Author: eugenefram

Dr. Eugene Fram has over 25 years experience as a non-profit board member, consultant, and author. His model of nonprofit governance has been adopted by thousands of organizaations.

Focusing the Nonprofit Board on Strategy – Same for For-Profit & Nonprofits?

Focusing the Nonprofit Board on Strategy – Same for For-Profit & Nonprofits?

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 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  <!–more–>   

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.

 

 

 

Once Again: How to Keep a Nonprofit Board Informed.

Once Again: How to Keep a Nonprofit Board Informed.

By: Eugene Fram

At high-performing nonprofit boards, members of the board will rarely be invited by the CEO to participate in operational decisions. Yet the board still needs to know that is going on in operations.

The name of the game is for the CEO to communicate the important information to board members and to keep them informed of significant developments.  Still, there’s no need to clutter regular board meetings by reporting endless details about operations. <!–more–>

Probably the most effective way of keeping board members aware of what is going on within the organization is to have staff frequently make short presentations.  However, I have seen this approach used in dozens or nonprofit board meetings without success.  Two problems frequently occur.   First the staff person is so enthusiastic about an opportunity to talk with the board that the presentation time continues well beyond the allotted time, and, second, board members raise “micromanagement” level questions, which further extends the presentation session. To solve these problems, the board chair needs to suggest to detail seeking directors that the questions are very operational and can be answered “offline.” Second, the chief executive must meet with the staff person well ahead of the meeting and make sure that the material to be presented is succinct and the staff person is well aware of the time constraint. A “dress rehearsal” might even be appropriate for some staff personnel

Another technique is to use a consent agenda.  With a consent agenda, routine and previously agreed upon items are organized together in the pre-meeting agenda and then, hopefully, approved as a group.  If one or more board members questions an item in the group, it is placed on the agenda for the next board meeting. This process eliminates the time consuming effort of having a separate discussion for each item.

A third way is for the chief executive to meet with board members informally about every quarter. Occasionally, these meetings are with two directors at one time.  At these sessions, the chief executive can discuss the more “entrepreneurial or wild ideas” that might need testing and update them on operational decisions in greater detail.  Some of the meetings can happen quite informally, before or after a committee meeting or after a monthly board meeting. Some can occur at  appropriate social events. It is important to have the executive’s assistant keep track of the meetings and then to have authority to make new appointments to meet the quarterly schedule.  Obviously, the CEO would need to meet wit the board chair more often, and if the board is a national one meeting less frequently, a scheduled phone call is appropriate. One veteran CEO I know meets frequently with two board members. One is a long serving member, and the other is a newly appointed board member.

Source: “Policy vs. Paper Clips” Third Edition (2011).  Available on Amazon

My blog site: http://bit.ly/yfRZpz

The Nonprofit CEO Exceeds His/Hers Authority – What Happens Then?

The Nonprofit CEO Exceeds His/Hers Authority –  What Happens Then?

By: Eugene Fram

It happens!  When it does, it’s the board’s job to inform the CEO that he or she has taken on too much authority.  As a board chair of a human service nonprofit, I encountered such a situation. The CEO signed a long-term lease contract on his own that should first have been approved by the board.   The financial obligations involved weren’t significant. <!–more–>  When the CEO recognized his error, I then asked for formal board ratification. None of us does out jobs perfectly.  But a CEO has to recognize  the board’s ultimate authority for long-term contracts and similar issues, even when the financial obligations are insignificant.

I don’t believe you need as much Board-CEO trust in the for-profit world as in the nonprofit world.  In the former, the “bottom Line” can give directors a reasonably clear (not exact) indication of how the CEO is performing.    In the nonprofit world, there is no organizational solid bottom line, except the one that says income must match expenses.  Also of importance, there are many qualitative outcomes, such as community impact, that are not part of the financial statements and must be considered in the evaluation.

Board directors must trust in the ability of the CEO they have selected to do the job, and clearly make the person accountable.  Since there is no complete long-term performance bottom line for many nonprofit organizations, and the costs of obtaining sold qualitative performance metrics is so high, most nonprofits have to rely on imperfect metrics to obtain a semblance of comprehensive long-term performance. *

For a nonprofit organization, it is necessary to hire a president/CEO or executive in whom the board can place a high degree of trust. But along with the trust, the board must ROBUSTLY annually evaluate the CEO and the organization’s performance.

  • See my blog: http://bit.ly/yfRZpz and my 2010 article “Using Imperfect Metrics Well: Tracking Progress and Driving Change.” I can send a copy of the article to those who request it.   eugenefram@yahoo.com

Guidelines for Forming Nonprofit-Business Partnerships

Guidelines for Forming Nonprofit-Business Partnerships

By: Eugene Fram

Ashley Halligan, an analyst at Software Advice, http://www.softwareadvice.com/nonprofit, has conducted a pilot study involving business and nonprofit managers, “4 Steps Nonprofits Can Take to Establish a Lasting Business Partnership.” The study has recently been mentioned in the New York Times. Following are a few ways she (in quotations) and I suggest the steps can be implemented to initiate partnerships with business organizations.

1. Assess your Goals – The nonprofit should try to align with businesses that roughly have similar client goals as expressed in terms of the nonprofit’s mission, vision and values. <!–more–>

“For instance, Trees for the Future, a nonpro0fit, wanted to plant more trees in developing countries.” Partnering with international Celestial Seasoning, the nonprofit was able to sponsor the planting of more than one million trees. The relationship between the two was evidently based on the firm’s need for international PR & sales, and the nonprofit’s mission to sponsor the planting of more trees in developing countries. There often does not need to be based on a direct product/service relationship such as cancer prevention nonprofit and a drug company selling cancer drugs.
2. Develop a Shortlist of Potential Busyness Partners – “Look (first) for (local) businesses that have commonalities with the (nonprofit) organization.” They are the most likely to know about the nonprofit’s social values, present and past directors, staff professionals and clients the nonprofit has helped. Seek higher-level executives from the short list companies as nonprofit directors.
3. Start Some Conversations – In developing these conversations, make sure that persons representing the nonprofit are fully comfortable in dealing with senior level business executives. My observations are that few executive directors have a high comfort level in these situations. That is why I strongly recommend the nonprofit’s chief executive officer hold the title, president/CEO. This allows the businessperson to quickly know who has final operating authority. An old adage concludes, “Principals Talk With Principals.”
4. Initiate & Nurture the Relationship – “…[A] Nonprofit-Business relationship requires time and nourishment to flourish. … While the (relationship is) business (to the nonprofit), it is important to remember that the relationship is a highly personal one. Demonstrating a return on investment (ROI) is also important. … Track as many benefits to the company as you can, so you can provide a strong ROI.” *

*See my blog site: http://bit.ly/yfRZpz and my article: “Using Imperfect Metrics Well: Tracking Progress and Driving Change,” Send request for copy to: eugenefram@yhaoo.com.

Failure in Nonprofit Succession Management – What to Avoid

Failure in Nonprofit Succession Management – What to Avoid

By Eugene Fram

Boardmember.com in its October, 11, 2012 issue carries an op-ed item by Nathan Bennett and Stephen Miles titled, “Is your Board About to Pick the Wrong CEO.” Although targeted to for-profit boards, all of the five items listed can be applied to nonprofit boards. Following are my applications to nonprofit boards.

1. Is There Interpersonal Conflict on the nonprofit board? If there is a high level of interpersonal board discord, the board is setting up the new executive director for failure, no matter how strong the e executive’s background or talents. The same can be said if the staff is “at war” with the board. No matter who the board chooses, the new person is tainted as the board’s change agent, not a collegial leader. (more…)

Attn: Crisis Planners – A Leadership Plan For a Nonprofit Organization in Trouble

Attn: Crisis Planners – A Leadership Plan For a Nonprofit Organization in Trouble

By: Eugene Fram

When a nonprofit origination encounters serious difficulty, the level of board oversight needs to increase substantially. From my own personal experience, it amounted to the executive committee reviewing and monitoring critical outcomes every two weeks for about six months, in addition to the monthly board meetings.

For the executive director, or interim executive director, it involves taking the following steps:

• Obtain a new external audit or update the most recent external audit. This provides an assessment of how financial controls are operating and highlights important financial concerns.
• Meet monthly with the board finance committee. The committee should have a good understanding of the financial situation. In addition, it can provide support if quick fiscal changes must take place.
• Ask a trusted consultant to provide an objective, third party, evaluation of key personnel. This will help provide a rationale for any personnel changes that need to be made quickly. It should also help the executive director to assess staff strengths and weaknesses more quickly.
• Establish a board-staff committee composed of individuals with reputations for being creative thinkers and doers. Ask for their suggestions for increasing revenues, enhancing fund raising efforts, cutting costs and other issues such as improving morale
• Make decisions quickly and limit participation in decision making to a reasonable level of staff involvement. Don’t let matters drag for too long. Be alert to persons or groups who want to prolong the discussion process either to further their own private agendas or because they have inadequate skills and fear change
• Make necessary administrative changes as quickly as possible. Don’t hesitate to move quickly to remedy long- standing administrative problems. The high-performance group of staff members will be delighted and low achievers may see the handwriting on the wall and plan their departures.

Source: Eugene H. Fram & Robert F. Pearse (1992), “The High Performance Nonprofit; A Management Guide for Boards & Executives.” Families International, Milwaukee, Wisconsin.

My blog site: http://bit.ly/yfRZpz

A Traditional Nonprofit Board vs. A Nonprofit Policy Focused Board: The Difference is Operational

A Traditional Nonprofit Board vs. A Nonprofit Policy Focused Board: The Difference is Operational

By Eugene Fram

Scenario: The nonprofit agency, ABC, has been criticized for not having enough minority staff members. Because ABC, a large well-known organization, primarily serves urban residents in a major U.S. city, board members are concerned about the criticism. (more…)

Reissue: Can a board member ever hold a staff position in the same nonprofit organization?

Can a board member ever hold a staff position in the same nonprofit organization?

THIS BLOG CONTINUES TO HAVE CONSIDERABLE READERSHIP SINCE IT WAS ISSUED EARLIER THIS YEAR.

By Eugene Fram

Sometimes a board member acts not as a director but as a different kind of volunteer. For example, Director Z has a particular accounting skill and wants to utilize it to help the nonprofit. The CEO agrees.

In this instance the board member is not a board member, but a volunteer working under the direction of the CEO. This distinction is easy to understand if you think about the example of a Girl Scout leader who also serves as a board member on a Girl Scout regional group. As leader, she follows scouting guidelines and directives provided by the organization’s professionals. As a council director, she helps to set policy for the movement in the geographic area. In only one instance does she act as a director.

Whether or not he/she should receive a payment for the work is subject to various state law nonprofit laws and approval of the board.

Source: Policy vs. Paper Clips, Third Edition, 2011, pp.231-232.

My blog site: http://bit.ly/yfRZpz

What To Do About Weak Nonprofit Board Practices

What To Do About Weak Nonprofit Board Practices

By Eugene Fram

Peter Rinn, Breakthrough Solutions Group, recently published a list of weak nonprofit board practice. * Following are some of the items listed and my estimation of what can be done about them, based on my experiences as a nonprofit board director, board chair and consultant.

• Dumbing down board recruitment – trumpeting the benefits and not stressing the responsibilities of board membership.
Board position offers frequently may be accepted without the candidate doing sufficient due diligence. At the least, the candidate should have a personal meeting with the executive director and board chair. Issues that need to be clarified are meeting schedules, “give/get” policies and time expectations.
In addition, the candidate, if seriously interested, should ask for copies of the board meeting minutes for one year, the latest financials, and the latest IRS form 990. (more…)

A 21st Century Nonprofit Reality – The Chief Executive Needs to be a President/CEO

A 21st Century Nonprofit Reality – The Chief Executive Needs to be a President/CEO

By: Eugene Fram

Many of my viewers* know that I strongly favor nonprofit boards, which develop a budget level of more than $1 million (US) and employ about 10 full and part time people, should designate their chief executive as the President/CEO. A volunteer director then becomes the board chair. Below, in italics, is a response I received to my viewpoint listed on the Board Source blog site:

Interesting points. However, where I come from, executive director is the recognized title for the heads of non-profits, with the possible exception of multimillion-dollar agencies. Everyone understands it. Even when the ED is recognized (in bylaws and/or policies) as the CEO of the agency, they still tend to use the ED title, The CEO title smacks of the for profit sector, which may be off-putting to the social service sector, perhaps a tinge of “playing out of your league.” President is definitely from the for profit sector, and could be confusing from the perspective that some boards still refer to their chairs as “presidents. (more…)