Nonprofit mangement

Does the Nonprofit CEO Need to Go?

Does the Nonprofit CEO Need to Go?

By: Eugene Fram   Free Digital Image

Recognizing and acknowledging that the current CEO is no longer helpful to the nonprofit organization is never easy to come by. Beyond malfeasance and under-performance, obvious reasons for initiating such a discussion, there are often other indicators: his/her modest leadership skills, ineffective discussions between the CEO and the board chair, criticism from external stakeholders, overemphasis on tactics unbalanced by a focus on strategies, etc.

Volunteer directors are loathe to be confrontational when a CEO has been marginally satisfactory for a number of years, preferring to avoid the “drama” that inevitably accompanies the “changing of the guard.” Directors know such a change may be confrontational and the action of the majority may even split the board. They also inherently know that a termination will require more board meeting time and negotiations, something that can interfere with job and personal commitments.

Yet this type of change can’t be accomplished in a clear and pristine manner — a textbook change is usually not the case. The board first needs to take three major steps.

• Work with the CEO – In the best of all scenarios, the CEO’s contract may be expiring and/or she/h may be ready for a transition. The two parties can then arrive at an amicable agreement and timetable for change. Even in this less painful circumstance, there is the possibility that there may be resistance from some board members and staff. If the best scenario is not realistic, arrangements need to be made for the CEO’s termination, hopefully in a mutually satisfactory process.

• Board to have its “boots on the ground” — The board needs to make an initial assessment of the qualities necessary for a successor and then move forward and decide to identify potential candidates internally or start to contact employment sources. This requires the board to have comprehensive knowledge of strengths and weaknesses of all managers now reporting to the CEO. It also assumes that the board, in succession planning, knows the capabilities of all personnel who may become successor candidates.

• Board consensus – Volunteer directors, not having a financial stake at risk, may be swayed by a jumble of emotion and loyalties. Even though there is a respectable consensus as the process begins, it is not unusual to have some fallout among the directors who may change their minds prior to taking action. In addition, be prepared with a backup plan to address the outbursts of protest from staff, outside community and possibly industry.

The change at best will be disruptive, but the board must remain resolute, never losing sight of the overall rationale. The CEO position needs to evolve as the board reviews opportunities to grow and increase the level of the organization’s services. If the CEO is a “C” Level player, the board has an obligation to seek a “B” level candidate who will be comfortable with the nonprofit’s expanded scope. And if a strategic goal requires a merger or acquisition along with a mission modification, the board would need an “A” level player. A realistic vision of the organization’s growth direction will dictate the strengths required to effectively recruit a new executive leader.

Calming the waters associated with CEO change:

• Keep the board resolute! – As stated earlier, volunteer directors can become emotional and succumb to outside pressures and protest. Be sure that they stay “on message” whether or not the vote was unanimous. Pay special attention to the relatively new board members who may not have internalized the organizational history as deeply as others.

• Keep the CEO informed — Once the decision is firmly approved, inform the CEO as soon as possible and in person. Do not notify by letter or email. Be mindful of the contributions he/s has made to the organization and provide reasonable incentives (bonus, references, etc.) to help during the transition. Determine if it is politically and staffing wise to keep the outgoing CEO in a subordinate position, should some specific skills are needed.

• Treat outgoing CEO with respect – She/h has made contributions and needs to be credited for them.

• Move quickly – Even if the outgoing CEO stays in place for a while or an interim CEO is appointed, set a goal for finding the replacement in a matter of a few months.

• Avoid litigation – Legal counsel may be needed to review the termination process to be certain all legal bases are covered.

A change of CEOs is a complex and emotional process. But when the board has identified a significant deficit in the CEO’s intellectual and/or managerial skills that may impede stability and/or further growth, it is of paramount importance that a new CEO be engaged. And it is the right time to make that happen.

 

 

The Succession Dilemma: Why Do Nonprofit Boards Fail to Plan Ahead?

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) recently 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. (more…)

Stress Test Your Nonprofit Strategic Plan With These Guidelines.

Stress Test Your Nonprofit Strategic Plan With These Guidelines.

By: Eugene Fram                 Free Digital Image

Strategic plans need to be reevaluated as they are implemented. Left routinely attended only at year’s end, a nonprofit board’s long-range plans can quickly grow old during implementation. Following are four potential changes that nonprofit boards and managers can use to consider stress testing practice changes: The changes require those responsible to move: (more…)

Guidelines For Developing Authentic Nonprofit Board Leaaders

Guidelines For Developing Authentic Nonprofit Board Leaders

By Eugene Fram               Free Digital Image

The problems of Enron, Tyco and WorldCom have provided negative examples for future leaders, according to William George, Senior Fellow at the Harvard Business School. As an antidote to these and others serious problems that have plagued business and nonprofits in the last several decades, he cites the movement towards Authentic Leadership. He further lists six guidelines to identify behaviors in such leaders. Following are my views on how his guidelines can be useful to directors and managers in the nonprofit environment. (http://hbswk.hbs.edu/item/authentic-leadership-rediscovered) (more…)

How Do Nonprofits Determine CEOs’ Productivity?

 

How Do Nonprofits Determine CEOs’ Productivity?

By: Eugene Fram

Nonprofit organizations can’t have bottom line profits. If they did, CEO productivity determination could be less complicated. Determining a fair CEO 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 benefits needs to be done by a small committee, the entire board needs to fully agree on the rationale for the final decision. (more…)

Attention Nonprofits: If You Want to Avoid “The Squeeze,” Here’s the One Strategy That Can Help

With a competitive landscape in which spiraling demands are offset by a financing squeeze, nonprofits organizations have entered an era where only the strongest and best run will flourish, Prof. Eugene Fram, an author, consultant and nonprofit expert said in an interview. But that “strength” is easily attained, with a simple-to-implement game plan that strategically integrates the nonprofit’s board and executive staff.

“It’s a threatening squall – one I often refer to as ‘The Squeeze’,” said Prof. Fram, author of “Going For Impact,” a guide to nonprofit dominance. “Just think about what’s happening. On one hand, because of slashed government budgets, there’s a growing demand for nonprofits to solve community challenges and societal ills. On the other hand, there’s the escalating challenge that nonprofits face because of a funding squeeze. Declining tax receipts are crimping many government budgets. The merger wave has slashed the number of companies that were traditionally big sources of giving. Even the recent tax cuts are squeezing funding. The competition for those fewer dollars is brutal. And that’s just on the funding side. There are also new challenges that nonprofits must address – challenges ranging from cybersecurity to sexual harassment. The bottom line is that nonprofit boards – and their directors or trustees – must be more vigilant, more informed and more proactive than ever. The good news is that the nonprofits that embrace this will be the organizations that emerge as healthy, even dominant. And the strategy isn’t that tough to enact.”

Dr. Fram recently sat down with veteran journalist William Patalon III – ironically, one of his former MBA students – to talk about the “State of the Nonprofit Sector,” and to explore what philanthropic organizations can do to “beat the squeeze.”

Here’s an edited transcript of their talk. (more…)

Nonprofit Board Cultures Need To Be Defined

Nonprofit Board Cultures Need  To Be Defined

By: Eugene Fram     Free Digital Image

Over several decades of contacts with nonprofit boards, I have yet to find one that has spent any time trying to define the organization’s culture that delivers service. Yet every organization has one. It defines what the organization has done well and what needs to be changed. It can grow over years haphazardly or change quickly when new board members are elected or when a new CEO is appointed. Those newly appointed, for better or worse, can change the organization’s mission as well as its culture. Nonprofit staffs that work a few levels below the board and CEO organizationally are especially sensitive to cultural movements emanating from above. They know that a change in culture can affect their work and livelihood.

The reason that nonprofit boards rarely try to define the cultures of their organizations is that it is an amorphous subject. Ask a group of directors to define the culture of their board or the organization and quite different answers will be given. Yet there are commonalities that arise that can form the culture—conservative vs. liberal policies; legacy vs. future focused programs; operations are clearly defined vs. CEO dominance assumes board powers in a de facto manner; etc.  But cultures need to be defined:  Uber failed in the process, while  Microsoft has an ambition to transform Microsoft  from  “a know it all” to a “learn it all culture” *

I recently found a list of 12 attributes of a strong organizational culture. **  Following are six that I suggest that nonprofit boards should consider in assessing their needs of the organizations. My comments provide some practical ways that each can apply to nonprofit boards and organizations. (more…)

Once Again: How to Keep Nonprofit Board Members Informed.

Once Again: How to Keep Nonprofit Board Members Informed.

By: Eugene Fram

With high performing nonprofit organizations, board members will rarely be invited by the CEO to participate in operational decisions. As a result, management will always have more information than board members. Yet the board still needs to know that is happening in operations to be able to perform their overview process.
The name of the game is for the CEO to communicate the important information and to keep directors informed of significant developments. Still, there’s no need to clutter regular board meetings by reporting endless details about operations. (more…)

Top Factors For Improving Nonprofit Board Members’ Board Experiences

Top Factors For Improving Nonprofit Board Members’ Board Experiences

By: Eugene Fram

Spencer Stuart, an international placement firm,  asked 500 directors who serve on for-profit boards to name the top factors that would reasonably improve their board experience. Their answers also resonate in the nonprofit arena. (more…)

Establishing Effective Nonprofit Board Committees – What to Do.

Establishing Effective Nonprofit Board Committees – What to Do.

By Eugene Fram                      Free Digital Image

Following are ways that many nonprofit boards have established effective board committees using my governance model as described in the third edition of Policy vs. Paper Clips.

https://goo.gl/j4EK5P

• In the planning effort, focus board personnel and financial resources only on those topics that are germane to the organization at a particular time. For example, financial planning, long-range planning or short-range planning. However the board needs to be open to generative planning if new opportunities present themselves or are developed via board leadership. (more…)