Good governance

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.

 

How Can Nonprofits Accommodate To External Influences? Some Field Observations

How Can Nonprofits Accommodate To External Influences? Some Field Observations

By Eugene Fram       Free Digital Image

Ruth McCambridge, former editor of Nonprofit Quarterly, pointed out “Our organizational management, (board) styles and structures are affected by the four external influences.” See paraphrased bolded items below. (http://bit.ly/1HSwrZY)

Following are some specific field observations I have encountered that, over several decades, support her model relating to external influences.

The nonprofit’s mission field: McCambridge points out that arts organizations have dual have leadership models—artistic and business. However, unless specified which has final authority, the system can lead to continual conflict between the two; the artistic leader wanting the most authentic productions and the business leader concerned with budget realities. The final authority is often determined by which leader has the CEO title.

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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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How Can a Nonprofit Board Chair Fix a Dysfunctional Board? 

 

 

How Can a Nonprofit Board Chair Fix a Dysfunctional Board? 

By: Eugene Fram.     Free Digital Image

There are times when the governing body of any organization may appear to be “broken.” The board members, whether for profit or nonprofit, may be polarized—progress is stunted – apathy and confusion replace purpose and efficiency.

A listing of ways to resuscitate dysfunctional business firms prompted me to expand on actions for nonprofits in similar condition. When a nonprofit is in trouble, any chair, who is aware of his/ her leadership responsibilities, should aspire to be the “fixer “of the fractured board. But there is just so much he/s can do. Some failures have deep endemic roots such as outdated structure, personality conflicts etc. The following actions are within the chair’s capability, and they can be useful in repairing board disruption. (more…)

For-Profit Boards Versus Nonprofit Boards: Similar Challenges?

   

By: Eugene Fram                                  Free Digital Image

The wise person learns from his/h own experiences. The wiser person learns from the experiences of others. Chinese Proverb

The CEO Forum published an article covering the governance views of five business board members, known for their wisdom and vision.   Following are some of topics in the article that relate to nonprofit boards. *

Good governance is dependent upon well-curated boards. This means that nonprofit boards must look beyond the functional competencies (e.g. accounting, marketing, law, etc.) for candidates. Within these groupings, they need to seek candidates who have strategic outlooks, are comfortable with critical thinking and have documented leadership skills.   This requires recruiting and vetting efforts that go well beyond the friends, neighbors and colleagues who traditionally have been the sources for board positions. Also related is the issue of board succession, since that many will leave the board after a four to six year period. The current board(s) has an obligation to make rigorous recruiting and vetting become part of the nonprofit’s culture.

Assessing long-term sustainability. In the past, nonprofits have projected longevity because there will always be a need for the services or products they provide. This is no longer an assured proposition. Nonprofit day care centers now must compete with those that are for-profit. Improvements in medication have decreased the need for individual counseling and many new technologies can quickly solve problems that are embedded in the nonprofit’s mission.

Review governance best practices carefully! Know who is suggesting them and make certain they are appropriate for a specific organization. For example, some experts suggest that executive committees should be eliminated. However an executive committee that is responsible for a slim board committee structure can be effective in driving change and promoting better communications throughout the organization. **

Changing public accounting firms. Nonprofit accounting practice suggests changing public accounting firms about every five years. However one expert suggests, “It is important to ensure that judgment areas such as nonGAAP disclosures are well-defined, supporting calculations are well-documented and that the definitions and calculations are consistent across reporting periods.” At times of accounting firm change, nonprofit board members need to be able to add these issues to their question that they pose to management.

Ethics & Compliance. Like business organizations, nonprofits are subject to significant lapses in ethics and compliance. One study of  nonprofit fraud found that it 46% involved multiple perpetrators.  ***  As shown in the recent Wells Fargo debacle, establishing the tone for rigorous applications of a standard needs to start with the board and flow through all management levels. In the current environment, audit committees have to be especially alert and take immediate actions when red flags arise in either the ethics and/or compliance areas.   In my opinion, a nonprofit audit committee that meets only once or twice a year is not doing the necessary job.

Strategy. The nonprofit board has an obligation to help management see “around the next corner.” This involves board members assessing coming trends and sparking civil and meaningful board and committee discussions.

Board member comfort zones. Like their business counterparts, few nonprofit board members are “comfortable testing how to rock the norms.” It is easier to acculturate new directors to the current norms, a process that is inward bound and self-defeating. But a start can be initiated with questions such as, “If we were to start a new nonprofit across the street, what would it look like and who of the present board and a staff members would we ask to join us?

*https://www.forbes.com/sites/robertreiss/2017/05/22/americas-five-governance-experts-share-perspective-on-boards/#2a2ee326659a   

**For documentation see: https://goo.gl/QEL8x3

***https://nonprofitquarterly.org/nonprofit-fraud-its-a-people-problem-so-combat-it-with-governance/

Lifestyle & Behavioral Information – Some New Ways To Seek High Performance Nonprofit Board Members?

Lifestyle & Behavioral Information – Some New Ways To Seek High Performance Nonprofit Board Members?

By: Eugene Fram            Free  Digital Image

Over several years, I have conducted nonprofit board recruitment projects. Two boards with which I worked had rather similar challenges.
• They had concerns recruiting sufficient numbers of board members to fill their needs.
• Current board members, largely composed of younger people, in the 30-40-age range, had significant problems balancing work and family obligations and attending board and committee meetings.
• Attendance was sporadic. Although the boards were small, board members really did not know each other, and, in another situation, a board member sent a  work subordinate to attend board meetings. A well-regarded board member never attended meetings and only occasionally met with the ED to offer advice. In both instances EDs and board chairs had significant power. One of the EDs complained she was doing the work of operating the organization and operating the board, and this may lead to too much potential personal liability.
• Although these organizations, with budgets in the $8-$10 million range were operating successfully, the EDs involved realized that they were in line for long-term problems if board recruiting didn’t change.

What to Do
• Consider establishing two boards, a board for governance and a consulting board. For the governance board, make certain the typical directors in the 30-40 year age range have a good understanding of their work-family obligation to be able to devote time for the organization.
• For the consulting board, ask volunteers to work on projects that have a defined time limit. They will not be asked to be involved in more than one or two projects per year, an ideal inducement for millennials who are used to short bursts of activities. It may be necessary to recruit several persons with the same skills to provide coverage for several projects.
• Keep communications flowing to the consulting board like one would to the governing board. Have social and educational events that allow the groups to meet informally. If the organization has a volunteer manage the consulting  board, this person should be charged to keep the communications flowing. Members of the consulting board will only have occasional contact with the organization.
• Overlay the traditional nonprofit skills grid with several time dimensions to recruit:
1. Recently retired people, both those traditionally retired and those who retried early, who may have time to be candidates for both the governing and consulting boards.
2. Seek individual contributors who may have more control of their time, such as medical doctors, lawyers, professors and small business owners.
3. Seek successful entrepreneurs who can schedule their own time, can resonate with the organization’s mission, vision and values and who want to give back to the community.
• Beyond the time requirement, seek persons with experience on for-profit or nonprofit boards so they can share their board knowledge and become models for those having their first board experience. Their questions and behaviors can teach as much or more than formal seminars.

Summary
The traditional nonprofit board skills grid can still be helpful in the 21st century. However it needs to incorporated lifestyle and behavioral information for each board candidate. These are important candidate attributes that must be thoroughly vetted.

How Boards Develop Successful Business Practices In Nonprofit Organizations

How Do Boards Develop Successful Business Practices In Nonprofit Organizations?

By: Eugene Fram     Free Digital Image

Every nonprofit needs a business plan to implement marketing, financial, human resources, etc. activities. The goal of the nonprofit business plan is to maximize the achievement of the organization’s mission within existing resources.

Strong service and business practices should be the hallmarks of any nonprofit board that effectively focuses on four business factors: 

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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…)

Once Again! Should a Nonprofit CEO Be a Voting Member of the Board of Directors

   By:  Eugene Fram         Free Digital image

BoardSource, a professional governance organization, reports that this question is one of the most asked. Google reports about eight million citations, in a brief .52 second search, related to the issue or related issues. The question continues to be debated, and the need for comment and opinion seems insatiable. (more…)

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/