Board micromanagement

Is Your Nonprofit Forward-Focused or a Prisoner of the Past?

By: Eugene Fram            Free Digital Image

Governance arguably suffers most … when boards spend too much time looking in the rear view mirror and not enough scanning the road ahead. *

It has been my experience that nonprofits rarely address the possibilities and perils of “…the road ahead.” An endless stream of current and pressing issues can cause both Board and CEO to take a myopic view of their nonprofit responsibilities — either totally ignoring strategic issues or procrastinating a discussion of the subject. The results can be damaging to the organization. Here are some “prompts” that might guide nonprofit board members and CEOs as they attempt to provide leadership in this important but neglected area:

Balanced Agendas — Include and highlight strategic issues on every board meeting agenda (not just when a committee report is presented) until they are resolved with action plans, policy development or thoroughly discussed and removed. This constant emphasis on planning can go a long way towards achieving concrete actions on topics of future concern. A discussion of immediate issues juxtaposed with ongoing strategic concerns will provide a balanced meeting format that may possibly discourage board member’s attempts to micromanage, a very common tendency in nonprofit boards!

Short Term Focus — In a BoardSource report,  “…only 33 percent of nonprofits report that their board members are actively involved in advocating for their missions, and many organizations aren’t advocating at all.”** To inspire and challenge board leaders to actively serve as ambassadors.  The explanation for weak performance in this area is often attributed to the fact that the directors’ terms of service on the board are usually three to six years during which time people’s interest in the long-term future of the organization may be compromised. Some boards may be disproportionately represented by “millennials” whose participation comes with heavy time constraints. Problems of this type can be mitigated by seeking board members who are partially or fully retired. They are likely to be better equipped to focus on the important governance functions and the fundamentals in which the nonprofit operates. Boards need to look to look further out than anyone else in the organization… There are times when CEOs (those operationally concerned with strategy) are the last ones to see (environmental) changes coming.

Board Recruiting — Nonprofit recruiting can be a hit-or-miss process, often producing candidates who are readily available and familiar to the current board. Rarely will the committee seek out people who have strong track records as strategists and/or competent visionaries. This is a real challenge, but a forward focused board should make every effort to identify potential directors who have these types of experience and skills. The topic of recruitment is a challenging one and the process should have continual annual evaluation.

Can Nonprofit Boards Work Smarter Not Harder?
As noted earlier, nonprofit board people are often limited in the amount of time they can devote to board participation. Given these constraints, the board chair and CEO can choose from a range of options that will help orient directors to better understand the external landscape in which the organization operates. These initiatives can include visits to comparable facilities, opportunities to attend field related conferences or inviting experts in the same or similar organizations to interact with board members. The purpose is to infuse each member of the board with an informed view of the organization’s long-term future and prepare them to take the appropriate action. The CEO and board chair must address this question with a viable plan: What actually helps… (to develop) a board environment that encourages participation and allows board members to derive meaning, inspiration and satisfaction from their (board) work?

Talent: The Key to Nonprofit Success — A nonprofit board has one hiring decision to make: the engagement of the CEO. But it also has a significant responsibility to overview long-term talent development in the staff and management. The board of a family service agency needs to assure that its counselors are up to date on current modalities of counseling. A recreational organization must be operating in the context of accepted fitness practices. Annual talent reviews need to be scheduled with CEOs and the appropriate staff. In addition, individual board members, with the concurrence of the CEO, may want to have occasional professional contact with key people below the senior management.

Make strategy part of the board’s DNA — (Many nonprofit) … CEOs present their strategic vision once a year, the directors discuss and tweak it at a single board meeting (or a short retreat), and the plan is then adopted. The board’s input is minimal and there’s not enough in-depth information to underpin proper consideration of the alternatives.

An educated nonprofit board will have the depth of understanding to be alert to the future needs and problems of its organization. Typically there is usually an unanticipated “fork” in the road ahead. Status quo, “minding the store,” participation by rote are all too easy mindsets that will only hobble the progress of an organization. Board chairs and CEOs are key actors in turning an existing board environment into one that is focused on moving forward.

*Christian Casa and Christian Caspar (2014) “Building a forward-looking board,” McKinsey Quarterly, February. Note: Quotations from this article are presented in italics.

**https://boardsource.org/research-critical-issues/

 

How Can A Chief Operating Officer (COO) Advance Your Nonprofit Organization?

In my decades of involvement with nonprofit boards, I have encountered several instances in which the CEO has failed to engage the services of a COO– when this addition to the staff was clearly needed. In each case and for whatever reasons, this reluctance to act left the nonprofit organizationally starved.

This means that the CEO continues to handle responsibilities that should have been delegated, some of which a predecessor may had assumed during the start-up stage. I once observed a nonprofit CEO with an annual $30 million budget personally organize and implement the annual board retreat, including physically rearranging tables/materials and cleaning the room after the retreat! When top leadership is deflected in situations as this, client services and the general health of the organization is likely being negatively impacted.

From a board perspective, the dynamics involved with the COO issue are best explained through field case examples:

CASE A: 

Peter Gilbert was CEO of a national association, with a budget of about $13 million. The association supported about 250 human services nonprofits throughout the United States. It also had a subsidiary for-nonprofit firm that generated cash flow for the nonprofit. Income was generated from members’’ dues, foundation grants, individual donations, plus income from the for-profit firm, publications and conferences. 

After about two years, Peter was doing an outstanding job with fund development and visiting individual members, but the internal organization was being deprived of leadership since he was traveling about 50% of his working time.

The board began to suggest that Peter needed a COO to assist him to improve internal operations. However, he said the budget was too tight to allow for the salary of COO.  

Comments & History: After about four years of discussions, Peter and the board decided to allocate salary dollars from the subsidiary for-profit to fund the salary of a COO. He and the new COO worked well together for many years. The organization has successfully merged several times since then and continues to prosper. 

CASE B: 

Steve Gilbert is a 10-year veteran CEO heading a community human service nonprofit with a budget of about $3million. He is well regarded in the community, and his nonprofit is considered well run, although it is the smallest of similar types of agencies in the region. He has 4.5 full time people directly reporting to him, and a total staff of 40 professional and other types of support staff. Since the organization is a relatively “flat” one, some board members want Steve to add a COO. For example, he recently had to make a decision on whether to buy a new or rebuilt carburetor for a van? Steve recognizes the need for a COO, and at one time even allocated budget for one, but without taking action on the budget allocation.  

Comments: The board in this case needs to make a determination as to whether or not Steve is managing the organization for long-term stability. In other words, does the nonprofit have the capacity to serve more clients with the addition of a COO? Considering Steve’s long tenure of acceptable service, is it appropriate for the board to be proactive in motivating Steve to appoint a COO? With his willingness to step in to the “weeds “ and work harder when agency gaps develop, it seems he is perpetuating a form of crisis management.

He may not realize that the nonprofit may not be functioning appropriately. This may include delegating too much of the fund raising effort to others and neglecting potential donors who want to interact with the CEO. He may fear that a millennial COO will encourage too many disruptions with the status quo.

Since the appointment of a COO is clearly Steve’s responsibility, there is little the board can do except to offer, “advice and consent.”

CASE C:

Jennifer Gilbert is a newly appointed CEO of a faith based nonprofit with an annual budget about $12 million. The organization has had some significant deficits over the last three years, causing her predecessor to resign.  Although she had been a volunteer board member of the organization, this is her first management position with a nonprofit. Her previous experiences included a series of middle management positions in business and entrepreneurial organizations. One of her first actions as CEO was to eliminate the COO position.

Comments: Obviously Jennifer needs to trim costs, but she/or others must assume the responsibilities now carried by the COO. Since she had been on the board of the organization, perhaps she felt she knew enough about the internal dynamics to eliminate the COO position without starving the nonprofit? On the other hand she may be leading the nonprofit to long-term difficulty once the current financial crisis has abated.

Summary

Nonprofit CEOs may knowingly or unwittingly reject the idea of adding a new “chief” to the management team. Some are victims of the “founder’s syndrome” and enjoy the high level of control that defines their current leadership. Others are concerned about the financial implications the addition of a new staff salary might have on a typically tight budget. Risk is carefully considered in the nonprofit environment. The board needs to exert its overview responsibilities and become advocates for the change when deemed necessary. Otherwise, client services will be impeded and the organization will become locked in its status quo position.

How Often Do Nonprofit Board Members Need to Question Strategic Norms?

How Often Do Nonprofit Board Members Need to Question Strategic Norms?

By Eugene Fram               

A new nonprofit board member has a lot to learn. Considering that his/h term of service will be relatively short (typically six years), he/s must quickly learn the “ropes” to participate in a meaningful way. In this process, colleagues and leadership will acquaint him/h with prevailing board systems and culture—often ignoring the depth of expertise she/h can employ. Example: An expert in financial strategies may be asked to assist the CFO with accounting details, far below the person’s skill level. Oftentimes the new board member also is greeted with a mantra that says, “We’ve always done it this way.” As the board member moves in his path from novice to retiree, during a short tenure, there is little opportunity to suggest innovations that differ from the accepted fundamentals and to successfully advocate for change.

Following are four nonprofit areas that call for strategic scrutiny and, if recognized by several other current board members as constraints on the future of the nonprofit, the process may allow individual directors to seek positive change:

Can Mission Creep be Good?? Dedication to the organization’s mission should be the board and staff’s primary focus. Often this focus can limit a conservative board’s vision if long-term risk may be involved. But nonprofits have an obligation to keep current in addressing emerging needs and may veto a client venture that has reasonable potential. This hard and fast adherence to mission parameters can be used as an avoidance mechanism to maintain the status quo. How do directors determine the initiative’s positive/negative impact on the organization? Boards need to wrestle with tough questions such as the following: As baby boomers retire, there will be an increased need for elderly housing. Should those nonprofits whose mission is to operate homes for children feel morally obliged to extend both their mission and operational expertise to develop separate or operationally related homes for the low-income elderly?

Nonprofit boards, in my opinion, try hard to acculturate new board members to the mission, as the current group of board members views it. The disadvantage is that expansion or even modification of the program implementation becomes difficult or even unacceptable. A field case: A moribund human services agency offered counseling services on weekdays from 9 to 5 and on Thursdays 9-8pm. The nonprofit had no provision for emergency services. For decades board members had been acculturated to the rigid service schedule and were resistant to change. Finally, a group of new board members, recognizing the urgency of the clients’ requirements was able, with support of new a CEO, to develop a cost-effective way to increase service to a 24/7 model.

The Ethos of Overhead vs. Development: When the need for a new staff-type management person arises, it is often hotly contested. Nonprofit organizations have usually operated on the ethos that about 80% of budgets need to be expended for direct client services. This ignores the fact that an increase in overhead costs, if carefully planned, can yield substantial increases to program budgets. One CEO who was adept at fundraising refused to engage a COO, citing increased overhead as the reason. After four years of board prodding, he relented and made the appointment. The result was positive on two counts—he was able to expand his fundraising prowess and internal operations improved significantly.

Board Culture: Many boards have a tendency to be a rubber stamp for management. This can be a significant danger with nonprofit boards whose culture encourages directors to “go along to get along.” Board members, as volunteers, often view the political and friendship costs of rigorous debate as being too high. Others surmise that management has more information in the field and are uncomfortable in challenging its expertise. This malaise in the nonprofit sector can have disastrous results, evidenced in the frequent reports of fraud due to board laxity. Occasionally, a board may even refuse to fire the perpetrator and the state attorney general must intervene.

There is nothing tactically sacred about the monthly two-hour board meeting and yet limited discussion and crowded agendas can inhibit any type of rigorous discussion at them. Board members who would like to suggest new ideas or question accepted norms are usually frustrated and discouraged from doing so. Although obsolete, the meeting format is rarely challenged. There are, however, alternative options. Board meetings, in my opinion, should be scheduled for longer periods such as 1½ – 2 days–or bimonthly meetings of 3-4 hours. Instead of merely current updates, the format, if carefully structured, could then accommodate substantive policy/strategy issues and allow board members to be heard.

Alternative Data Measurement Systems: Nonprofits often fail to develop  impact data that one could deem reliable. In my view, too many nonprofits fail to appreciate the benefits of rigorous performance basis measurement. This failure is caused by the substantial cost of developing some qualitative impact counts, e.g. impact of advocacy efforts. Nonprofits, however, can glean whatever value they can through imperfect metrics, gathering information and data that may be anecdotal, subjective, interpretive, qualitative or developed through small size samples. Over time, imperfect metrics can be continually improved and become useful in tracking progress and driving change. (http://bit.ly/OvF4ri)

Challenging the Nonprofit’s cultural DNA is daunting. Ties to traditional modes of governance are hard to sever. But with sensitivity and persistence, a board member can help move the organization forward, if at least several other directors also understand the need to question strategic norms.

Pressure Test Your Nonprofit’s Fund Development Efforts

Pressure Test Your Nonprofit’s Fund Development Efforts

Pressure Test Your Nonprofit’s Fund Development Efforts

By: Eugene Fram

It’s no secret that nonprofits do not excel in the craft of fundraising. A 2015 study reported that 65% ofCEOs gave their boards academic grades of “C” or below for efficacy on this front. Yet most will agree that without the continuous influx of financial support, the mission to which the board members have committed themselves will fail

I clearly remember examples of this deficit from my own board experience—one in which I served on the fund development committee for a small nonprofit which met monthly for about a year. A sincere and hardworking board chair headed it, but the meetings took place without the presence of the CEO.   Many ideas with merit were exchanged such as developing a reserve fund, “get or give” board requirements etc.There was a lot of talk but no implementation, and after a year of pure discussion, a new president, who convened a new committee, disbanded the group.

A review of the pressure points in key fundraising activities would have taken the group from talk to action and further implementation. Here are activities and their variations that I consider most critical to nonprofit development processes:

Board-CEO Partnership—Some Elements For Success

 To be successful in fundraising, both the board and CEO must be active partners. Board memberscannot fundraise alone as in the above example.

 Board members will never have the required depth of organizational knowledge to demonstrate nonprofit outcomes and impacts. Also the CEO and/or development director, if there is one, will be needed to build proposals for grants or awards. In addition, the CEO should have access to foundations in the mission field, so that appropriate responses can be initiated

. Although this is not always the case, the CEO needs to have the ability to interact with senior business and foundation executives. Where the CEO lacks these capabilities, the board has an obligation to offer the services of a management coach to help him/h to acquire such skills. Expenses involved can yield substantial returns!

 Hypothetically, the board must be continually seeking donors who will be interested in the nonprofit’s mission, quickly involving the CEO when an opportunity is identified. Similarly, the CEO has an obligation to agree with the board about what funding proposals should be pursued from foundations and individuals.

 While the board is one partner in the development effort, not all board members should berequired to be active in fundraising. At a minimum, all should be asked to report donor opportunities that they encounder.

 For nonprofits that have a diverse board, some training on how to seek and address opportunities will be necessary. These topics can range from knowing that their employers have a matching gift policy to recognizing something they see in a newspaper/magazine that might be reviewed as a funding opportunity.

 Three or four board members, willing and able to drive the effort, should shoulder major funding activity. Many of the others will be unable or unwilling to become involved, except to provide lead information. (A recent study shows although 90% of nonprofit directors believe fundraising is an important obligation, only 45% of organizations require board member to minimially fundraise.) *

 The board members focusing on development need to be able to be persistent and constantly on the lookout for new sources.   As one fundraiser said to me, “ I’ll keep after the opportunity until the donor tells me to “go away!”  He was directly responsible for a $1 million donation to his university for organizational support. As part of the partnership, the board and CEO will have to determine how much time and resources need to be given to fund development. This can become a difficult discussion because many CEOs will want to direct more of the budget to targeted mission projects. In some cases where an unusual opportunity arises, the CEO may have to expend substantial amounts of his/h personal time to be successful. He/she may also have to redirect staff time and resources to the project.*

Nonprofit fundraising is a team effort. In cases where the CEO does not actively involve some board members in the process, make certain the board is not being micromanaged by the CEO.

Nonprofit Boards And Internal Working Environments—No Pieces of Cake!

People who work in the business community sometimes view nonprofit organizations as “cushy” places to work. The truth is that today’s nonprofits have challenges that are very different from those of the corporate world–and typically struggle to accommodate parameters such as restricted finances, increasing wage costs that must aligned with ever expanding client needs. In addition, board members must be concerned about personal liabilities under special legislations such as completing the IRS Form 990 and The Intermediate Sanctions Act. * Not easy!

A article in the Wall Street Journal discusses the hypothetical release from “grind” pressures a business executive might experience when moving employment to a nonprofit. ** Following are some of the specific advantages cited by the article (in bold) followed, by some of my real world observations over four decades as board member and/or consultant.

“People, etc.

The importance of the mission to a nonprofit cannot be contested. It’s what attracts committed personnel to the field and motivates them to grow the organization. The problem is that this concept can lead to a low risk culture that impedes the CEO and senior managers from seizing client service opportunities, elevating the fundraising culture and developing innovative business plans that can demonstrate impacts. 21st century standards require nonprofit CEOs to be strong and aggressive entrepreneurs. But conservative boards often inhibit that behavior in the nonprofit sector

“For nonprofits, it is more difficult to measure success.”

No question about this statement when it comes to measuring objectives that are anecdotal, subjective, interpretative or qualitative, such advocacy for the homeless. ** Also the metrics can only rely on small sample data or those that are derived from situational data. On the positive side, both nonprofits and for-profits are beginning to utilize types of data often referred to as “non-financial metrics.” These are lean experiment style metrics *** that can be modified, long as as learning takes place.

“Generally speaking, nonprofits are much more process-oriented….”

Nonprofit boards often employ a process culture because they are responsible for public funds or charitable dollars. This often leads to a board micromanagement approach long after the nonprofit has exited its startup phase. Also it causes many nonprofits to limit their potential for maximizing client service.

“There are also multiple stakeholders (clients, donors, volunteers, the general public) whose viewpoints have to be considered.  

Both business and nonprofit organization have multiple cohorts with which they must be concerned in the 21st century. But the nonprofit has to tread the very fine line between various constituencies.   A board member angering a major donor can lead to the organization’s bankruptcy!

“Collaboration decision making replaces speed in this world.”

Nonprofit managers have to devote significant time to garner a high level of collaboration, some times at the expense of more important projects. Many nonprofits operate on a “consensus” format. But without board members having a financial investments in the organization, and the rotating director tenure system (4 to 6 year median), votes can be based on a personal need to “go along to get along.”  What should take place is rigorous and civil discussion, respectful of dissenting votes.

* International Journal of Not-for-Profit Law / vol. 18, no. 1, February 2016

**Ted Beck (2016) “Think You Want to Work For a Nonprofit?” The Wall Street Journal, September 12th, p. R10

** For a comprehensive explanation, see: http://onstartups.com/tabid/3339/bid/96738/Measuring-What-Matters-How-To-Pick-A-Good-Metric.aspx 

How Prepared Are Board Members for the Challenges of the Nonprofit Culture?

How Prepared Are Board Members for the Challenges of the Nonprofit Culture?

By: Eugene Fram    

Given that the typical tenure of a new nonprofit board member is about six years, the board member’s intention may be to make his/her unique contribution to the organization’s progress before he/s rotates off the board and is supplanted by another “new board member.” With these factors in mind, I estimate that many volunteers enter the boardroom with little understanding of nonprofit culture. Even those who have served previously on business boards may initially spend valuable time in accommodating to the nuances of nonprofit practices and priorities before being poised to make contributions to the “greater good” that nonprofits create. Following are some areas that are endemic to nonprofits:

• Mission is Impact: Whereas the central mission of corporate boards is to make money for shareholders, nonprofit organizations, with their multitude of diverse missions, are commonly invested in impact. Most nonprofit board members, managers and staff are committed to helping the nonprofit organization fulfill its unique mission. I have seen staff and managers, often with highly marketable skills, remain with nonprofits despite financial pressure to move on. Dedication to the organization’s raison d’etre is a strong motivator that keeps good people working towards its accomplishment. Both types of organizations can report financial results quarterly, but nonprofits struggle to measure such long-term mission outcomes as  ” … enhanced quality of life, elevated artistic sensitivity, community commitment and successful advocacy… .” The elusive nonprofit challenge becomes how to measure impact in order to assess mission fulfillment. (http://bit.ly/OvF4ri)

• A Slower Pace: The pace of the decision process is decidedly slower in nonprofits than in the corporate board. This can occur for a number of possible reasons. It could be that the NFP’s charter may purposely set up requirements that preclude hasty and possibly unwise decisions—by mandating a period of deliberation before an action is formally voted upon. It may possibly be that the organization recognizes that it has insufficient staff for fast implementation. And there have been a number of cases when a nonprofit board has had to defer action because a succession of meetings has not produced a voting quorum!

• Get or Give Obligations: Nonprofit board members are said to stand “10 feet tall” in response to their commitment and service to the organization. The value of their time, energy and expertise is immeasurable. Another important aspect of good board management is ensuring the availability of adequate funds. To this end, many nonprofits ask board members to help generate and/or make annual donations themselves within the parameters of their resources. Commonly, directors are urged to make a “stretch” gift– and there are times when they are even requested to make their largest donation to that organization or seek donations or services from others. Some board members resist this type of pressure. But even with a development staff taking proactive development responsibility, it is still the board’s responsibility to pursue funds by every appropriate means.

• Board Chair, CEO and Staff Relationships: This triumvirate of positions makes up the lifeline of any nonprofit organization. Both Board Chair and CEO have their own designated spheres of influence that sometimes succumb to a board culture that is resistant to change. The staff has its own set of issues related to the nonprofit’s “flat” structure.  Here are some cultural breakdowns in internal relationships that can be disruptive to the organization.

The NFP Board Chair is probably more important than in an FP organization. The rank and file board members often defer to the current chair on proposed actions– generally to avoid conflict, which might impact donations or hobble potential networking efforts. This hesitancy to challenge the leadership cannot only impede progress but is apt to give the board a “rubber stamp” image..

The CEO will be the keystone to implementing a high-performance culture in a nonprofit organization. Boards are frequently resistant to consider replacing a CEO as long as he/s is producing at  a “C” or “B” level.  “If it’s not broken, why fix it?” is the view, albeit a short-term response. Understandably, the frequently shifting body of board members finds that maintaining the status quo is less disruptive. It is not, however, always in the best interest of the organization and its potential to grow and serve clients. 

The Staff, unlike in the FP hierarchy, is structurally often only one or two levels below the board, thus well attuned to the frequent rotations of board personnel. A continual shifting body of of board members makes staff members vulnerable to changing priorities, which can significantly impact their work. Nonprofits should offer many opportunities for staff and board to communicate appropriately—to interact in informal settings and on board-staff committees. But creeping board micromanagement needs to be avoided as a danger for nonprofits. 

Summary: Once acclimated to the unique challenges of the nonprofit culture, serving on the board can provide an exceptionally rewarding experience. Board members will have a chance to work with others who are dedicated to the work of serving people with significant personal needs, improving the positive contributions of professional and trade associations and bringing value and enrichment to their communities.

 

Can Virtual Meetings be Humanized?

Here are some suggestions:

More But Shorter Meetings:  Instead of monthly board meetings, schedule meetings every two months.. With the social intensity in the environment, some boards are being required to meet more frequently.  In advance of the meetings, ask the Nonprofit CEO to send a list of announcement types items, hopefully limited to one page.  (Have it understood that the one page may not meet the requirements of her/h high school English teacher!)

Onboarding New Board Members: A friend joined a nonprofit.  As a result of all virtual board and committee meetings she feels adrift of human connection. She might even not recognize some of her new colleagues if she passed them on the street.  This problem can be alleviated to some extent by arranging for the new member to have brief individual virtual meetings with other board members and senior managers.  It’s a hopefully a quick fix to a problem.

Strategic Planning. It was evident in the pre-corvid period that strategic planning needs to have a longer focus than the traditional three to five-year plan in order to achieve organizational sustainability. There are enough evidences of post-covid changes to continue strategic planning with small committees.  This involves more frequent, but shorter, virtual meetings for the planning committee and updates to the board.

Building Trust:  Having trust among board colleagues is critical to having a fully functioning board.  Talking directly to them, listening carefully and even watching body language or  face colorings.   Some people, for example, when agitated develop a flushed face.  None of this appears when meetings are virtual!  There are several actions Board Chairs and/or CEOs can take to help members to be better acquainted, hoping to lead to trusting relationships.

·      Good & Welfare Periods:  At the beginning or end of the virtual meeting ask members to share personal or professional events—promotions, marriages, children or grandchildren, etc.

·      Outside Presentation: At a virtual meeting, arrange for a local or national authority to  briefly talk about a mission related topic

·      Invite the board members’/managements’ spouses or significant others to also be involved. 

·      Other Interests: Invite board members/management persons to discuss unusual skills they have or other groups to which they belong that promotes the public interest.

·       Board Education:  Where possible continue board education via a virtual approach.  If staff persons participate, be certain presentations are rehearsed and that time restrictions are carefully followed.

Focusing on any of these four areas  in a time-compressed nonprofit environment can be difficult. In my opinion, nonprofit boards should review them to determine if they can help alleviate the obvious deficits inherent with virtual meetings.        

Nonprofit Boards Hire and CEOs Must Act

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NONPROFIT BOARDS HIRE AND CEOs MUST ACT!

By: Eugene Fram

Whenever the time is ripe to select a new nonprofit CEO, I think of the old joke that says “…every person looks for the perfect spouse… meanwhile, they get married.” By the same token, nonprofit directors seek perfection in a new ED or CEO– and find that they must “settle” for less. But there are certain defined attributes that are essential to his/her success in managing the organization.

With the 21st century pressures of increasingly slim budgets, fund development challenges and the difficulty of recruiting high quality employees the ED/CEO must be action oriented and come equipped with at least a modicum of the following abilities:

 Visionary: It’s all about the organization’s future.

The ED/elect should bring or at least begin tocultivate a deep concept of where the nonprofit is, should be and what the trajectory should looklike. He/she can do that by immersing himself in the mission field—reading widely and remainingin contact with regional and national leaders in the field. A state-of-the-art CEO should beavailable for consultation with colleagues with similar issues. Included in his span of vision arepotential disruptions that might affect the organization– and how to help the board focus on andimplement appropriate change.

 Board Enabler:

The new chief understands the limits of his/h operational responsibilities and the governance overview role required by the board. To build trusting relationships with the board, she/h realizes that transparency is key.

 Fundraiser:

The optimal fundraising relationship is a partnership between the CEO and theboard. Board members must be alert to outside funding opportunities and the CEO, alert tofunding opportunities from sources related to the mission field. Once an opportunity is identified, the CEO and the board work closely together to develop a proposal and to meet with the donor(s).If the organization has a development director, the person filling the position must be brought intothe discussion at an early stage.

 Communicator:

To be organizationally successful, the Board and CEO must be in a position to interact with a variety of stakeholders: government officials, donors, vendors, clients and theirs surrogates, foundations, etc. One area in which many nonprofit CEOs need improvement in communications is with the business community. It goes beyond simply joining the Rotary or Chamber of Commerce groups. Nonprofit CEOs must have rudimentary knowledge of many businesses so they can interact intelligently with business leaders they encounter in development efforts. This information can be about specific organizations they are approaching or general knowledge acquired from perusing publications like Business Week or The Wall Street Journal.

 Spokesperson:

Although some suggest that the volunteer president must be the spokesperson for the nonprofit, I suggest that the Executive Director/CEO must hold this position for several reasons

1. If a volunteer becomes a president/CEO, he/s may acquire some liabilities that other board directors don’t have. Some nonprofits have given the chief operating the title of president/ceo and the senior board person, board chair.  This eliminates confusion that often surrounds the ED title when contacting business or government officials.

2.The volunteer president typically does not work in the organization daily and does not understand its nuances as well as the CEO.

3.In a crisis situation, the media may contact board members.   It should be clearly understood that the CEO is the only person to comment to the media.

4. In ceremonial situations, it may be appropriate for the president to be a spokesperson.

5. The CEO needs to become the “face” of the organization because volunteer presidents come and go, some annually.

 Team Builder:

She/h needs to build a strong management team, some of whom, over time, may become capable of becoming an Executive Director. The CEO, as head of the management team, needs to be sure all staff are performing well with some being bench strength to move to higher positions.

 Tone Setter:

The CEO needs to set an ethical tone where everybody feels free to express their suggestions for improving the organization. This tone, in various ways, must also be communicated to all stakeholders by the Executive Director.

 Performance Monitor:

Hopefully the board has a rigorous and fair system for evaluating the CEO and the organization, and the values of this system that are embedded in staff evaluations.


 

 

Once Again! What Does Nonprofit Board Oversight Mean?

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By:Eugene Fram

Frequently, I encounter nonprofit case stories surface related to inadequate oversight by nonprofit boards of directors.  Some of the cases result in substantial dollar losses to the nonprofits. Following is my personal list of what reasonable board oversight means to attempt to help nonprofit boards of directors to avoid such losses.

  • At least half the board should be able to analyze the monthly or quarterly financial statements.  Have voluntary information sessions available for those who do not have the skills.
  • Make certain that an external audit is conducted at least every two years, and the board is involved in the selection of the external auditor from a list of two or three suggested by board members and/or management. [i]
  • Be alert to the system used for developing new programs.  Be wary when new programs are described such as “mindboggling.”
  • Be certain the organization has either a comprehensive assessment committee, finance committee, and/or audit committee. (Some states require nonprofits to have an audit committee once the organization has a certain annual revenue.) 
  • Be alert to the development process for filing critical reports –Examples:  990s, employee tax withholdings and both state and federal tax reports.[ii]
  • Make certain the board has developed or is developing a current strategic plan.
  • Make certain that the organization has a knowledgeable CFO.  No board member should have to worry about the safety of the organization’s assets.
  • Be especially alert when financial reports are frequently late or one or more directors perceive financial personnel are inadequately skilled. 
  • If you don’t understand something, be ready to raise questions, even if the question appears to be innocuous
  • Nonprofit transparency is critical in the 21st century.  “Trust But Verify.”

[i] For guidance in this process see: Eugene Fram & Bruce Oliver, (2010)“Want to Avoid Fraud?  Look to Your Board,” Nonprofit World, pp.18-19.

Identify Nonprofit Staff Groups To Help Drive Organizational Change

Identify Nonprofit Staff Groups To Help Drive Organizational Change.

By Eugene Fram     

Nonprofit executive directors Board Members tend to think of the staff professionals as individual contributors. These individuals are persons who mainly work on their own and increasingly also have to contribute as team players – for instance, counselors, health care professionals, curators and university faculty. However, many executive directors fail to recognize that these individual contributors can be grouped according to identifiable types, with differing work-value outlooks. Each group needs to be motivated differently to drive change in today’s fast moving social, political and technological environments. Nonprofit board members can use these groupings in their responsibilities for overseeing promotable staff members.  

From years of observation of a variety of nonprofits the late Robert Pearse, a psychologist, and I have identified four major groups that have been labeled “Nostalgics,” “Maintainers,” “Producers’ and “Builders.” Executive directors and board directors who do not recognize the existence of such groups and the special needs to motivate and evaluate them differently may not achieve the forward motion or the performance goals that are required in the 21st century.

An identifiable group may dominate a department or it may have members in different departments. In many cases, a single group may include professionals with disparate personalities but whose work-value systems are similar.

Meet, for example, Sarah Thomas, a congenial department head who has spent the past decade in a nonprofit trade association, and Jack Engels, a brusque cost accountant in the association’s financial division. Sarah is well liked by the members of her department, while Jack is largely left alone in his work.

On the surface, Sarah and Jack appear to have little in common. Closer observation, however, shows that they are alike in one important aspect. Sarah’s department, which she has headed for the past six years, performs at a satisfactory level. Over the years, Sarah has tended to hire staff professionals who have  work-values like her own. They are good – but not outstanding – performers. The group gets regular work done but rarely exhibits creative efforts or critical thinking.  A recurring complaint from Sarah and her people is, “The department has too much to do.”

Jack Engels, the brusque accountant, also gets his work done, even though he shows little enthusiasm for his work. It is just a job, and he is averse to any change, except that mandated by accounting requirements.

Both Sarah and Jack are Maintainers, for both are comfortable with the status quo. If the executive director and/or board members were to allow the Maintainers standards to pervade the entire organization’s performance, it would likely stagnate and eventually decline.

Nostalgics are generally easy to recognize because they identify so strongly with the organization’s past history and culture. Many of them tend to be long tenured professionals whose performance has leveled off over time. They tend to take pride in being dedicated to the nonprofit but are uncomfortable with changes they perceive as breaking sharply with tradition.

The following strategies are helpful in working with Nostalgics:
• Respond to their need to revere and emotionally relive the past.
• Encourage the “willing worker” value system of group members.
• Show how proposed changes will perpetuate past glory by contributing to organizational longevity and prominence.
• Recognize that Nostalgics lack vision and prefer to avoid direct confrontation about the future direction of the organization.

Maintainers constitute the largest group in virtually all organizations, as illustrated by Jack and Sarah, they are average performers who typically have less tenure but also possess more currently useful skills than Nostalgics.  They do only what is required by a job description or implied contract. Although they appreciate having a professional position, they have not internally accepted the self-directed performance behavior one typically associates with being a professional.

Several guidelines are helpful in working with Maintainers.
• Be alert to the strong “legacy” value system at work in this professional group-all established processes can be successful in the future.
• Depend on group members for low to average productivity but be aware that requests for increased productivity or increased self-management are likely to generate resentment and hostility.
• Emphasize the pressures in the organization’s external environment that require professional performance improvement. Indicate how such improvements are important to long-term job security.
• Set modest but attainable performance improvement goals on an annual basis. (Note: If a complete turnaround is essential, for the organizational survival, this slow improvement will not be adequate.)
• Expect some continuing hostility whenever Maintainers feel new standards put pressure on them for sustained higher performance and commitment.

Producers are a varied collection of highly individual “type-A” workaholics who are motivated by their own goals. They tend to work on their own, but can be useful as team leaders if required for time limited projects. Because work output is the core of their existence, they see few differences between their personal and professional lives, sometimes leading to an unhealthy work-life balance.  This can be a larger challenge if work forces are increasingly working from home.   Producers will support changes initiated by the executive director that they perceive will enable them to produce more efficiently as individuals.

The executive director can try to motivate Producers’ effectiveness in the following ways:

  • Channel Producers’ vigorous efforts into organizational priorities by linking Producers’ special interests to the mission and goals of the nonprofit.
    • To the extent possible, provide Producers with the resources needed to be self-managing and productive.
    • Wherever possible, remove bureaucratic roadblocks to their productivity.
    • Agree annually on goals, and let Producers achieve them with a minimum of supervision and with appropriate rewards .

Builders, unlike Producers, are committed to furthering the goals of the organization, even at the expense of his or own personal goals. A senior nurse, who agrees to become an administrator, even though he or she prefers to care for patients, is an example of a Builder. Builders fall into two categories: vague visionaries and organized progressives. The former group’s attention span shifts rapidly from one detail of a proposed change to another. They lack sustained capacity for completing long-term performance improvement. The members of the latter group, organized progressives, are systematic thinkers who think quickly. Once they have a picture in mind, they can provide the executive director with knowledgeable and strong support.

An executive director can motivate the Builder group in the following ways:
• Use the vague visionary Builders to help sell others when launching new performance programs.
• Explain to organized progressives how their Builder values can contribute to a long-term systematic improvement plan.
• Give organized progressives strategic follow-up assignments to ensure the new program will move forward.
• Provide Builders with superior performance rewards..

If nonprofits are to continue to serve the nation in the current turbulent difficult time, executive directors and volunteer board members will need to provide strong support to their Builders and Producers and their work-value systems. In addition, they must also motivate the Nostalgic and Maintainer groups, using the suggestions cited above.

We hope this blog will spur board members, executive directors and president/CEOs to identify these four groups in their own organizations.
Sources
Eugene Fram & Robert Pearse (1991) “The High Performance Nonprofit: A Management Guide for Boards and Executives,” Families International, Milwaukee, Wisconsin.
Judith Gordon (1991), “Organizational Behavior: A Diagnostic Approach,” Allyn & Bacon, Boston, pp. 205-207, 742.