Focusing the Nonprofit Board on Strategy – Same for For-Profit & Nonprofits? Updated & Reissued
By: Eugene Fram
Writing in the third quarter, 2012, of Board Member.com, Peter Dailey begins with the following conclusions about for-profit company’s strategic process (es):
As directors become increasing involved in their company’s strategic process, it’s evident that some fail to have the competencies to meaningfully contribute. Some deficiencies may result in only benevolent dabbling. … But at the extreme, deficiencies can result in destructive deliberative processes and the adoption of faulty strategic decisions. Often these scenarios operate with the context of by well meaning directors – not within hostile environments. * Skill matrices related to specific director experiences are needed. But they fall short in addressing how a director might behave.
For example, I once observed two influential directors establish complex “management by objective” programs for which the staff was forced to focus on process minutiae rather than program outcomes and impacts. The organization suffered. Large company executives can be a problem source when they force extensive discussions on minor operational items. These are items that they would never allow on their own board agendas. Why this happens is a decades old mystery for those of us who have observed it
Dailey presents options as to how these situations can be corrected on for-profit board by seeking directors who have seven behavioral attributes. Following is how I think the behavioral attribute mix can be applied to nonprofit boards to keeping strategic planning on the rails: “Seven (attributes) standout as key differentiators of directors’ ability to shape strategy and long-range planning“ in both for-profit and nonprofit boards.
1.Curiosity – “Curious thinkers explore far and wide, into areas that my have no obvious connection to the core” mission of the nonprofit. For example, a banker may be on the board of a hospital, with no experience in health care issues, but a curious banker can contribute to the hospital by the ability to think about the hospital’s problems in broad terms.
2. Debate Skills – “Directors who … engage in persuasive arguments with others, which serves to polish and clarify the thinking of all members of the board.”
3. Tolerance of Ambiguity – Some may perceive their way is the only right way. “ It is also difficulty for them to accept other ways.”
I have often observed these types of people are staff people (such as lawyers, IT programmers and accountants) who have little management experiences and want to try to show a faux management expertise. Because they hold significant staff positions in, but many have had only managerial responsibilities for one for two people, the nonprofit’s management, staff and other directors often accepts their recommendations with disastrous results. Another opportunity is often missed by nonprofits in terms of culture. These organizations often attempt to acculturate a new director to organization instead of allowing the director to bring his/her expertise to the organization. For example, a person with financial strategy expertise is asked to overview a bookkeeping operation, instead of being asked to lead the board in developing a financial strategy.
4. Prudence – “Rule-bound directors are strong in compliance and less comfortable in gray areas in which many board discussions may dwell upon.”
They may be what I call process people who consistently want to continually cross check everything. “Rule– lax directors… believe everything can be nuanced or ignored.” For example, I was on a nonprofit board that made a major acquisition with only the approval of the executive committee and then asked the board for post hoc approval. The results were quite costly. I resigned quickly after the acquisition with the usual excuse of having increased job responsibilities.
5. Analytical Speed – “Analysis of facts, arguments and assumptions depend upon experience and perspective, but, most important, on cognitive processing cognitive ability. “ Nonprofits boards need more of this type of director but they are in short supply for for-profit and nonprofit boards.
6. Coaching – “The transition from executive leadership to board service requires the emotional maturity to dial down personal competitive practices, (reduce the emotional desire to micromanage), and to dial-up interpersonal skills so directors may more successfully engage peers and senior mangers in (critical thinking, civil discourse), problem-solving or developmental conversations.”
7. WHO TAKES THE LEAD IN THE NONPROFIT WORLD?
“Board engagement is fine, but overall the consequences for (nonprofit boards like for-profit boards) are not all positive. “It is the job of the nominating committee to seek diverse (behaviorally based) candidates on “who we need” rather than “who is available” criteria. To find the “right” director, a nomination or governance committee must strike a balance between specialized skills, total commitment to the nonprofit’s cause and the desire to be proactive director. In the end, no matter how scrupulous the search, the ultimate success of the new slate of nominees, like other human selection efforts, can still be the luck of the draw!