the problems were
subsiding, or it was going to substantially reduce, the large portion of the agency’s budget it provided.
• Joe’s management style did not change. He was terminated with a six-month pay package in order to avoid a legal suit.
A strong president/CEO then was fortunately hired, who was well known in the community, was an experienced social worker, and had union negotiating experience.
• The professional staff decided to join the union.
• The new president/CEO remained at the helm of the agency for 25 year, bringing innovation and change. However, the professional staff remained in a union chapter. Mistrust was hard to breach.
This is a true case with which I was involved as a board member. Based on your experiences, to what extent have you noted a similar pattern?
• A nonprofit board misjudges the requirements for filling the chief executive position.
• Organizational discord becomes a problem.
• The board is slow in taking action, by trying to give the new executive time to resolve the problem.
• The board then terminates the chief executive for failing to meet objectives or because there is
substantial organizational discord.
• Groups in the community become involved in the organization’s internal problems.
• The chief executive is fired.
• A new chief executive brings change, but there is still a feeling of mistrust that permeates the communications of the agency for decades.
Nonprofit Management 
Some changes must be made with a scalpel, some with an axe. Sometimes, though not always, the best way to make any real progress in a major change initiative is to start with an axe and begin trimming a sacred cow. Progress gets made quickly, but cannot become sustained over time because the focus becomes personally focused on the one holding the axe – as though it were somehow personal. It is not. But after the initial push that knocks the complacency and comfort levels away, the axe-holder must know the timing of when to switch to a scalpel and ask others to be part of the surgery team.
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The main issue of controversy here is that the executive function has a more birds-eye view of the situation (or should) as the overseer of the organization in the market and must move the organization forward in that context. The primary function of most boards, particularly of a nonprofit, is that they believe their primary function to be one of maintaining operations or passively supporting someone else who does. Nonprofit boards are like people; they must be developed to maturity so that they are able and charged with more mature views of things, and this takes time and much frustration in the process. This is why it is so important who gets selected to sit on a nonprofit board. Most of the time, the biggest mistake is that board members are selected due to their passion for the mission of the nonprofit and not for their outside connections and skills they bring into the decision-making process.
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Susan: Thanks for your thoughtful and perceptive comments
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The fact that the professional staff continued to comprise a union should not be considered evidence of under performance by the CEO. It is possible to have a nonprofit with comfortable relations between boss and staff even though staff rely on the union-employer relationship to ensure fair and equitable treatment. Many good bosses get along fine with staff and inspire hard work without giving staff any reason to feel that the boss’ reactions to individuals would be an acceptable substitute for the structure of union representation, which survives if people enjoy fair treatment as a result. First, get rid of your false assumption and anti-union prejudice. Then take a look at whether the bottom line provides proof that the union relationship is financially injurious to the agency. Remember that, regardless of your feelings, workers in the USA have a legal right to organize and collectively bargain for wages and working conditions. Remember that managing the agency is a separate matter from wages and working conditions. I have been there and found greatly improved staff attitudes and performance after the contract was in place. Relax. (MSW/JD)
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Timothy: Thanks for your thoughtful and perceptive comments. I have been involved with two social service agencies which have been unionized. In both cases, Although the circumstances for unionization have disappeared,both groups have retained he union for decades. It seems that once trust is lost, it appears difficult or impossible to revive.
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