Stakeholder Relations

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 behaviors can give an idea of whether it is excellent, good or nonexistent.

Following are some of the behaviors that signify a trusting partnership is in place: (more…)

Nonprofit Board Disruption—A Board Member’s Reflections

 

Nonprofit Board Disruption—A Board Member’s Reflections

By: Eugene Fram

 

A tsunami can suddenly erupt on a nonprofit board. Or, instead, dissension can smolder within the organization, and finally burst into flame. In any case, polarization of opinion can damage an organization unless skillfully managed. It can occur on many fronts: fraud, sharp division of opinion, staff morale or any number of issues. In turbulent times such as the Covid 19 environment, latent problems can swiftly escalate and create chaos.

Disruption on the Board can only be resolved with strong leadership. In most cases, the Board Chair (BC) assumes the responsibility of addressing the problem. In my 30+ years of board/consulting participation, I have had a number of opportunities to view nonprofit boards in trouble. In this post, I share some of the suggestions that have “worked” to resolve problems and help rebuild broken organizations.

When the BC has to accept the challenge of uprooting the problem, he/she is likely to be met with some resistance. Board members may resign from the board in anticipation of a substantial increase in meetings and time involved. Some may be concerned that their management reputation could be sullied or personal financial liabilities leveled by the IRS, the possibility of lawsuits.

If the BC is unable to persuade the distressed board members that their expertise is needed to achieve the nonprofit’s mission, and has made them aware of the Directors & Officers’ Insurance policy which will protect them from financial liability, it will be difficult to recruit new people in this period of instability.

However, the BC can ask former board members to return for another term or two. In one case, a human service organization persuaded a board member about to be termed out to stay for another two years. He happened to be a senior vice president of a listed firm–and a valuable asset to the nonprofit.   He accepted the offer to stay and agreed to become BC of the weakened organization. During his extended tenure, he successfully recruited some former members dedicated to the organization’s mission. (more…)

NONPROFITS NEED A BRAND THAT RESONATES!

NONPROFITS NEED A BRAND THAT RESONATES!

By: Eugene Fram       Free Digital Photo

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: (more…)

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.

 

 

Big Data Are Great—But Imperfect Metrics Work for Nonprofit Boards!

 

Big Data Are Great—But Imperfect Metrics Work for Nonprofit Boards!

By Eugene Fram

Nonprofit boards need to expand their evaluations of nonprofit managers and their organizations adding more behavioral impacts * to their evaluations.

For example, a nonprofit might count the number of volunteers that have been trained. But boards must go to the next level in the 21st century.
In the case of volunteers, they must seek to understand the impacts on those trained. They need, for instance, to understand how well these volunteers are assisting clients and how they are representing the nonprofit to the clients. The training is a process, but it determines their relationships with clients and yields impact data.

Qualitative data must be developed to the next level, and the average nonprofit CEO will argue that he/she doesn’t have the staff or expertise to develop impact data. Engaging an outside organization to complete a simple project can cost thousands of dollars. (more…)

Preparing the Nonprofit for the Unexpected Crisis

Preparing the Nonprofit for the Unexpected Crisis

By: Eugene Fram      Free Digital Image

Nonprofit boards and management, large and small, can suddenly be subjected to the trauma of an event that will shake the organization to its roots! While I am sure that larger nonprofits like the Red Cross have crisis management plans in place. I have yet to encounter a mature mid-sized nonprofit that has even considered anything beyond a temporary replacement for the executive director should he/she is incapacitated.

Yet it’s essential that every board chair know what to do if the executive director calls at 3AM to report that the nonprofit facility is on fire! With about 16% of all fraud losses emanating from nonprofits, how should the board chair respond when a new auditing firm reports that the executive director has been using thousands of agency dollars for personal expense?

In either of these instances, the board chair and members must be prepared to step into leadership positions that are frequently out of their comfort zones. A plan to deal with a crisis of any sort should be in position and reviewed by board and management on an annual basis. Here are some suggested topics that need annual updating:  (more…)