Strong Culture & Leadership Critical for Nonprofit Board Strategic Success
By Eugene Fram
The National Association of Corporate Directors (NACD) is conducting a series of sessions focusing on board “challenges and opportunities expected in the next five to seven years.”
Following is how I perceive one of the session’s results (in bold) could apply to helping nonprofit boards focus on culture, leadership and achieve strategic success:
• Inherent in the board-(management) relationship is an information imbalance: Nonprofit directors have been humorously described as birds of flight through a nonprofit organization. They do not have daily organizational contact, and board members’ tenures usually range from two to six years. As a result, communications between the board and management is often inconsistent.
The board and management must develop a trust culture where actionable information, supplied by management, supports board expectations. This kind of collaboration leads to reasonable board oversight and forms the cultural bases for the development of thoughtful policies and strategies.
• With an expanding board agenda, process and expectation settings are critical: The time frame for nonprofit board meetings has not changed in decades. If the meeting is monthly or bi-monthly, it is usually one to two hours, plus an annual retreat. Consequently nonprofit directors have to find ways of evaluating more information in shorter time frames. Major challenge has been to develop processes to permit the board to complete its overview functions without allowing directors to dive deeply into unnecessary operational issues. This is especially true of issues having human relations content that often distract the meetings. The board chair needs to assume significant responsibility for this effort, as he/s often can act as a de facto parliamentarian to help move the discussion away from operational tasks. However, it will take a succession of strong proactive board chairs before it can become part of the board culture and be recognized leadership quality.
• An empowered lead director… can help mitigate the risk of information imbalance. … and can break down some of the roadblocks that may develop between the management and directors: Lead directors have been successfully used in public operations for about 10 years to help directors focus on (1) board policy and strategy efforts and (2) to assist the board chair with duties, such as making certain committee work is on schedule and on target.
I strongly believe that a modified form of lead directorship might be employed by nonprofit boards to make certain that sufficient effort is being given to strategy development and evaluation, to assist the board chair with a large board and to act as a consultant occasionally to the CEO. It will take a substantial cultural shift for nonprofits to move in the direction of adopting Lead Directors. Following is a link to my proposal. http://bit.ly/13Dsd3v
• Ultimately, the board has to make winning decisions that are informed by data: Not being able to afford the time and money to develop excellent metrics to assess behavioral impacts, nonprofits often have to garner value from utilizing imperfect metrics. These data are anecdotal, subjective, interpretative and qualitative. The metrics can rely on a small sample, uncontrolled situational factors, or they cannot be precisely replicated. http://bit.ly/OvF4ri
Instead of failing to measure long-term organizational qualitative outcomes, boards can exercise prudence and good sense in using imperfect measures. Developing a board culture and leadership that can effectively use imperfect metrics will require a board-management partnership willing to improve on the process quality of the metrics over time.
• The board should identify which stakeholders are critical to the strategic plan and target communications to those groups. Nonprofits have a pleathera of stakeholder group to consider as communications targets. However, they do not always do a good job with some groups. Example: Many former board members often only receive routine boilerplate requests for donations or copies of annual reports. In the future, board cultures will require director interpersonal involvement with important stakeholder groups, such as former directors.
Although these challenges and opportunities are forecasted for for-profit boards, it is like that they also will impact nonprofit directors. Experience has shown that although the for-profit focuses on stockholder return and the nonprofit on accomplishing a mission, each can operationally learn a great deal from the other, especially when it comes to culture and leadership.