imperfect metrics

Time Compressed Non Profit Board members – Recruit & Retain Them

Time Compressed Non Profit Board members – Recruit & Retain Them!

By: Eugene Fram               Free Digital Image

Every nonprofit board has had the experience of having board positions open and being unable to fill them with highly qualified people. The usual response from qualified candidates is that they are too busy to be accept a board position. However, the real reasons, if speaking privately, are that they perceive the nonprofit decision process to be too slow, board agendas loaded with minutiae, presentations that take up more time than they should, unfocused discussion, etc. (more…)

How Do Nonprofits Determine CEOs’ Productivity?

 

 

 

How Do Nonprofits Determine CEOs’ Productivity?

By: Eugene Fram           Free Digital Image

Nonprofit organizations can’t have a traditional bottom line profits. If they did, CEO productivity determination could be less complicated. Determining a fair CEO  salary or benefit based on productivity, can be a complex issue for a nonprofit board. Providing too little or too much can be dangerous for the organization and possibly the board members. Although the spadework for salary and benefits need to be done by a small committee, the entire board needs to fully agree on the rationale for the final decision.

Following are some of significant challenges that I have noted nonprofit boards face when determining what is a fair system.

Evaluation Failure: Some CEOs might receive high  salaries because a series of boards have not effectively evaluated her/h performance. It is not unusual to find CEOs who have not been formally and effectively evaluated for years. They are held in position because they are “minding the store,” not being professional managers. It isn a comfortable position for both board and CEO.  As one CEO commented to me, ” I present the board with alternatives, they make the decision that I must implement.”

  Market Forces: Nonprofit organizations are restricted by law from providing their CEOs with excess benefits. (Section 4958 – IRS Code) As a result, the benefits offered the CEO must reflect a market level found in the geographic area and/or the person’s professional qualifications. For example, nonprofit health insurance organizations may have to compensate CEO at levels that are competitive with for-profit organizations. In my opinion, unusual CEO benefits (e.g. luxury cars) that are hard to justify market-wise are invitations for an IRS inquiry

Board Relationships: Obviously having a good, not perfect, interrelationship with the constantly changing board membership is critical to support a reasonable  compensation level. It is especially important in association type nonprofits where the person holding the board chair position changes annually. I recently encountered one board chair who, although being very pleased with the CEO’s performance, expressed a concern that the CEO did not have good communications with board members. The chair welcomed a suggestion that the board might engage a professional coach to help the CEO work on the issue.

Additional Benefits: Although not usual in the for-profit environment, special benefits can be offered the nonprofit CEO, especially if they relate to job performance. These can range from special insurance coverage to extensive travel benefits , educational opportunities. or even housing and entertainment allowances. If involved with fundraising, like a college president, housing and entertainment benefits may be appropriate. In some unusual instances the person’s spouse or significant other may also receive compensation for time spent to benefit the nonprofit.

Nonprofit CEO: It is not unusual for the  nonprofit CEO to undervalue his/h own worth, especially when associated with a human services type of organization. This then keeps a cap on the whole salary scale and can make it difficult to hire capable people. Example: I encountered one CEO with degrees in human services and management areas plus 30 years of excellent experiences. Admired for his performance by peers in a nearby university, he refused to use that leverage to seek equitable compensation.

Personality: Now doubt a positive CEO personality can be an attribute in working with boards and staffs.mAt an extreme, some nonprofit boards continue to support well-liked CEOs, even after they have been found to be involved with fraud. The board then has to be removed by state attorneys’ actions.

Summary:
Nonprofit boards can do a poor job of determining nonprofit CEO salary and benefits because of inherent challenges. Evaluating critical qualitative outcomes and impacts, like improving life quality and successful advocacy, can be daunting. Nonprofit compensation must in line with market levels and professional qualifications, or the board members may acquire an IRS personal liability if they provide excess salaries and benefits!     

Once Again! Nonprofit CEO: Board Peer – Not A Powerhouse

Once Again! Nonprofit CEO: Board Peer – Not A Powerhouse

By: Eugene Fram                Free Digital Image

Some nonprofit CEOs make a fetish out of describing their boards and/or board chairs as their “bosses.” Others, for example, can see the description, as a parent-child relationship by funders. The parent, the board, may be strong, but can the child, the CEO, implement a grant or donation? Some CEOs openly like to perpetuate this type of relationship because when bad decisions come to roost, they can use the old refrain: the board made me do it.

My preference is that the board-CEO relationship be a partnership among peers focusing on achieving desired outcomes and impacts for the nonprofit. (I, with others, would make and have made CEOs, who deserve the position, voting members of their boards!)

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Do Your Board Members View Their Board Work As Being Meaningful?

 

Do Your Board Members View Their Board Work As Being Meaningful?

By Eugene Fram                  Free Digital Image

For several decades, I have suggested that nonprofit Board Chairs and CEOs have a responsibility to be sure that each board member perceives his/h continuing relationship as being meaningful. Following are some organizational guidelines that can assist Board Chairs and CEOs in this effort.*

  1. Developing or hiring strong executive leadership: Obviously when hiring externally it is necessary to engage a person with a managerial background. But many nonprofit CEOs can be appointed after years of being an individual contributor or leading a small department. These experiences condition them to do too much themselves, rather than to assume a strong management posture. This involves focusing more on strategy, on talent development, interacting more with the board/community and creating a long-term vision.

A strong CEO, if appointed internally, should understand the role changes that take place once appointed. He/s must delegate activities that was once performed was once performed within a comfort zone and seek new challenges. Examples: The new CEO needs to be enthusiastic about becoming a fundraiser.   She/h must become well acquainted with peer CEOs regionally and nationally to stay abreast of the state-of-art in both management and mission areas. He/s needs to become acquainted with cohorts in the business and public management communities. Over time, those involved with the nonprofit internally and externally must perceive the organization is lead by a capable executive.

  1. Creating impact: In the 21st century, funders, board members and other nonprofit leaders are attracted to organizations that create impacts as opposed to outcomes. A nonprofit can have great program outcomes with little long-term impacts on clients. Impact is often hard to measure, but it can be done, only if started with imperfect measures that are improved over time. ** For example, one local human services organization, with which I am acquainted, operates groups of apartments offering social services that allow elderly clients to live independently for years on their own, rather than in an assisted living facility. The impact in this instance is well-defined and an impetus to attracting board members and donors that find the impact meaningful.
  2. Building relationships externally and internally: Board candidates who have broad contact networks are sought by search committees to enhance community or industry relationships or to strengthen the organization’s fund development efforts. Little effort is directed to fostering closer relationships among current board members who often don’t get to know each other personally because of crowded board and committee agendas. Example: I consulted with one board where some board members complained that they might not recognize their board peers when they meet them in outside social situations.

To solve the problem, both the Board Chair & CEO must acknowledge that it exists—in the above example; it took an extensive personal interview board survey to highlight the problem.   Then creative tactics like the following can be employed.

  • One CEO has a weekly one-hour conference call with the board chair to discuss current issues. Other board members are invited to join the calls if they wish. This is an excellent way for new board members to quickly become attuned to the nonprofit.
  • Another CEO, each Sunday, sends a one-page e-mail summary of major events to board members. He reports that his high school English teacher would never approve of his grammar or format, but he knows emails are reviewed. They are reflected in the level of discussions at meetings
  • Low-key self-funded social events for board members and significant others can help board members to become better acquainted and work together.
  • Another classical approach is to allow 10 minutes each meeting to allow board members to briefly report changes in their personal or professional lives.
  • Assuming an organization is successful in developing a cohesive board, what can be done to retain these efforts once they have termed-out? The answer is to ask them to join the organization’s “Alumni Association.”   The process can be found here: (https://onlinelibrary.wiley.com/doi/epdf/10.1002/ltl.20305)
  1. Organizational stability: Unstable nonprofits have common telltale signs—rapid employees or management turnover, excessive bank borrowing, reserve depletion, late report filings, etc. It’s difficult to provide meaningful board experiences under these conditions. However it is not unusual to find board members who will accept responsibility when the nonprofit is unstable, if they are dedicated to its mission. Some may even “enjoy” the turnaround challenge.

While no nonprofit will be perfect, those with the best opportunity to provide meaningful board experiences will have a well formulated strategic plan that allows it to be stable operationally and financially.

*https://grantspace.org/resources/blog/high-impact-volunteer-engagement-six-factors-for-success/

** https://nonprofitquarterly.org/2012/07/24/using-imperfect-metrics-well-tracking-progress-and-driving-change/

** https://nonprofitquarterly.org/2012/07/24/using-imperfect-metrics-well-tracking-progress-and-driving-change/

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

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

By: Eugene Fram                Free Digital Image

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 at this level, client services and the general health of the organization is likely being negatively impacted.

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Questions For Nonprofit Board Meetings—And Why They Are Needed

Questions For Nonprofit Board Meetings—And Why They Are Needed

My greatest strength as a consultant is to be ignorant and ask a few questions. – Peter Drucker

By: Eugene Fram

Knowing the right questions to ask at a nonprofit board meeting is a critical part of a board member’s responsibility. Following is a list that, as a nonprofit director, I want to keep handy at meetings. * I also will suggest why I think each is important in the nonprofit environment. Compliance and overviewing management alone do not guarantee success.

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A Nonprofit Board Must Focus On Its Organization’s Impacts

A Nonprofit Board Must Focus On Its Organization’s Impacts

By: Eugene Fram

“One of the key functions of a (nonprofit) board of directors is to oversee (not micromanage) the CEO, ensuring that (stakeholders) are getting the most from their investments.” * State and Federal compliance regulations have been developed to make certain that boards have an obligation to represent stakeholders. These include the community, donors, foundations and clients, but not the staff as some nonprofit boards have come to believe. The failure of nonprofit boards, as reported frequently by local national blog sites, show something is wrong.  Following are some inherent problems that derail boards from focusing on impacts.

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Want Better Nonprofit Board Cultures? Look for Four Board Behaviors

 

By Eugene Fram                Free Digital Image

Board cultures can be difficult to modify or change in for-profit and nonprofits. A recent McKinsey study demonstrated the strength of the board culture in three different levels of board operations—ineffective, complacent and striving. * Differentiated achievement seems to be largely dependent on four behaviors. (See bold type.) Centered on my experiences, they can be applied to nonprofit boards. At the least, the behaviors can motivate considerations for board modifications. (more…)

Can A Nonprofit Board Change Its DNA?

 


Can A Nonprofit Board Change Its DNA?

By: Eugene Fram        Free Digital Image

Genetic codes aside, the term DNA is now commonly used to describe distinctive characteristics and qualities in almost anything –living or inanimate. Every nonprofit has a DNA! And every board member, if questioned, will probably have a different take on that invisible life blood which — for better or worse—impacts the  actions of his/her board. One author goes so far as to suggest that   “…one common element to create sustainable success is evaluating and interjecting the right DNA.”

He goes on to recommend three steps to make the necessary changes in the nonprofit culture: Assessment, New Genetics and a Gestation period— the last step being essential …“for the new approach to take hold and grow.” * Following,, as an example, is how it might apply if a nonprofit board needs to move from a traditional Community Board to a Policy/Strategy Board.  This is a situation where the board increases its overview responsibilities and decreases or eliminates its involvement in operations, i.e. micromanagement.  

Assessment: Evaluations involve defining what the agency is doing well and what systems need to be removed or modified.  Listing the former is easy, but dropping long embedded practices can lead to unproductive board conflict.  Logically, board members still need to be in their third year of a median four or six-year tenure before sustainability assessment (5 to 10 Years) can be undertaken.Too much legacy culture has been embedded in the Board operations, calling for three to five year strategic plans. At that point, most or all of current board members will have been termed-out of their positions

I once observed, as an example, a board that made a strategy decision about changing the timing of an annual fund raising event.  Once the decision was made, the board took the remaining meeting time to review and formulate new platforms for the event, presenting management with implementation suggestions.  The prolonged discussion, in effect, was simply perpetuating a standard community board micromanaging process.  When I called this to the attention of the Executive Director, he claimed that it is part of the nonprofit’s culture to be operationally involved.

Assuming it will take about two years for a board member to become acclimated to the new board organization, it is clear that no single director can bring about a sustainable long-term approach until his/her third year of a six-year term. There should be two or three other older directors who strongly support the change.   Most importantly, the ED must see the value in it.  Otherwise, it will have to wait for the appointment of a new ED that may probably take place outside of the tenure periods of current board members.  Management and staff leadership who can take a broad view of the future also need to become involved.

New Genetics Include:

Growing the Future.  Early adopters are critical to change.  These are board members who, for example, fully understand the line between policy issues and operational ones.  They can be helpful to the board chair in keeping meeting discussions out of the operational “weeds.”

Equip, empower and encourage:  Allow the CEO to have full operational responsibility, with the understanding that a rigorous evaluation of quantitative and qualitative impact impacts will be reviewed each year.  The board and CEO should jointly develop these issues. ** Under no circumstances should the board singularly establish them.  

Assuming all these changes are in place and board members support them in their fourth or fifth tenure years. it’s then important to make sure that newer board members have a similar mindset.  Some new directors who may have had experiences in other more traditional nonprofits  might want to revert to the legacy operations because it is the way that “all nonprofits operate.”

Vet New Directors Carefully:  Make certain new directors understand the new board environment that is being developed so they are comfortable with it.  It can attract highly qualified directors and staff, with the DNA’s focus in creating sustainable long-term success.  Some, however, may have quite different views.  For example, I once encountered two board candidates, with social work backgrounds, who wanted to supersede management personnel and directly evaluate staff members, because they had field experience.

Gestation Period

It takes four to five years to firmly install the new system.  These environmental movements do not take place quickly. By then, the original directors leading the change will likely have termedout of their board positions. The recruitment committee will have to seek candidates who are attracted by the new environment and understand the need for substantial operational delegation to management.  Most of the problems will have been eliminated from the DNA, and it should set the nonprofit on a course for sustainable success.

*https://www.forbes.com/sites/forbesnonprofitcouncil/2017/12/13/how-to-create-an-organizational-dna-thats-sustainable/#71ba9f5030ac

** https://nonprofitquarterly.org/2012/07/24/using-imperfect-metrics-well-tracking-progress-and-driving-change/

What Attributes Qualify a High Performing Nonprofit Board?

What Attributes Qualify a High Performing Nonprofit Board?

By: Eugene Fram       Free Digital Image

Every Board—whether for- or non-profit –creates its own organizational “stage.” True, there is an ever-revolving cast of characters and variable props. But as any artistic director will tell you, it’s the quality of the performance that can make or break the perceived value of the production.

On a parallel plane, Russell Reynolds Associates, an international executive search firm, lists six key issues (in bold) that can determine the performance level of a for-profit board.
(http://bit.ly/1f5Yt7F)  Following are my views on how these questions can be applied to nonprofits. Such information may help directors to assess their own organizational impacts.

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