Crisis Management

Wanted: Nonprofit CEOs with Entrepreneurial People Skills

Wanted: Nonprofit CEOs with Entrepreneurial People Skills

By: Eugene Fram      Free Digital Image

The need for superior leadership skills is as critical to CEOs in nonprofits as it is in the entrepreneurial world. Following are four such skills and the unique challenges they bring when employed in the nonprofit environment.

 

  • The CEO’s Power of Persuasion

A nonprofit CEO and the board must take the lead in creating the organization’s mission, vision and values. However, since the board majority is usually composed of volunteers who are seldom involved in the day-to-day implementation of the organization’s mission, it becomes the responsibility of the CEO to present viable options for the future — and then to effectively share the board-approved “vision” with three discrete audiences: the board, professional staff and other stakeholders. But…

Board members, in the roles as part-time overseers, often do not have the time to critically evaluate alternatives when presented, particularly if a revised mission is under consideration.

Nonprofit staffs tend to be conservative, especially when change may jeopardize their positions. (e.g. “Don’t change the program, the position that may be dropped can be yours!”)

And foundations, donors, and supporters, who are possibly considering funding requests from other nonprofits, need to be approached by a CEO who is equipped with outstanding people skills.

While business organizations have somewhat similar challenges, obviously their revenue sources are not dependent on financial gifts.

  • The Right Hires

Just as in business, the process of judicious hiring endlessly challenges a nonprofit CEO. Nonprofit salary levels are simply not competitive with those of established commercial organizations, especially in the area of hard-to-find skills such as finance or IT. But these challenges can be overcome! I have seen nonprofit CEOs develop a collegial working atmosphere in their search for employees, resulting in new personnel who are not only dedicated to the mission but feel encouraged to exercise their own creative potential.

  • Face of the Organization

The nonprofit CEO, like his entrepreneurial business counterpart, must be the top marketing executive who is the face of the organization. While board members can assist with promotion, CEOs are the leaders to whom stakeholders and employees look to promote the organization’s impacts. Alternatively, they must take the blame for failures. No longer should a nonprofit CEO be able to use the old excuse with a failed program, “The board forced me to take the action.” But to shepherd an entrepreneurial CEO, the board needs to be able to tolerate some failures as long as they were based on reasonable “business judgment.” No one does their job with unfettered perfection.

  • Growing the Organization

If a nonprofit decides to expand the scope of the organization, the skill sets needed in a CEO are quite different from those needed to maintain a status quo operation. Rarely can the executive who simply “minds the store” adjust to the complexities of the new environment and must be replaced or moved elsewhere. A nonprofit’s commitment to expansion is both exciting and terrifying. In any case, it demands a nonprofit CEO who, in partnership with a supportive board, can handle the requisite financial development and continual networking with stakeholders.

 

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

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

By: Eugene Fram    Free Digital Image

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

In specific, the board failed to take any action to remove a board member who wasn’t attending meetings, but he refused to resign. His three-year term had another 18 months to go, and the board had a bylaws obligation to summarily remove him from the board. However, a majority of board members decided such action would hurt the board member’s feelings. They were unwittingly accepting the “nice-guy” approach in place of taking professional action. (more…)

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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Tightening the Oversight of Nonprofit Boards?

 

By: Eugene Fram   Free Digital Image

Tightening the Oversight of Nonprofit Boards?

By: Eugene Fram      Free Digital Image

Clearly the purpose of a nonprofit board is to serve the constituency that establishes it-be it community, industry, governmental unit and the like. That said, the “how” to best deliver those services is often not so clear.

The fuzziness of boundaries and lack of defined authority call for an active nonprofit system of checks and balances. For a variety of reasons this can be difficult for nonprofits to achieve. (more…)

Nonprofit CEOs and Board Directors: How Expert Is Your CFO?

 

Nonprofit CEOs and Board Directors: How Expert Is Your CFO?

By: Eugene Fram        Free Digital Image

When hiring a chief financial officer (CFO), nonprofit organizations often find themselves with a major challenge, since many financial and accounting functions and compliances are identical with those of for-profit organizations. To compete, the nonprofits may need to offer higher salaries than typical for nonprofit organizations. Some may trim the level of expertise required to fill the position.  They hire a person with a bookkeeping background when the organization needs somebody with financial analysis skills.  This is a dangerous move, especially when the organization is growing. It is difficult to terminate a financial person who is satisfactory for a startup, but isn’t able to navigate the challenges of rapid growth.  Also it is a continuing challenge for the Board and CEO, to make certain that the person in the position now has the requisite skills.  A mistake by a person who is not current with financial changes and compliances can make a major error that will harm the organization’s reputation, leading to a board restructuring and/or firing the CEO.

Both the nonprofit CEO and the board need to assess the CFO’s expertise annually by:

*Asking knowledgeable board members if they are receiving financial data and analysis in a format helpful for decision-making.

*Having an executive session with the external auditors yearly to obtain the firm’s assessment of the expertise of all financial personnel with whom they had have contact.

*Keeping track of reports that are submitted late. Something might be radically wrong. (I know of one case where the Board and CEO were only receiving a subsidiary report intermittently. The problem was the data reported involved old accounts that should have been written off months ago. The organization had to hire forensic accountants to determine what needed to be done to resolve the situation. The board terminated the CFO and then the CEO.)

*Making certain all financial personnel take two weeks vacation each year, so that a substitute needs to handle the duties.

*Having the CEO review the CFO’s expertise annually with knowledgeable board members, external accountants or others.  Acknowledging the growth point when the nonprofit needs a CFO with analytical abilities as opposed to bookkeeping ones.  

*Reviewing the causes for a high turnover rate among financial personnel.

*Providing local financial support for the  CFO and others to stay current with accounting and compliance regulations. 

For a current case of a board that evidently failed to adhere to such guidelines see:

http://www.nonprofitquarterly.org/management/23235-existence-of-a-reserve-fund-in-this-nonprofit-threatens-its-future.html

 

 

 

 

 

 

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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What Nonprofits Can Do To Maintain Liquidity

What Nonprofits Can Do To Maintain Liquidity

By: Eugene Fram    Free Digital Image

It doesn’t take a pandemic to make a nonprofit question its capacity to survive. Events such as a loss of major funding, a damaged reputation, huge unpredicted expenses could swiftly reduce the lifeblood of the organization, plunging the nonprofit into deep concern for its long-term survival.

Any nonprofit CEO has the data to predict how long the organization can stay afloat without income. This, however, would be only one rough measure of the nonprofit’s liquidity. Board members need to take the discussion further. They need to realistically appraise total liquidly from fixed/variable expenses and income venues as they relate to mission accomplishment.

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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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WHAT NONPROFIT & TRUSTEE BOARD MEMBERS HAVE A RIGHT TO KNOW.

By Eugene Fram        Free Digital Image

A blog developed by an internationally known  board expert* raises some pertinent governance questions mainly targeted to for-profit boards. Following are my suggestions how these questions could apply to nonprofit and trustee boards. In addition, field examples show what happened when the questions had to be raised in crises situations.

Does bad news rise in your organization?
“You may be the last to know.” For example, the board of a human services organization knew that the professional staff was not happy with a new ED with an authoritarian management style, but the board felt it needed to give him a chance to modify his style. Board members didn’t know that the staff  professionals had been meeting with a union organizer for nine months.
A labor election resulted, with the professional staff agreeing to work under a trade union contract.

Do your CEO & CFO have integrity?
“If the CEO or CFO holds back, funnel information, manages agendas, is defensive or plays…. cards too close to the, vest, this is a warming sign.” For example, a CFO was delinquent in submitting a supplementary accounts receivable financial report. The board and CEO accepted his excuses, but the data, when submitted, had a significant negative impact on the financials. Both the CEO and CFO lost their positions.  Should the board have also accepted some responsibility for the crisis?  

Do you understand the (mission) and add value?
The board members need to seriously answer this question:
If this organization were to disappear tomorrow, who would care?

Do you know how fraud can occur in your (nonprofit)?
Common wisdom prevails that there is little for-profit or nonprofit boards can do avoid fraud. To review nonprofit boards actions that can be taken, especially for medium and small size nonprofit boards, see; Eugene Fram & Bruce Oliver (2010) “Want to Avoid Fraud? Look to your Board,” Nonprofit World, September/October, pp.18-19.

Do you compensate the right behaviors?
“You are at the helm as board members. Whatever you compensate, management will do.”
Be certain the organization is compensating for outcomes and,more importantly, today impacts. Too often compensation is given for completing processes that are not tied to client impacts

Do you get disconfirming information?
Management is only one source of information. With the agreement of management, visit privately with people below the management level. Set a Google Alert for the name of the organization to see what others on the Internet are saying about your nonprofit’s relationships.

Do you get exposures to key (operational areas) and assurance functions?
“Bring key people into the boardroom, without Power Points. See how they think on their feet. It is good for succession planning and is an excellent source of information.”

Do you get good advice and stay current?
“Bring tailored education into the board room and stay on top of emerging developments. “ This is especially important for the nonprofit directors or trustees who serves on a board that is out of their area of expertise. For example, bankers might serve on a hospital boards.

Do you meet with (stakeholders) – apart from management?
Board members need to join with management in meeting key funders occasionally to determine if their expectations are fully met and what the board might do to foster a continuing relationship. This lets funders know that the board is involved over-viewing the organization’s outcomes and impacts.

*Richard Leblanc, “The Board’s Right to Know and Red Flags To Avoid When You Don’t.” http://www.boardexpert.com/blog, September 14, 2012
Note: Bold & quoted items are from the above blog.

 

Nonprofit Board Members Have The Potential To Become Great Ambassadors!

Nonprofit Board Members Have The Potential To Become Great Ambassadors!

By: Eugene Fram        Free Digital Image

There is no shortage of able communicators on most nonprofit boards. Board members usually bring a degree of passion, purpose and special abilities to their term of service. Many come from business or professional environments that require at least a measure of experience in advocacy, often referred to as “selling” an idea or product!

But rarely do Board Chairs and CEOs avail themselves of the opportunity to develop nonprofit board members as fully functioning ambassadors for the organization. With a constantly rotating board and emerging crises, it becomes difficult to find the time and energy to coach board members in the art of putting the organization’s public face on view. In some cases the CEO simply doesn’t encourage contact between the board and staff. At other times, they fail to include selected board members in important conversations with key public figures and/or major donors or foundation executives. Such omissions represent a major talent loss in the advocacy process.

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