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Policy vs. Paper Clips

Time-Compressed Non Profit Directors – Recruit & Retain Them!

Time-Compressed Non Profit Directors – Recruit & Retain Them!

By: Eugene Fram

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, never voiced 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…)

Once Again! What Does Nonprofit Board Oversight Mean?

Once Again! What Does Nonprofit Board Oversight Mean?

By: Eugene Fram

I have a daily subscription to Google Alerts on “Nonprofit Management” and “Nonprofit Governance.” Every week, several nonprofit case stories surface, related to inadequate oversight by nonprofit boards of directors. Many of the cases result in huge losses to the nonprofits. Following is my personal list of what I consider to be reasonable board oversight responsibilities, to attempt to help nonprofit boards of directors to avoid such losses.
Financial Related Actions
• At least half the board should be able to analyze the monthly or quarterly financial statements. Have voluntary information sessions available for those who do not have the skills.
• The board chair needs to be alert to “teachable moments” during board meetings. When a complex financial or board related legal issue arises, the chair needs to make certain that all have a basic understanding of what is involved. Otherwise some directors will sit quietly and nod their heads in agreement!
• Make certain that an external audit is conducted at least every two years, and the board is involved in the selection of the external auditor from a list of two or three suggested by board members and/or management.
• Be certain the organization has either a comprehensive assessment committee, finance committee, and/or audit committee. (Some states require nonprofits to have an audit committee once the organization has specific annual revenues.)
• Be alert to the development process for filing critical reports –Examples: IRS 990s, employee tax withholdings and both state and federal tax reports. With the recent expansion of the 990 Form, the board and/or audit committee needs to be involved with the development of the form and responding to the 28 new questions related to nonprofit governance.
• Make certain the board has developed or is developing a current strategic plan and that it becomes a useful document.
• Be especially alert when financial reports are frequently late or one or more directors perceive financial personnel are inadequately skilled.

Other Governance Actions

• Be alert to the system used for developing new programs. Be wary when new programs are described such as “mind-boggling.” However, be certain that all reasonable opportunities are examined in a robust manner. Otherwise the organization may be a candidate for long-term disruption, like Eastman Kodak.
• Although engaging the CEO is the only hiring decision the board makes, it still has a responsibility to understand the strengths and weaknesses of promotable internal staff. This will require some board interactions with these staff persons
• Make certain that the organization has a knowledgeable CFO. No board member should have to worry about the safety of the organization’s financial assets.
• Directors need to be ready to raise questions, even if they fear the questions may appear to be inadequate ones.
• Nonprofit operational transparency is critical in the 21st century. Malfeasance, in any format, must not be covered–up for the “sake of the organization’s reputation.”

“Trust But Overview &Verify.”

Nonprofit Policy Development & Operations Management – Crossing Boundaries?

Nonprofit Policy Development & Operations Management – Crossing Boundaries?

By: Eugene Fram

“Nose in- fingers out,” is the commonly used guide for nonprofit directors’ relationships to operations. Translated into terms of governance-management relations, it means that boards have an obligation to overview management impacts and outcomes, but they need to avoid micromanaging the operations of the nonprofit. This is a particular danger with nonprofits because micromanagement often seems to be in the DNAs of nonprofit boards.

On the operations side, strong experienced nonprofit CEOs can tend to be overly impatient and can easily make strategic or policy decisions that are the responsibilities of the board. In fact, I have seen a few CEOs step over the boundary and develop and execute board style policies. (more…)

When Should Nonprofits Consider Making A Transformative Change?

When Should Nonprofits Consider Making A Transformative Change?

There is no “quick fix” to some nonprofit problems. A new hire, a board retreat, another task force—all good nonprofit “fixers”—are simply not equal to major challenges that call for transformative change. The evidence of more than one of the following signals suggest the necessity for different and possibly radical action:

• Lack of progress stemming from director micromanagement
• Mission creep or irrelevance of original mission
• Poor morale on board, staff and/or management
• Inadequate outcomes
• Struggle to compete with other similar organizations
• Divisive internal conflict
• Continuing financial and/or client deficits

Over the years I have seen nonprofits bravely taking on transformative change to keep their organizations alive and healthy. In every case, the process has been slow, frustrating and yes, messy! But the rewards have been significant. Here are a few “real world” examples that come to mind: (more…)

Strong Culture & Leadership Critical for Nonprofit Board Strategic Success

Strong Culture & Leadership Critical for Nonprofit Board Strategic Success

By Eugene Fram

The National Association of Corporate Directors (NACD) is conducting a series of sessions focusing on board “challenges and opportunities expected in the next five to seven years.”
http://bit.ly/1wuW8Wt

Following is how I perceive one of the session’s results (in bold) could apply to helping nonprofit boards focus on culture, leadership and achieve strategic success: (more…)

Dysfunctional Levels in Nonprofit Boards & Organizations.

Dysfunctional Levels in Nonprofit Boards & Organizations.

By: Eugene Fram

Article and studies from a Google search on “ Dysfunctions in Nonprofit Boards & Organizations,” yields 445,000 items in .32 of a second. These items show dysfunctions on charter school boards, church boards, healthcare boards, trade associations, etc.

Rick Moyers, a well-known nonprofit commentator and nonprofit researcher, concluded:

A decade’s worth of research suggests that board performance is at best uneven and at worst highly dysfunctional. ….. The experiences of serving on a board—unless it is high functioning, superbly led, supported by a skilled staff and working in a true partnership with the executive – is quite the opposite of engaging. (more…)

Nonprofit Risk and Crisis Management: Challenges for the 21st Century

Nonprofit Risk and Crisis Management: Challenges for the 21st Century

The nonprofit leadership literature recommends that every nonprofit organization have a comprehensive crisis management plan, but it has little focus on risk. Perhaps nonprofit boards are too risk averse and are really unable to maximize their resources to assist clients? Is it that nonprofit boards see little personal gains from taking reasonable risks fearing potential reputation and financial losses? I reviewed over 300 nonprofit articles related to nonprofit crises and related risks; only a handful centered on how a nonprofit board can respond to handling risk and crises in a strategic manner. A great deal seemed to depend on the position of organization of the nonprofit board and its culture, provided in these principles: (more…)

The Dangers of Board Micromanagement

The Dangers of Board Micromanagement

By: Eugene Fram

Accepted View of Micromanagement: “…Directors spend more time with the details of the operations instead of planning its short-term and long-term growth strategies. …
(http://linkd.in/1q84pMm)

The Need for a Micromanaging Board
Board micromanagement is an appropriate approach when either a nonprofit or for-profit is in a start-up stage. Financial and human resources are modest, and the directors often assume some responsibilities normally executed by compensated staff. The chief executive often has managerial responsibilities as well as a list of low-level operational duties. (more…)

A PS to Harvard Business Review Blog Post: Boards Can Be Terrible at Their Most Important Job: http://bit.ly/1B3N6Rj

A PS to Harvard Business Review Blog Post:
Boards Can Be Terrible at Their Most Important Job: http://bit.ly/1B3N6Rj

By: Eugene Fram

“A recent Bridgespan Group survey of nonprofit CEOs found that nearly half (46%) got little or no on-boarding help from their boards.”

To help the board with the on-boarding process, a customized format can also be utilized. The board then tailors a program that helps the new executive to develop a solid base in the organization and to understand its unique climate and culture. Properly structured, this orientation takes about a year to complete. The board’s time commitment decreases over the course of the year. Major responsibly for the program should rest with the board chair, but it should also involve one or more senior board members.
Every custom designed orientation program should include nine steps, either in sequence, or concurrently.

1. Developing immediate and long-term goals
2. Reviewing fiscal and personnel resources
3. Examining current policies and procedures
4. Developing staff relationships
5. Fostering board relationships
6. Cultivating community or industry relationships
7. Understanding the customers, clientele, membership and stakeholders.
8. Discussing the new executive’s career expectations
9. Establishing a succession plan should the executive be temporarily incapacitated

Steps one and two are often readily accomplished. The following steps need more detailed explanations because boards do not commonly initiate them.

• Examining Current Policies & Procedures: This is a routine but necessary task. The top administrative staff should be responsible for the new CEO’s orientation on operating policies and procedures, and the CEO will also develop a fuller understanding of such policies and procedures as he/s makes daily operating decisions. However, when it comes to understanding how the board goes about setting policies, the CEO needs a formal “tutorial” orientation from the board chair. The CEO and the board chair should establish a work plan to determine if all board policies are concise, understandable and operationally complete. Depending upon the quality of prior work, this task can be simple or require extensive revisions and additions.
• Developing Staff Relationships: In any organization, top management changes cause staff insecurity and unrest. Old comfortable patterns will be broken. Resistance to change will likely occur. Board members must provide strong support for changes that are needed. Board members should have representation at all business meetings and at other functions where the board traditionally has been expected to participate.
• Fostering Board Relationships: Any astute new CEO will want to get to know his/h board well, and board members should expect a strong leader to assertively develop these interpersonal relationships. One suggestion is for the new CEO to meet individually with board members at their place of employment or another convenient location.
• Cultivating Community or Industry Associations: The board chair needs to assume leadership in helping the new CEO to develop contacts and relationships with community leaders, industry leaders and/or other stakeholders, such as key vendors. The board chair and CEO need to jointly develop a “game plan” to achieve the objectives involved.
• Understanding The Customers, Clientele, Membership and Stakeholders: Through informal meetings, presentations or reviews of pertinent issues, the board should strive to give the new CEO an understanding of how the products or services offered are perceived by various stakeholder groups. The CEO needs to try to verify the information with visits with stakeholders. If a significant gap(s) is noted, the CEO has an obligation to review it with the board to determine if the strategic plan in place is sound or needs modification.
• Discussing The New CEO’s Career Expectations: As part of the hiring process, the board should have an understanding of that individual’s career expectations and aspirations to be certain that these are compatible with the position being offered. The board and the new CEO must agree on a plan for his/h career development and growth, and the board should specify what it is willing to do to help the CEO with the plan.
• Succession Planning: Two plans are needed. One — to cover a situation where the CEO is incapacitated for a period — should be organized quickly. The other, long-term succession planning, a more difficult discussion, needs to take place every few years for the CEO and his/h direct reports.

Numerous benefits accrue to having a board-directed orientation program for a new CEO. The most important is the smooth transition that the program promotes. As a result of these efforts, power, authority, leadership and accountability are clearly understood and accepted by both the board and its new CEO. Misunderstandings and conflicts can be avoided.

Source: Eugene H. Fram & Robert F. Pearse (1992), “The High-Performance Nonprofit,” Milwaukee, Wisc. Families International, Inc.

Can A Nonprofit Find Strategic Ways To Grow in Difficult Times?

Can A Nonprofit Find Strategic Ways To Grow in Difficult Times?

By: Eugene Fram

Nonprofits have always had to struggle to meet their client needs, even when economic conditions and social turmoil were much less constraining than today. How can mid-level nonprofits uncover growth opportunities in the present environment? (more…)