What Nonprofit CEOs Think of Their Boards – Some Projections
By Eugene Fram
Governance articles frequently cover issues related to relationships between the CEO and board. A comprehensive report was recently published in a recent Harvard Business Review* citing what for-profit CEOs readily think of their boards. Following is a projection of how some of the article’s conclusions can apply to nonprofit CEO’s thinking, based on my decades of experience with nonprofit boards.
• “[T]he best leadership partnerships are forged where there is mutual respect (between CEO & board), energetic commitment to the future success of the enterprise and strong bonds of trust. … Great boards support entrepreneurial risk taking with prudent oversight, wise counsel and encouragement.”
These statements should be the gold standards for nonprofit CEO- board relationships. Unfortunately, not many nonprofits have the gold standard or even reach for it. Too many nonprofit boards, because of long traditions, see the CEO-board relationship as a “parent–child” one. This leads to mistrust, board focus on operations and missed strategic opportunities for growth. Many nonprofit boards are very careful with risk related decisions, but the gold standard does allow nonprofit boards to assume reasonable risks.
• A common weakness of nonprofit boards is that they are easily distracted from policy and strategic issues by becoming overly concerned with operational topics. Directors can be inordinately involved with detailed reports, when they are related to client cases.
• Nonprofit directors, for the most part, are busy people with full-time occupations. Consequently, directors and CEOs rarely communicate with each other between board meetings (sometimes three or four times a year) or committee meetings.
However, as I have suggested, CEO’s can be more proactive to bridge these gaps with regularly schedule individual informal meetings, that don’t require extensive preparations or have specific outcomes. One CEO respondent in the Harvard study reported sending board members a weekly Sunday morning e-mail to let them know what is on his mind. He explains, “It’s informal – I don ‘t worry about getting the grammar exactly right.” **
• Directors can only be helpful to the CEO if they complete their required due diligence well. In the for-profit environment, directors can rely on the impartial consultants to help with major decisions. In the nonprofit environment, directors often must rely only on the background information that management offers. Seeking more information can add substantial costs.
• Celebrity or major donor directors can be a source of pride or aggravation for the CEO. For example, Jerry Lewis was a source of pride for decades. However, one director with whom I am acquainted, made a substantial donation each year to the nonprofit organization, didn’t attend board meetings but refused to resign from the board. This person was quite a frustration to the CEO by setting a precedent that violated the bylaws.
• Motivating a nonprofit director to resign is a delicate and difficult task. It is not unusual for some directors to serve their terms, leave the board for a year and then be again nominated for a new full set of terms. I have seen this process allow persons to remain on the board for decades. However, it has been suggested in the nonprofit situation that a board chairperson, working with the assistance of a volunteer lead director, might help mitigate the problem. *** The Harvard article suggests, “[B]oard members should police one another. It’s difficult when you make the CEO accountable for dealing with disruptive (board) personalities.” Nonprofit boards have the same problem.
*Jeffrey Sonnenfeld, Melanie Kusin & Elise Walton (2013) “What CEOs Really Think of Their Boards, Harvard Business Review, April. http://hbr.org/2013/04/what-ceos-really-think-of-their-boards/ar/2
**Details in: 2011 edition of Policy vs. Paper Clips http://bit.ly/yfRZpz
*** Details in: Eugene Fram (2012) “Can Lead Directors Help Improve Not-For-Profit Board Performance?” The International Journal of Not-For-Profit Law April, Volume 14, Numbers 1-2, pp. 57-63.