The Nonprofit Dream Team: a Board/CEO Partnership that Works!
By: Eugene H. Fram
Re-balancing and maintaining important relationships in a nonprofit organization can be important to its success. Do various players fully understand and accept their specific roles. Is there mutual trust between players? Are communications open and civil?
I recently encountered an association CEO who complained that his board wanted to judge him without establishing mutually agreeable goals, outcomes or impacts. He felt what is needed is a partnership arrangement where the board does not judge the CEO and organization based on political or personal biases but overviews the two in terms of mutually accepted achievements. This, he contended, forms a substantial partnership between board and CEO and staff. If the board thinks it can judge management, he stated, it gives it a personal political type of power, unrelated to performance. As an example he pointed to an unfortunately common nonprofit situation where a CEO is given an excellent review and fired six months later because there had been a change in the internal board dynamics.
Here are some behavioral ways by which to assess whether or not a quality partnership exists between the board and CEO.
Do the CEO and board have a substantial trusting relationship? The trust arrangement is like a marriage. A board should not engage a CEO unless there can be substantial relationship trust. A nonprofit has no solid bottom line, except the one that says income must match expenses, long-term. Imperfect metrics must be developed for qualitative objectives and outcomes, such as improved life quality or successful advocacy, which are important to many nonprofits. The metrics need to be developed, as a board-CEO partnership, from small samples that are anecdotal, subjective or interpretative, and then continually improved over time.
Does the CEO have fiscal latitude in relation to operational decisions? Once the board approves the operating budget, it overviews the organization’s financial status monthly and annually. At each regular meeting, the CEO informs the board about budget developments and exceptions. In addition, some boards indicate trust by allowing CEOs to borrow money on their own, up to a set limit, when a cash-flow problem develops.
Does the board encourage a CEO to be entrepreneurial? Is the board tolerant when the CEO may occasionally exceed his/h operational authority? None of us does a job perfectly. Example: A CEO signs a long-term contact for a modest sum without the approval of the board, as required He/s argues that operational contracts for much larger dollar amounts are signed regularly by the CEO. The board does not become troubled by this modest misstep and then formally ratifies the contract. If a continual series of missteps takes place, the board must be proactive and review what has been delegated to the CEO. The next excess may be tornado size!!
Does the CEO occasionally involve the board in operational decisions? Example: The board and CEO agree that a IT manager is needed, and the CEO is responsible for the hiring decision. But the CEO has no experience in hiring a person with this background. She/h invites two board members to advise on the process and candidates. It is understood that the CEO still has full responsibility for the final decision, even if a bad one. The excuse, “The board told me to do it.” is not appropriate for a 21st century board-CEO partnership.
To maintain a strong partnership, the board must delegate all or a substantial number of operational powers to the CEO, under an active checks and balances system. In turn I believe the board need to value the CEO as a peer, not a servant.
But the CEO in a true partnership must:
• Fully understand the board’s role as a partner, including its roles in setting corporate strategy/policy and overseeing the organization’s operational performance against that strategy.
• Provide positive and negative information quickly in a digestible and understandable format.
• Give robust, fair and complete answers to directors’ questions.
• Develop a strong partnership arrangement for fundraising.
Nonprofit dream teams involve perfection, but using the guidelines suggested above, boards and CEOs can develop meaningful partnerships.