Employee compensation nonprofits

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.

 

Is Your Nonprofit Recruiting & Retaining by Using a Mission-Driven Approach?
Is Your Nonprofit Recruiting & Retaining by Using a Mission-Driven Approach?

By: Eugene Fram        Free Digital Image

Recruiting and retaining able people for nonprofit careers has always been a challenge.  Salary levels have not been comparable to business organizations and some government posts. Many small and medium sized nonprofits have frontline personnel organizationally located only two levels below the Board of Directors.  Consequently, career paths can appear stymied.

The employment situation has changed for two population cohorts.  They are: some millennials (born between 1981 and 1996) and those in the Generation Z cohort (born between 1997 and 2012).

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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

 

 

 

 

 

 

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.

 

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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Developing A Sustainable Nonprofit–Post Covid-19

Developing A Sustainable Nonprofit–Post Covid-19

By: Eugene Fram         Free Digital Image

An analysis of the current pandemic environment should be a clarion call for nonprofit board members. It can be summarized in a couple of sentences:

Great crises tend to bring profound social changes, …. . We seem to be at another point when society will make adjustments for good or ill. * 

As nonprofit board members or managers, are you ready to identify and confront these adjustments as they already have developed or will challenge your nonprofit within the next 10 years? Hopefully, a large portion of nonprofit boards will accept the challenge and begin strategic planning for the post Covid 19 period now!  

Board Challenges – Post Covid-19

As I view the situation, the pandemic has already brought about changes in four areas that can impact the long-term sustainability of a nonprofit. There are others that can be added to my four, for example Fund Development—but this topic has been well covered elsewhere. 

Advocacy 

Advocacy for Post Covid 19 needs to be more than an occasional Tweet or two. Some nonprofits will continue to advocate for issues that relate to its mission, vision and values. But they may have to take substantial stands on broader topics.

With 5G communications expanding the connections in the world, the post Covid-19 period will present opportunities for nonprofits to advocate, where appropriate, on social topics that may not be strictly germane to their mission—e.g., health care, social justice and “Me Too” issues.

At the least, each nonprofit should have reviewed policies that enable management and boards to respond quickly to pandemic generated movements that are not currently on the horizon.

Information Security

Board members have an obligation to make certain critical information is secure. It requires more specific policies than the requirement to have an insurance policy in the event a hacker steals a membership list.

Developing these policies requires some basic IT knowledge. If some board members need a “review” of these basics, the board should offer an educational opportunity to upgrade their knowledge. 

Generation Z (Gen Z) 

Gen Z, born between 1995 and 2015 (2020 in some reports) has already started to impact the workforce. The Gen Z population is currently 86 million and is expected to grow to 88 million in the next 20 years due to migration. **

In comparison with the millennial cohort, Gen Z:

  • Wants more autonomy and independence. A Gen Z staff will readily accept positions that allow them to work from home, especially if it yields a healthy work-life balance. This will cause nonprofit boards to review policies related to office space requirements while evaluating “at home” productivity. Some staff may choose to be located elsewhere in the United States or internationally.
  • Are less team-oriented than millennials. Being more competitive than the previous  generation, financial compensation is more important. They have been raised in some difficult economic times, and their Covid-19 experiences will no doubt heighten their motivations to seek higher financial compensation. To engage the best and the brightest of the Gen Z cohort at nonprofit salary scales, organizations will have one other major attraction. Nonprofits are mission (or purpose) driven, “Showing the positive impact their work will have on society can be (an attraction) for Gen Z when it comes to choosing a job.” ***

Cultural or Technical Vulnerabilities

These are the challenges that may be in an infant stage but can have significant impact on the organizations polices. The March of Dimes movement changed its focus to healthy moms and strong babies after the development of a polio vaccine. As psychiatric drugs improved, the boards and managements of a number of face-to-face counseling nonprofits declined or they broadened their missions. After simmering for years, the “Me Too” movement has caused colleges and universities to be modify their policies, sometimes in a rapid manner.

Many of these vulnerabilities can emerge quickly and affect a nonprofit’s sustainability. CEOs should lead with a visionary manner and boards need members who can think broadly to respond with financial or intellectual support.  This process has been described by a Harvard Law publication as future-proofing.**** “This involves thinking though the impact of today’s changes on future outcomes and future needs.” The authors admit asking management to take on this planning effort within unprecedented uncertainty may hinder its ability to react short term.   But they feel it is worth the risk to provide the challenge to management’s long-term thinking.

*https://www.newyorker.com/magazine/2020/07/20/how-pandemics-wreak-havoc-and-open-minds

**https://knoema.com/infographics/egyydzc/us-population-by-age-and-generation-in-2020  

*** https://business.linkedin.com/talent-solutions/blog/hiring-generation-z/2019/how-to-hire-and-retain-generation-z

**** https://corpgov.law.harvard.edu/2020/07/26/the-boards-role-in-guiding-the-return-to-work/#:~:text=The%20board%20has%20a%20role,operations%20and%20growth%20moving%20forward.

Must Nonprofits Develop Employee Benefits That Substitute For Annual Raises?

Must Nonprofits Develop Employee Benefits That Substitute For Annual Raises?

By: Eugene Fram                      Free Digital Image

An analysis in the Washington Post reports that a tsunami-style change has been taking place in the manner in which United States employees are being paid—benefits are being offered in place of annual salary increases. (http://wapo.st/1MwoIBZ) Driving the change are the needs of a substantial portion of millennials who appreciate immediate gratifications in terms of bonuses and perks, such as extra time off and tuition reimbursement. Employers like the arrangement because they can immediately reward their best performers without increasing compensation costs. Example: One sales employee spent weeks reviewing dull paperwork, was very diligent in the process and was given three extra days of paid leave. She said, “I think everybody would like to make more, but what I liked about it was the flexibility.”

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How Is Your Nonprofit Board Adjusting To “The Great Resignation”?

How Is Your Nonprofit Board Adjusting To “The Great Resignation”?

By: Eugene Fram                Free Digital Image

An article in The New York Times (12/23/2021) reports, In Louisville Ky, nonprofit groups are losing social workers to better-paying jobs at Walmart and McDonalds.  *  With 34.5 million American job resignations reported by, August 31, 2021, it’s reasonable to estimate that by the end of 2021 about 46 million Americans will have left their current jobs during the past year. This is about 25% of the American work force. ** The movement has been named “The Great Resignation.”      

Reasons for change range widely.  Beyond salary, some families may have found living on one salary acceptable, others may have moved to rural areas for quieter living, still others may have used a lay-off bonus to have time to get away from an authoritarian boss. ***          

It appears this robust employment turnover will continue. As a result, nonprofit boards, within their overviewing responsibilities, must focus on recruiting and retaining organization talent, like few nonprofit boards have done in the past. (more…)

The Nonprofit Board’s New Role In An Age of Exponential Change
The Nonprofit Board’s New Role In An Age of Exponential Change

By Eugene Fram                 Free Digital Image

Most nonprofit boards are being faced with huge pressures—reduced financial support, challenges in integrating new technologies, recovering from Covid impacts and difficulties in hiring qualified personnel who will consider “nonprofit” wages. To survive long term, board members need to be alert to potential opportunities. These may be far from the comfort zones of current board members, CEOs and staff.

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