Is Your Nonprofit Recruiting & Retaining by Using a Mission-Driven Approach?
By: Eugene Fram
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).
Once Again! How Can Nonprofit Boards Support Management & Staff and Refrain From Micromanaging?
By: Eugene Fram
The dilemma is common to nonprofit organizations. As start-ups, everyone aspires to do everything. Passion for the mission and determination to “get it right” imbue board members with the desire to do it all. But once the organization starts to mature, board roles shift to focus more broadly on policy and strategy issues. With the advent of qualified personnel to handle operations, there are many overview activities, sans micromanaging, available to board members. Following are some ways that boards can assist and demonstrate support for operations, CEOs and staffs without interfering.
Respect Management & Staff: The Board needs to accept the CEO as professional manager, not as a person dedicated to a field specialty—police officer, physician, attorney, etc.—with part-time management efforts. * He/s should know how to hire well, interrelate with staff, board and other stakeholders and make certain day-to-day operations are effective and efficient. It is possible, however, to have a mediocre board and an effective management and staff that is devoted to the nonprofit’s mission. Hopefully, a few board members recognize the situation and are able to build a culture of respect for the management and staff, often a difficult task when the board is micromanaging the nonprofit.
The Importance of Long-Term Goals: Currently nonprofits tend to plan on a three-year to five-year cycle because the environments in which they operate change so quickly. With nonprofit board members having 4-6 median terms, this suggests many will have one short-term outlooks. But, in my opinion, much longer-term planning needs to be considered, perhaps for as long as ten years. This way current planning can influence longer-term planning. This generative thinking will also provide some benchmarks for the types of abilities and skills that future CEOs will need to possess.
Understand Psychological & Non-Monetary Benefits: Flexible benefits are required by nonprofits to compete with business and other nonprofits paying higher wages. For example, in many areas, hospital chains compete with human service agencies for people with social-work abilities. They must also compete with businesses for computer specialists. One way is to offer flexible scheduling to all personnel needing it. Another way is for the board to formally honor staff for successes and make certain that management provides appropriate praise frequently, a requirement for millennial, and possibly generation Z age staffs.
Empower the CEO and staff: Boards need to be sure that the CEO is fully empowered to make tactical operating decisions without board interference. On an overview basis, the board needs to request management to ask small staff teams to work on projects that can yield tangible results. This will encourage groups and teams to become more responsible.
Within its overview responsibilities, nonprofit board members can be quite proactive in assisting management and staff when they meet routine operational challenges. The above discussions demonstrate ways this can be accomplished. Nonprofit boards can add to them to meet local challenges.
* Some growing nonprofits unfortunately elect the CEO from the staff and allow him/h to continue to have some staff responsibilities.
A blog developed by an internationally known board expert* raises some pertinent governance questions mainly targeted to for-profit boards. Following are my suggestions how these questions could apply to nonprofit and trustee boards. In addition, field examples show what happened when the questions had to be raised in crises situations.
Does bad news rise in your organization? “You may be the last to know.” For example, the board of a human services organization knew that the professional staff was not happy with a new ED with an authoritarian management style, but the board felt it needed to give him a chance to modify his style. Board members didn’t know that the staff professionals had been meeting with a union organizer for nine months. A labor election resulted, with the professional staff agreeing to work under a trade union contract.
Do your CEO & CFO have integrity? “If the CEO or CFO holds back, funnel information, manages agendas, is defensive or plays…. cards too close to the, vest, this is a warming sign.” For example, a CFO was delinquent in submitting a supplementary accounts receivable financial report. The board and CEO accepted his excuses, but the data, when submitted, had a significant negative impact on the financials. Both the CEO and CFO lost their positions. Should the board have also accepted some responsibility for the crisis?
Do you understand the (mission) and add value? The board members need to seriously answer this question: If this organization were to disappear tomorrow, who would care?
Do you know how fraud can occur in your (nonprofit)? Common wisdom prevails that there is little for-profit or nonprofit boards can do avoid fraud. To review nonprofit boards actions that can be taken, especially for medium and small size nonprofit boards, see; Eugene Fram & Bruce Oliver (2010) “Want to Avoid Fraud? Look to your Board,” Nonprofit World, September/October, pp.18-19.
Do you compensate the right behaviors? “You are at the helm as board members. Whatever you compensate, management will do.” Be certain the organization is compensating for outcomes and,more importantly, today impacts. Too often compensation is given for completing processes that are not tied to client impacts
Do you get disconfirming information? Management is only one source of information. With the agreement of management, visit privately with people below the management level. Set a Google Alert for the name of the organization to see what others on the Internet are saying about your nonprofit’s relationships.
Do you get exposures to key (operational areas) and assurance functions? “Bring key people into the boardroom, without Power Points. See how they think on their feet. It is good for succession planning and is an excellent source of information.”
Do you get good advice and stay current? “Bring tailored education into the board room and stay on top of emerging developments. “ This is especially important for the nonprofit directors or trustees who serves on a board that is out of their area of expertise. For example, bankers might serve on a hospital boards.
Do you meet with (stakeholders) – apart from management? Board members need to join with management in meeting key funders occasionally to determine if their expectations are fully met and what the board might do to foster a continuing relationship. This lets funders know that the board is involved over-viewing the organization’s outcomes and impacts.
*Richard Leblanc, “The Board’s Right to Know and Red Flags To Avoid When You Don’t.” http://www.boardexpert.com/blog, September 14, 2012 Note: Bold & quoted items are from the above blog.
The “Compliant” Nonprofit Board—A CEO Takes Charge Like a Founder!
By Eugene Fram
According to BoardSource, “ ‘Founderitis’ and ‘founder’s syndrome’ are terms often used to describe a founder’s resistance to change. When founderitis surfaces, the source of the dilemma often is a founder’s misunderstanding of his or her role in an evolving organization.” * I would like to suggest that a nonprofit CEO also might suffer from the “founderitis illness,” sometimes with the board only being mildly or completely unaware of it.
Board Member Tenure versus CEO
The average board member tenure is six years (e.g., two three year terms) as compared with the average almost 13-year CEO tenure. ** The CEO has twice as longer period to influence polices and strategies. More importantly, she/h has more opportunity and time to acquire background knowledge and influence the organization’s culture.
“CEO Founderitis”—Typical Board Members & CEO Behaviors
The board is a dependent one, cancels or reschedules major committee/board meeting when the CEO can’t attend.
The CEO is overly verbose in presenting background information at meetings.
Concurrently, the number of board member comments is limited at most meetings.
The CEO places limits on the types of contacts the staff can have with board members, in the name of avoiding staff “end runs. “
The CEO carefully covets outside relationships and donor relationships. Board members are only marginally involved in fund development.
The Executive Committee does not challenge the CEO when setting the agenda.
The nonprofit board is satisfied with marginal gains each year, without seeking broader challenges to provide enhanced client services.
The CEO’s performance isn’t rigorously assessed.
The board rarely, if ever, overviews CEO and staff talent successions.
Board actions and activities are not rigorously reviewed or discussed.
Led by the CEO, Board resistance to change is substantial.
What should the board do if the CEO takes charge like a founder?
Three Options:
Does Nothing: This assumes the CEO is performing reasonably well in developing positive program impacts, not outcomes. (i.e, Program objectives can be achieved, but they can have little impacts on clients.)
The CEO and Board are satisfied with programoutcomes as performance measures. As a result, the organization inadvertently may not be innovative. In addition, long-term organizational sustainability may be compromised. There may be long-term challenges on the horizon that go beyond the typical three to five year planning cycles.
A majority of board members may feel comfortable with this option because the CEO acts strongly, even though he/s occasionally may encroach on a board’s perogrative.
Makes Changes: This will probably require the CEO & Board to change, modifying some of the behaviors listed above. The CEO then forms a partnership with a changing independent board.
Some board members will be satisfied the status quo, little is required of them. But others may want to remove a CEO who leads like a founder. Internal conflict will likely arise on both sides to delay or abort change.
A Solution? Don’t rock the boat. Only when the CEO, especially one with long tenure, suffering from “founderitis” makes a graceful exit will there be opportunity for change. Hopefully, the new CEO will develop a partnership culture with the board.
For-Profit Boards Versux Nonprofit Boards: Similar Challenges?
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?
Ideally, change takes place only when is a critical mass of board and staff want it. A significant portion of leadership must realize that the status quo won’t do. Based on my experiences, this ideal is rarely achieved because:
The CEO needs to support the changes being suggested and/or mandated by a majority of the board. But, if not fully invested in the change, the CEO can accede to board wishes for action but move slowly in their implementations. The usual excuse for slow movement is budget constraint.
Complicating the situation is the fact that most nonprofit boards are hesitant to remove a CEO who has a nice personality but lacks vision, makes modest revisions each year and keeps budgets in balance. As volunteers, board members know that removing a “status quo” CEO can cause board and staff conflict. These events require more meeting times and can cause board members to turn against one another. Volunteers accept board positions to promote positive outcomes, not to become involved with the stresses that accompany conflict.
Changing a CEO, board members or the governance model, etc., can easily send negative signals to the staff because they may view it as leading to disruption in their jobs and working environments. Most nonprofit staffs are only one or two organizational levels away from the board and may become concerned that new influential board members can have significant impact.
For example, two professors persuaded their board colleagues that the agency needed a “management by objectives program.” The staff became so involved in establishing and measuring objectives that they neglected client services .
Critical actions that boards can take to overcome these barriers.
Agreement about what “change” means. Perhaps it is increasing clients served and/or simultaneously having to increase donations to maximize the mission’s service? These changes can be readily measured. However, nonprofits often have revisions that can only be measured approximately in the short-term because of the significant costs involved. These include such items as improving public awareness or community influence. They require use of more qualitative measures over time to assess trends and improve the measures. *
Those responsible for change need to be reminded that words have meaning, and the words used to describe revisions can create negative attitudes from board members and staff. Those with negative connotations include “profit, efficiency and restructuring.” Positive words include “mission, serving and compassion.”
Radical honesty about the hurdles standing in you way. It’s important to be upfront about the “bandwidth” in staff and board resources needed to implement any major modifications. This involves having three or four board members who are experienced with implementing change, willing to assume leadership of the process and have the interpersonal skills necessary to “sell” other board members on the benefits of the new plan. In one situation, where a governance model was changed and the ED’s title revised to President/CEO, a traditional board member was dissatisfied. He complained about the new title “What do we call the ED now, Presco?” The implication was that the new title was satisfactory for the head of a business organization but too sophisticated for the operating head of a nonprofit organization.
Commitment to do whatever it takes. Driving changed from a nonprofit board position isn’t for the person or team that gives up easily. A realistic plan is to anticipate the bumps in the road along the way. For example, if some board members agreed to a revision with limitations, it’s the responsibility of the CEO and board members to make certain they are consulted as the change progresses, helping them, if they can, to be more comfortable with it. If the change has substantial impact on the staff, the CEO and board members need to be certain that false rumors are handled appropriately when they appear. This also applies to rumors circulating in the community or in an industry, if the nonprofit is an association.
When boards fail to take the types of actions cited above, the impact can affect the nonprofit’s culture for decades. For example, a nonprofit engaged a new executive director with an authoritarian leadership style. His long-term predecessor developed a relaxed culture, often casually taking staff meeting time to read poetry. The Board concluded major changes were necessary.
As a first step to solve the problem, the board made a mistake by demanding the new ED modifies his authoritative management style. But concurrently, a union organizer heard about the dissatisfaction and persuaded the social workers on the staff to form a union. Results: the problematic ED was finally terminated, and an experienced ED, who had worked previously at the agency, was engaged. But the social work staff is still unionized. Trust between management and the professional staff was never restored.
The Nonprofit Board’s New Role In An Age of Exponential Change
By Eugene Fram
Most nonprofit boards are being faced with huge pressures—reduced financial support, challenges in integrating new technologies, recovering from Covid impacts and difficulties in hiring qualified personnel who will consider “nonprofit” wages. To survive long term, board members need to be alert to potential opportunities. These may be far from the comfort zones of current board members, CEOs and staff.
What needs to be done?
Look for scalable opportunities to reformat the nonprofit: This may include merging, partnering or acquiring other organizations, obviously in an attempt to make both organizations more effective and efficient. One nonprofit, operating a sheltered workshop for the blind and visually impaired affiliated with a local Goodwill nonprofit. The change over many years allowed the original service organization to grow from a budget of $5 million with 160 employees to today’s budget of $50 million. Currently it has 800 employees, serving 150,000 clients annually.
To achieve results like these, the board had to move out of its comfort zone, learn about new types of operation that can help fulfill the mission and initiate bold moves. To explore and manage such changes, a “Lean Management”* approach using small-scale experimentation can be helpful.*
Acknowledge the inherent limitations of nonprofit board tenure:
The median tenure for nonprofit board members is from four to six years. With only reputation and/or emotional investment in the organization, this creates a short-term time line horizon for many board members. The CEO, probably the only one with long-term organizational memory, has an obligation to motivate the board to consider long-term actions in this time-compressed tenure environment.
Led by the Chair & CEO what can be done?
First recognize that not all board members will be interested in developing a future scenario that goes beyond their tenure limits. The argument will be that a three-year strategic plan is sufficient. The answer is to have the board chair and CEO form a discussion group, not a committee to highlight longer term opportunities. It should be composed of board members who appear to be visionary in the mission field, in their career backgrounds back along with management and staff representation.
Pose questions like these:
What do you see the mission of this organization will be a decade from now?
What might shape it now to grow, decline gradually or stay stable over the decade?
What can management do now to prepare for the next decade?
Are there small-scale experiments that will assist in preparing for these changes?
What succession plans are required to make available strong or stronger management abilities available in the next decade?
Once a scenario is developed from the discussions, ask management to develop one or two experimental programs. If successful, it will help guide the nonprofit for the next decade. Hopefully, future board members will see the value of this work, develop an appreciation for longer term planning and continue the process.
This process is all a matter of aligning board members to long-term thinking. It involves using conceptual considerations by board and management. It motivates the CEO to consider managerial abilities that will be required, and it also should be especially helpful for board members whose careers are outside the mission area of the nonprofit.
Board Members Need to Review Unwritten Protocols to Boost Nonprofits’ Effectiveness
By: Eugene Fram
Nonprofit boards are governed by a series of obligations —some are clearly defined as legal responsibilities such as financial actions. Others, however, are less clearly defined and relate to people who are, in some way, associated with the organization. Guidelines to these diverse interactions are not typically archived in policies but are important to the overall professionalism of the board. They include consideration of its: board structure, internal operations, recruitment methods and leadership style.
Chinese Proverb: The wise person learns from his/h own experiences. The wiser person learns from the experiences of others
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 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?”
What Role Should Nonprofit Board Members Play in Overviewing Management /Staff Talent?
By: Eugene Fram Free Digital Image
Nonprofit boards rarely develop an in-depth strategy for assessing its organization’s human capital. Some will keep informal tabs on the CEO’s direct reports to prepare for the possibility of his/her sudden departure or is incapacitated. Others –smaller organizations with fewer than 20 employees—need only a basic plan for such an occurrence.
Need for Strategy: In my view, maintaining a viable talent strategy to assess staff and management personnel is a board responsibility, albeit one that is often ignored. The latter stems from the constant turnover of nonprofit board members whose median term of service is 4-6 years—hardly a lifetime commitment. Like for-profit board members whose focus is on quarterly earning results, their nonprofit counterparts are likely more interested in resolving current problems than in building sufficient bench strength for the organization’s long-term sustainability.
Nonprofit Management 