Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem

Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem

By: Eugene Fram

An updated and revised viewer favorite post

At coffee a friend serving on a nonprofit board reported plans to resign from the board shortly. His complaints centered on the board’s unwillingness to take critical actions necessary to help the organization grow.

In specific, the board failed to take any action to remove a director who wasn’t attending meetings, but he refused to resign. His term had another year to go, and the board had a bylaws obligation to summarily remove him from the board. However, a majority of directors decided such action would hurt the director’s feelings. They were unwittingly accepting the “nice-guy” approach in place of taking professional action.

In another instance the board refused to sue a local contractor who did not perform as agreed. The “elephant” was that the board didn’t think that legally challenging a local person was appropriate, an issue raised by an influential director. However, nobody informed the group that in being “nice guys,” they could become legally liable, if somebody became injured as a result of their inaction.

Over the years, I have observed many boards with elephants around that have caused significant problems to a nonprofit organization. Some include:

• Selecting a board chair on the basis of personal appearance and personality instead of managerial and organizational competence. Be certain to vet the experience and potential of candidates carefully. Beside working background (accounting, marketing, human resources, etc.), seek harder to define characteristics such as leadership, critical thinking ability, and position flexibility.

Failure to delegate sufficient managerial responsibility to the CEO because the board has enjoyed micromanagement activities for decades. To make a change, make certain new directors recognize the problem, and they eventually are willing to take action to alleviate the problem. Example: One board refused to share its latest strategic plan with it newly appointed ED.

Engaging a weak local CEO because the board wanted to avoid moving expenses. Be certain that local candidates are vetted as carefully as others and that costs of relocation are not the prime reason for their selection.

• Be certain that the board is not “rubber-stamping” proposals of a strong director or CEO. Where major failures occur, be certain that the board or outside counsel determines the causes by conducting a postmortem analysis.

* Retaining an ED who is only focusing on the status quo and “minding the store.” The internal accounting systems, human resources and results are all more than adequate. But they are far below what can be done for clients if current and/or potential resources were creatively employed.

* A substantial portion of the board is not reasonably familiar with fund accounting or able to recognize financial “red flags.” Example: One CFO kept delaying the submission of an accounting accounts aging report for over a year. He was carrying as substantial number of noncollectable accounts as an asset. It required the nonprofit to hire high-priced forensic accountants to straighten out the mess. The CEO & CFO were fired, but the board that was also to be blamed for being “nice guys,” and it remained in place. If the organization has gone bankrupt, I would guess that the secretary-of-state would have summarily removed part or all of the board, a reputation loss for all. The board has an obligation to assure stakeholders that the CFO’s knowledge is up to date and to make certain the CEO takes action on obvious “red flags”.

* Inadequate vetting processes that take directors’ time, especially in relation to family and friends of current directors. Example: Accepting a single reference check, such as comments from the candidate’s spouse. This actually happened, and the nominations committee made light of the action.

What can be done about the elephant in the boardroom?

Unfortunately, there is no silver bullet to use, no pun intended! These types of circumstances seem to be in the DNA of volunteers who traditionally avoid any form of conflict, which will impinge upon their personal time or cause conflict with other directors. A cultural change is required to recruit board members who understand director responsibilities, or are willing to learn about them on the job. I have seen a wide variety of directors such, as ministers and social workers, successfully meet the challenges related to this type of the board learning. Most importantly, never underestimate the power of culture when major changes are being considered.

In the meantime, don’t be afraid to ask naive question which forces all to question assumptions, as in Why are we doing the particular thing? Have we really thought it through and considered other possibilities? http://bit.ly/1eNKgtw

Directors need to have passion for the organization’s mission. However, they also need to have the prudence to help the nonprofit board perform with professionalism.

Advertisements

8 comments

  1. I just resigned from the board of a small homeless shelter whose board refused to update their operations to comply with current labor laws, such as using homeless clients as unpaid fulltime staff, and only paying a small stipend off-payroll to fulltime “volunteer” executive and program directors.
    This old charity has been using volunteer staff forever and refuses to recognize the liability they are allowing. I showed how just using the very large reserves they could hire staff for over 5 years without additional fundraising.
    An anonymous survey I did showed strong support for changes but in open board meetings they will not follow through with changes to bring them into the 20th Century – much less the 21st.

    Like

    1. Thankf for sharing your experience. Sounds like the group is on its wasy to the path of the Lemington Homes debacle (Pittsburgh). Read about it and it will show you have made the right decision.

      Like

  2. A number of non-profit boards invite people to be on the board, because they may provide funds and have contacts to community members that will look favorable on the non-profit through their interaction with board members. There is a difficult balance between board members that can provide funding for the non-profit, and the board members that have the knowledge to cover the necessary goverance requirements of a board member. They need to listen to each other, support each other and understand the total requirements of a board. Is there a course taught by a university that provides the knowledge a board member needs to ensure a more critical and creative thinking of all the board requirements ? Dr. Fram, maybe you could create an online course for board members !

    Like

  3. This is a good article. Being in the NPCs for some time, I can attest to what has been highlighted by the writer. However, I have come accross board members who are very knowledgeable and performing as though they are serving on multinational profit making companies.

    The problem with Non-profits is that there is a very low appetite from beneficiaries and members to take the Board to task for poor governance and reckless decisions.

    Like

  4. A major study into nonprofit organizations conducted in Australia found that, for many nonprofits, removing someone from the board can be just a difficult as finding a good new recruit. If an under-performing board member who has been around for a long time enjoys considerable support throughout the organization, removing them from office may be an unpopular action for the board to take.
    I have had personal experience of the nice guy syndrome at work when a board I was serving on could not agree to remove an elderly board member who was showing signs of dementia. The individual made no worthwhile contribution but we knew it would break her heart if we asked her to stand down.
    Maybe sometimes it’s OK to be compassionate or take into consideration possible adverse consequences from removing someone from the board even if the board would function better without them.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s