Too Much Information Can Cloud Nonprofit Board’s Decision Making–Tread With Care
By Eugene Fram Free Digital Image
In this age of information overload, nonprofits need to continually scrutinize the quality and source of the material received in preparation for major decisions. Since board members often come without broad enough experience in the nonprofit’s mission arena, they may not be prepared to properly assess its progress in moving forward–and not equipped to make relevant comparisons with similar nonprofits. In addition, naive or unscrupulous CEOs and highly influential directors may inundate their boards with information and data as a distraction tactic to keep them busy in the “weeds,” reviewing what has been presented. Board members need to avoid donning “rose-colored glasses” when assessing proposals from these sources.
I once encountered a nonprofit whose board was about to acquire a for-profit organization, headed by its founder. Pushing for the “deal” were the nonprofit’s CEO and an influential board member who were not, it turned out, capable of the due diligence needed for a project of this complexity. But the board accepted their work without question. When the acquisition was consummated, the founding CEO of the subsidiary refused to take directions from the CEO of the nonprofit. In addition, although the normal financial settlement of the project requires that a portion of the price be withheld pending adequate performance, the nonprofit had paid cash for the acquisition. Based on a lack of performance, the operation was finally closed with a substantial loss.
Nonprofits Can Build a Stronger Brand With Internal Marketing
By: Eugene Fram Free Digital Image
Nonprofit branding is an important topic to nonprofit board members and managers with nonprofits wanting to differentiate their services, images and reputations. Some organizations are spending substantial dollars to assess and build their brands.
Most nonprofits with which I have had contact are not aware whether not all their employees and perhaps some board members are brand loyal to their nonprofit organization. Many independent contributors (accountants, counselors, social workers, trade association executives, etc.), who work for nonprofits, see their loyalties as being related to their professions not their employing organizations.
I co-authored several articles to explore the issue of employee brand loyalty with commercial firms. * I would like to review some of those finding to show that nonprofit management also constantly needs to assess whether or not employees and board members are receiving positive brand messages related to the organization’s mission, vision and values. This should be the outcome of an internal marketing effort. The impact for internal marketing should be to enlist every employee and board member to become a brandchampion for the nonprofit.
Reasons for Rejection
“The results of (our study) indicate the two most prevalent perceptions relating to low employee … behavior were (a) a lack of pride in the product and (B) a sense that the product is unaffordable. “ … This suggests that managers need to determine the level of product pride in mission, vision and values when the term commercial term, “products,” is translated to nonprofits.” They must motivate employees to take pride by celebrating professional awards and reviewing honest client satisfaction data and case studies, especially those that show how the organization has contributed to individuals and society.
In terms of affordability, the internal marketing effort needs to show how clients have benefited long term. This is typical of university internal marketing that focuses on successful graduates who have made societal contributions. This program is especially important where the university is not nationally known but has some special educational benefit to offer.
Quality & Features
“Internal marketing campaigns (often) may rely too much on appeals to employee loyalty or self-interest, thereby missing the opportunity to convert the more skeptical persons on the payroll. …These findings imply that employers need to, where possible,continually educate employees (and board members) on the comparative advantages of their brands involving outcomes of mission, vision and values.” Comparisons of impacts of the local organization with those of others nationally can be helpful. For example, professional organizations often publish data that make interesting comparisons.
Values, Reliability and Prestige.
“One way to deal (with the prestige) issue is to inform employees and board members how the (nonprofit’s) standards compared to the (professional field) standards.” This can be done in two ways. One is to add the annual IRS 990 report to the organization’s website. Another approach is to issue a press release when the organization is re-accredited by an outside organization. At this time, when transparency is becoming increasingly important, management even might want to present a detailed debriefing on important reports to the board and employees as a way to discuss and challenges and strengths. Changing Perceptions
“Management needs to survey employees and board members to fully understanding their perceptions of the organization’s mission, vision and values. Even having a few misconceptions circulating can be harmful to the brand.” For example one nonprofit recreational facility determined that several members of their board and their families were using a competitor’s facilities. In several instances, there was little they could do about it, but it is important to understand the reason and to try to reduce the negative impact on its brand image. On the other hand, substantial positive changes might occur with the proper internal marketing.
Summary
“One responsibility of management might be to develop venues for employees and (board members) to become more comfortable in communicating their positive attitudes to friends and relatives. There’s also significant potential for brand-loyal employees (and board members) to act as brand champions After all, high enthusiasm within the ranks of employees and directors brings impressive dividends.”
• *Eugene H. Fram & Michael S. McCarthy (2004), “What’s Not to Like? If employees aren’t buying your brand, it important to find why,” Marketing Management, July-August, pp. 36-40. • *Fram & McCarthy (2003), “From Employee to Brand Champion,” Marketing Management, January-February, pp. 25-29
The Succession Dilemma: Why Do Nonprofit Boards Fail to Plan Ahead?
By: Eugene Fram Free Digital Image
There are many types of crises common to an organization. But one event seems to trigger a large proportion of the ensuing trauma. It frequently happens when a CEO or another top manager retires, resigns or leaves for other reasons. The flow of leadership is about to be disrupted and there is no viable replacement for the departing executive.
This transitional panic happens in both for-profit and nonprofit organizations. The National Association of Corporate Directors (NACD) reported that 50 % of public company directors concede that CEO succession planning needs to be improved. * In the nonprofit environment, only 27% actually have succession plans to replace a suddenly departing executive. ** This demonstrates the low priority nonprofits place on over-viewing talent succession to prepare for unexpected vacancies.
Here are some insights (in italics) from the NACD report that are applicable to nonprofit succession planning, be it management talent overview or implementing the replacement process.
What Makes A Great Nonprofit Board Member? Some Unique Suggestions!!!
By: Eugene Fram Free Digital Photo
Viewers may question my taking time to develop this post when a Google search, using the above title, shows about 302 million listings recorded in 0.63 of second! The answer is that I located a board article with a few interesting insights, relating to for-profit boards, that also can be useful to the selection of nonprofit directors. * Following are some of the unusual ideas.
The Nonprofit Dream Team: a Board/CEO Partnership that Works!
By: Eugene H. Fram Free Digital Image
Rebalancing and maintaining important relationships in a nonprofit organization can be important to its success. Do various players fully understand and accept their specific roles? Is there mutual trust between players? Are communications open and civil?
I encountered an association CEO who complained that his board wants to judge him without establishing mutually agreeable goals, outcomes or impacts. He felt what is needed is a partnership arrangement where the board does not judge the CEO and organization based on political or personal biases but overviews performance in terms of mutually accepted achievements. This, he contended, forms a substantial partnership between board and CEO and staff. If the board thinks it can judge management without these measures he stated, it generates a personal political type of evaluation unrelated to performance. As an example he pointed to an unfortunately common nonprofit situation where a CEO is given an excellent review and fired six months later because there has been a change in the internal board dynamics.
How do people see your organization? Is your nonprofit clearly perceived, and the unique nature of its work, fully understood in the community or industry?
Nonprofit board members occasionally talk about the organizational brand image but rarely take tangible steps to define it. Yet the creation of a strong brand is a major factor in generating public respect, support and significant funding sources. Potential donors need to believe implicitly in the impact of the nonprofit on its clients. They also need to understand the realities implied in the brand image that fail to match the realities of the organization’s operations. For example, some family services agencies (actually multi-human service groups), have long struggled with a brand perception that they offer only family reproduction services.
Following are some guidelines that may help improve a current image or further clarify the mission which fuels the dedicated efforts of boards, staff and volunteers:
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.
Onboarding the New Nonprofit CEO: Who’s In Charge?
By Eugene Fram Free Digital image
When the chair of the search committee announces that a new CEO has been selected, there is visible relief in the boardroom. After the stress of a waning—or even absent executive at the helm, directors tend to relax, engaging in a series of social events that provide a pleasant if superficial acquaintance with the new executive.
What actually lies ahead is much more serious and vital to the future of the organization. Call it orientation, acculturation or transitioning; it is the board’s responsibility to see that the CEO is grounded in every aspect of the organization. And that requires a plan that is carefully structured and may take a year to complete. Major responsibility for the plan and its implementation rests with the board chair and one or more senior board members. While there are many formats to achieve this goal, the best, in my opinion, is what has been described as a customized format.
Nonprofit board members and managers have acquired a measured of savvy when it comes to raising funds for their organizations. They have learned that building trust with current and prospective donors is the key to maintaining meaningful support. Here are some overlooked tactics to further strengthen relationships. *
Show the donors “what’s in it for them:” Some development officers still lead by focusing on what is of interest to them—the construction of a new building, providing funds for the nonprofit’s strategic development plan, etc. But they often lack certain perspectives. These are the skills to effectively interact with business executives like those holding C-Suite positions. These senior managers value evidence that the nonprofit representatives have “done their homework.” Pre-meeting preparation must include generating information on the executive (s’) professional and career background(s) that is readily available from LinkedIn. Also it is necessary to have some information about the challenges the firm or its industry are encountering. This level of preparation helps set a basis for better communications and managerial discussions that C-Suite personnel value.
Why Are Some Nonprofit Boards Missing the Mark? What to Do?
By Eugene Fram Free Digital Image
Stephen Miles of the Miles group (https://miles-group.com/) recognizes that many business boards are coming up short in performance. As founder and CEO of a strategy and talent development agency, Miles has identified five areas of potential improvement for commercial boards. I believe these categories are also quite relevant to nonprofit board operations in the following ways:
Knowledge Gaps
Many new board members are in the dark about some of the operating issues facing their organizations. Such information gaps are less prevalent in trade and professional associations because most board members are in associated fields or are in practitioner positions. However, new directors of community based charitable organizations and human services focused nonprofits should be much more attuned to discussions at initial board meetings. Current methods of orienting new directors don’t seem to be doing the job. This is critical for those boards with rapid turnover. For example, one board with which I am acquainted has 80% of its membership turnover with no more than 18 months tenure.
Orientations can take a variety of forms, ranging from brief pre-board session to pre-meeting phone calls from the CEO or Board Chair. These updates will provide the new board member with information that should make his/her participation in the board meeting more meaningful.
Lack of Self-Assessment
“When it comes to the (business) boards (assessing their) own performance, this is often done by using the check-in-the box exercise, (along) with some form of gentle peer review,” reports Miles. In the nonprofit environment, board self-assessments are not usually a priority because nonprofit directors often have time constraints. In addition, nonprofits need to more broadly examine qualitative outcomes, such as community impacts. But business boards are also beginning to move in the same direction, and at this time seem to be behind nonprofits!.*
The media, Internal Revenue Service, foundations and accreditation organizations are asking for more information and transparency to ensure that nonprofits have quality processes to overview management impacts. Few nonprofit boards can afford rigorous third party directed board self-assessment, the gold standard. However a self-review deficit might leave some board members with significant personal liabilities.** Consequently, it is my personal opinion that nonprofit boards need to make good faith efforts to have reasonable self-reviews, understanding that management and board members may hesitate to negatively reflect on volunteer directors been poor decision makers.
Self-Delusion
“Management Capture” occurs when a board too readily accepts a delusional view from management that organizational performance is significantly better than reality. As a result, some board self-examinations may take place only after a crisis has been resolved. So it is mandatory that the boards develop rigorous impact measures, both quantitative and qualitative by which to judge organizational and board performance. Models for self-board assessments are available from professional groups and consultants.
Recruitment Shortcomings & Board Inexperience
Miles maintains that most for-profit directors lack real experience in succession planning: this is also true of nonprofit directors. Even in for-profit boards where a chief executive is temporarily incapacitated, there often is no plan for interim succession. Plus there is always the possibility that a CEO will leave quickly for a variety of reasons. Planning for his/her unanticipated exit should be an ongoing board concern.
One root cause for having a nonprofit culture of board inexperience is that often there are too few directors who have served on other for-profit or nonprofit boards and know how to be role models for newer recruits. Also, normally serving one or two terms, lasting three years, some experienced nonprofit board members may not be motivated to serve in this role because there are no financial incentives offered. However, as demonstrated in the Penn State debacle, a director’s reputational risks can be substantial. How a board evaluates and improves its organizational talent pool is critical to performance. Miles characterizes the optimal board as composed of ” … directors who are active in their roles engaging individually and collectively (to engage with) other directors and (overview) management.” It is a tall order in today’s nonprofit environment.
For-profit organizations or nonprofit organizations, in my opinion, have five identical basic board guidelines. For Deloitte Partners, a worldwide accounting and financial advisory firm, these constitute board responsibilities that can’t be delegated to management. The board has responsibilities to have: a viable governance structure, annual assessments of (board and) organizational performance, driven strategic planning, improved management talent and assured organizational integrity.
A relentless pursuit of these lofty goals will enable nonprofits to be “on the mark.”
*For nonprofit qualitative outcomes, see: Jerry Talley & Eugene Fram (2010) “Using Imperfect Metrics Well: Tracking Progress & Driving Change,” Leader to Leader, winter, 52-58. For commercial boards see: Emily Chasan, (2012), “New Benchmarks Crop Up in Companies’ Financial Reports,” CFO Journal Section, Wall Street Journal, November 11th,
** For examples, see the Intermediate Sanctions Act, Section 4958 of the Internal Revenue Service Code. Also see the Expanded IRS 990 form guidelines for board structure and performance–38 questions related to nonprofit governance.
Nonprofit Management 