CEO Evaluations

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/

 

Using A Nonprofit’s DNA In Planning?

Bob Harris, CAE, suggests a nonprofit’s DNA consists of five elements. ** Following are my thoughts on how they can be applied, if a nonprofit board wants to develop an understanding of the “real world” applications of the Harris DNA elements. This needs to take place prior to the planning efforts.

Board Structure: Nonprofit boards must effectively operate with a series of board committees. The number of committees varies widely. I have observed some with as few as three committees and others with as many as 15 committees. The latter group rationalizes the number by suggesting board member involvement leads to better understandings of missions, vision, and values. More desirable board candidates live time-compressed work and lifestyles and can’t become involved with committees that meet without defined charters or try to micromanage management decisions.

Three to about six committees seems to be optimal for a mature board in the 21st century. A startup board will require more committees to allow board members to assume operational roles. One warning! If this large committee DNA format is allowed to carry over into maturity, it can lead to a dominating board that will be difficult to change.

Strategy: “A Board must act strategically—not tactically” ** In terms of its DNA, strategy must be the “lifeblood” that helps relate all major decisions to the nonprofit’s mission.

Start-up nonprofits often focus on tactical discussions at Board meetings. Founders and board members must address tactical issues because board members have two responsibilities. They must govern and act as part or full-time staff.  But as the organization matures it becomes essential to fashion all agendas on policy/strategy issues. The responsibility for action resides with the Board Chair and CEO. The Board Chair, however, has a special obligation to proactively discourage lengthy discussions of tactical issues, frequently characterized as “weed discussions.” It should be emphasized that these are operational and management responsibilities, not Board agenda items. 

Sustainability: This factor involves several critical keystones. First is the sustainability of income sources. If, for example, the nonprofit is heavily dependent on governmental funding, to what extent is the nonprofit able to secure private and foundation sources should governmental support abruptly decline? Managers and audit committee members need to be continually alert to seeking new funding sources.

A second keystone involves succession planning. The Board has direct responsibility for CEO succession and must overview staff succession. The latter involves knowing who among staff personnel are promotable, or, with training, be able to fill managerial positions. In my opinion, most nonprofits boards don’t provide significant overview attention to staff promotions.

Relatively short board terms or tenures for most board members (4-6 years) allow the board to introduce new thinking. However, they may not motivate board members to come to grips with issues related to long-term sustainability. Board members are traditionally active for one planning cycle, assuming strategic planning takes place every three to five years. From a sustainability perceptive, this restricts discussions of DNA changes that may impact stakeholders in the seven to ten-year time frames.

Relevance: Two keystones are also important here. First clients and funders must be able to perceive that the nonprofit is fulfilling its mission with integrity and a focus on stakeholder satisfaction.

The second involves maintaining a strongly committed board. To achieve this goal, the Board Chair and CEO must take actions to make certain that each board member perceives that her/h contributions are meaningful.   These perceptions can only be determined from candid conversations with each board member. It’s the responsibility of both the Board Chair and CEO to annually assess that each board member is involved with meaningful activities.

Unlike humans, the DNA of nonprofit organizations can change with careful interpersonal adjustments. For example, assumed it is desirable to have emergency client services available 24/7 instead of the normal 40-hour working week. Then management and staff should work together to modify the DNA (fair scheduling hours, etc.,) to accommodate the change.

Performance: The approaches to assessing the value of nonprofits have recently changed. Focus has changed from assessing program outcomes to assessing program impacts. ***

Program objectives can be achieved, but they can have little impact on clients lives. For example, marriage counseling can be helpful in eliminating symptoms of problems to meet client satisfaction, but the results may lack impact because they don’t address the problems’ root causes. Data analysts are being employed by some nonprofits to model impact information that is being requested by foundations and donors. The task, however, can take a long time to implement.

Suggestion: Most well-run nonprofits review their missions, visions, and values every three to five years. A review of their DNA factors, prior to the planning cycle can enhance the process.

 

Raising the Bar for Nonprofit Board Engagement

 

Raising the Bar for Nonprofit Board Engagement

By Eugene Fram                            Free Digital Image

It’s no secret that some board members cruise through their term of board service with minimal involvement. McKinsey Company, a well-known consulting firm, has suggested five steps that can be used to counteract this passivity in for-profit boards. * With a few tweaks, McKinsey suggestions (in bold) are relevant to the nonprofit board environment where director engagement is often a challenge.

Engaging between meetings: Nonprofit boards traditionally meet monthly, bimonthly or quarterly. Unless the board is a national one, these meetings range from one to three hours, with the three hours being typical of quarterly meetings. The meeting agendas are usually packed, and they leave little time for individual directors to enhance discussions. ** In addition, a sense of anonymity develops among board members who do not know each other personally, a significant barrier to team building. I have encountered nonprofit boards where disconnect between board colleagues is simply a nod—or less– when passing each other.

Board cohesion based on interpersonal relationships has an important impact on the quality of board discussions. It allows a board member to more fully understand the perspectives and goals of his/her fellow board members or “where they’re coming from.” With this information at hand on both sides of a discussion, it increases the possibility of creating “win-win” impacts for the nonprofit.

Responsibility for promoting between-meeting engagements needs to rest with the board chair. As a staring point, the chair can sponsor a few informal Jefferson dinners. The topic should be a cause which can excite the invitees. It needs to be, a challenge to the directors. ***

Engage with strategy as it’s forming—do not just review & approve it: Traditionally most of what becomes an organization’s strategy will emanate from the management and staff. But the board must proactively help to form strategy or step in to fill gaps when the management refuses to do it.

In forming strategy the board has an obligation to make certain all viewpoints are heard. Staffs as well as management ideas need to be considered. In addition, the board may need to take direct actions when the organization fails to fulfill a mission obligation. Example. A counseling agency only offered services during normal business hours–9 am to 5pm, five days a week. Its board required management to offer services, 24/7 with an emergency line when the office was not open. The management, a creative group, found a way to do it, without increasing costs.

Cultivate talent: The nonprofit board has several responsibilities in regard to talent.   First, it must engage and then evaluate the CEO. This is a complex duty because the vast majority of the board members are not full-time employees and many have only tangential attachments to the organization’s mission field. Second, the board must overview the quality of the staff talent so that it is in line with budget constraints. Third, it must be aware of those within the staff who may be promotable to management. Finally it must be alert to succession opportunities internally and externally in the event the CEO were to leave abruptly. Succession planning for the CEO must also include considerations about the talents that will be needed beyond the current one.

Engage the field: Since nonprofit board members have full-time occupations outside the mission field, it’s important that they receive a flow of information about leading edge changes taking place outside the organization. However, CEOs sometime can operate a “mind the store” nonprofit, by looking at past successes without a visionary component. To help avoid this occurrence, specific directors might be assigned to become more deeply familiar with key projects in order to assess their progress.

Engaging on tough questions: A difficult task on a nonprofit board where politeness is an overriding value. Peers are friends and business associations and generally there are few potential penalties for “going along to get along.” In all my decades as a nonprofit board member, I have yet to see one board member ask that his/h dissenting vote be recorded in the minutes. A necessary action when he/she feels that the vote being passed by the majority may lead to harming the organization.

*http://www.mckinsey.com/business-functions/organization/our-insights/changing-the-nature-of-board-engagement

** In California, the Brown Act might prohibit such meetings. The Brown Act covered concerns over informal, undisclosed meetings held by local elected officials. City councils, county boards, and other local government bodies that were avoiding public scrutiny by holding secret “workshops and study” sessions.

***For details on the background and planning for Jefferson dinners see: http://jeffersondinner.org/jefferson-dinner/

People Problems Can Put Nonprofits at Risk

People Problems Can Put Nonprofits at Risk

By: Eugene Fram   Free Digital Image

Like the Streisand song lyric, nonprofit people who need people must first have the know-how to choose and cultivate those people! If not, the risks to a board can range from modest to substantial. It all begins with making the right choices and vetting board and CEO candidates.  Most nonprofit board members know that they are only required to make one hiring decision—the engagement of the CEO. This is a process that always involves some risk factors. Take the case of the university that has expended substantial amounts to engage a CEO. After a brief “honeymoon period” it was determined that the candidate lacked the requisite background to move the organization forward. His resignation was forthcoming, and with it, a disruption that was costly not only in dollars but in board/faculty morale and public confidence.

A nonprofit board is usually confronted with several people risks. Following are some that should be noted by board members.

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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.

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How Nonprofit Boards Can Support Management & Staff and Refrain From Micromanaging!

How Nonprofit Boards Can Support Management & Staff and Refrain From Micromanaging!

By: Eugene Fram                    Free Digital Image

The dilemma is common to nonprofit organizations. As start-ups, everyone aspires to do everything. Passion for the mission and determination to “get it right” imbue board members with the desire to do it all. But once the organization starts to mature, board roles shift to focus more broadly on policy and strategy issues. With the advent of qualified personnel to handle operations, there are many overview activities, sans micromanaging, available to board members. Following are some ways that boards can assist and demonstrate support for operations, CEOs and staffs without interfering.

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The Search For a New Nonprofit CEO Needs To Be Realistic

 

The Search For a New Nonprofit CEO Needs To Be Realistic

By Eugene Fram      Free Digital Image

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 in the article can be applied to nonprofit boards. 

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Two Nonprofits Merge: Synergy or Collision Course?

Two Nonprofits Merge: Synergy or Collision Course?

By: Eugene Fram     Free Digital Image

Having led a merger committee that resulted in a successful merger with another nonprofit, I thought my field observations might be of interest to others contemplating a merger. These comments center on a merger of two equal partners, which plan to form a new organization, not the acquisition of one nonprofit by another.

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The Nonprofit CEO–How Much Board-CEO Trust Is Involved?

The Nonprofit CEO–How Much Board-CEO Trust Is Involved?

By; Eugene Fram         Free Digital Image

The title, CEO for the operating head of a nonprofit, clearly signals to the public who has the final authority in all operating matters and can speak for the organization.*  .

The CEO designation calls for an unwritten trusting contact with the board based on mutual respect, drawing from the symbolism that he or she is the manager of the operating link between board and staff. It is a partnership culture. However, a solid partnership does not allow the board to vacate its fiduciary and overview obligations. The board has moral and legal obligations to “trust but verify” and to conduct a rigorous annual evaluation of outcomes and impacts CEO has generated for the organization.

While the trust the board has in its chief operating officer can’t be described in exact quantitative terms, viewing it through the lens of a set of CEO and/or Board behaviors can provide an idea that a significant level of trust is involved in the relationship.

Following are some of the behaviors that signify a trusting partnership is in place:

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Nonprofits:”What Role Should Board Members Play in Overviewing Management /Staff Talent?”

Nonprofits:”What Role Should Board Members Play in Overviewing Management /Staff Talent?”

By: Eugene Fram    Free Digital Image

Nonprofit boards rarely develop an in-depth strategy for assessing its organization’s human capital. Some will keep informal tabs on the CEO’s direct reports to prepare for the possibility of his/her sudden departure or is incapacitated. Others –smaller organizations with fewer than 20 employees—need only a basic plan for such an occurrence.

Need for Strategy: In my view, maintaining a viable talent strategy to assess staff and management personnel is a board responsibility, albeit one that is often ignored. The latter stems from the constant turnover of nonprofit members whose median term of service is 4-6 years—hardly a lifetime commitment. Like for-profit board members whose focus is on quarterly earning results, their nonprofit counterparts are likely more interested in resolving current problems than in building sufficient bench strength for the organization’s long-term sustainability.

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