A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?

 

A Nonprofit Board Has A Problem With A Recently Hired CEO – What To Do?
By: Eugene Fram.         Free Digital Image

With some possible variations, is the following scenario one that is frequently repeated elsewhere?

• The nonprofit board had engaged, Joe, an experienced ED.  The prior ED had been in place for 25 years, and was evidently unwilling to move to meet changing client needs. For example, the agency only offered counseling services five days a week, 9 am to 5pm, with hours extended to 8 pm on Thursday night. There were no client options for emergency calls during nights or during weekends.


• Joe had been in place for about 6 months making some changes, evidently in an authoritarian manner. The board heard about the staff’s dissatisfaction with Joe’s management style, met with Joe and the staff together and decided to leave Joe in place. It was assumed that he and the staff were capable of healing the rift.
• However, three outside forces then came in to play. First, a trade union heard about the staff’s dissatisfaction and assigned a recruiter to enroll the professional staff as a chapter of the union to bargain for wages, benefits and working conditions. (The union already had a local governmentally supported human services unit as a member chapter.) Second, the agency was a very old one, and a group of community leaders, fearing this problem would cause the demise of the agency formed an unrequested advisory group called, “Friends of ABC.” Third, the United Way gave the agency 6 months to provide evidence that the problems were subsiding, or it was going to substantially reduce, the large portion of the agency’s budget it provided.
• Joe’s management style did not change. He was terminated with a six-month pay package in order to avoid a legal suit.
 A strong president/CEO then was fortunately hired, who was well known in the community, was an experienced social worker, and had union negotiating experience.
• The professional staff decided to join the union.
• The new president/CEO remained at the helm of the agency for 25 year, bringing innovation and change. However, the professional staff remained in a union chapter. Mistrust was hard to breach.

This is a case with which I was involved as a board member. Based on your experiences, to what extent have you noted a similar pattern?

• A nonprofit board misjudges the requirements for filling the chief executive position.
• Organizational discord becomes a problem.
• The board is slow in taking action, by trying to give the new executive time to resolve the problem.
• The board then terminates the chief executive for failing to meet objectives or because there is substantial organizational discord.
• Groups in the community become involved in the organization’s internal problems.
• The chief executive is fired.
• A new chief executive brings change, but there is still a feeling of mistrust that permeates the communications of the agency for decades.  The union continues to be the bargaining spokesperson for the professional staff, long after most staff members involved with the situation have retired  or taken other positions

3 comments

  1. Hello Dr. Fram –

    I would like to introduce myself to you. I am a recently retired nonprofit CFO with 25 years in the field and most recently, 15 years with a $20 million Catholic Charities agency in upstate New York. I have been reading your column and admire your range of experience and knowledge. I have just left a comment on your recent post regarding the problematic CEO.

    For the past year I have been writing articles passing on the knowledge that I attained over the course of my career. I believe that my offerings are unique in that they give practical advice along with context for better understanding of the challenges facing a nonprofit CFO. While I have a masters in accounting and an inactive CPA license, there is so much more to learn on the job! Although my research has not been exhaustive, I have not seen anything in the literature that compares to my approach.

    Since your offerings draw on your experience working with boards, I thought you might be interested in my articles. Two of them were published in Blue Avocado https://blueavocado.org/ in March of ’22. All are posted on https://marymightknow.com/ They aim to give insight into the mind of a CFO and I think that board members and executive directors would find them enlightening. For example, there is a series on the relationship between the CFO and the ED, and a number of articles on the basics of financial statements including reserves and how to present financial information to a board.

    I am wondering if perhaps you might want to direct your clients to my site, or perhaps mention it in one of your blog posts. I would welcome any opportunity to chat with you – perhaps you could advise me as to how I can generate interest in my site.

    Best regards, Mary Diegert

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    1. Mary: Thanks for your email. I have blog post on the importance of the CFO in “inventory.” If I can find a logical fit, I will try to reference to your post.
      If you would like to talk on the phone in the next few days, please send me several PACIFIC times you are available and a phone contact number. I will confirm one and call you. Best to communicate via my email frameugene@gmail.com
      Gene.

      Like

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