Nonprofit board communcations

Nonprofit Boards Should Consider the Implications of Artificial Intelligence (AI)

 

Nonprofit Boards Should Consider the Implications of Artificial Intelligence (AI)

BY: Eugene Fram           Free Digital Image

AI is rapidly being implemented in many environments, some with aggressive intensity. Walmart, for example, will be replacing 7,000 jobs with artificial intelligence powered technology. Foxconn will be replacing 60,000 factory jobs with machines. * While this is a minuscule portion of Walmart’s total employment, it presents a new reality—machines create fascinating outputs that require less energy to produce and do so at lower costs. They are capable of making decisions, regardless of skill level. *

What Nonprofit Skill Levels Might be At Risk (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…)

Nonprofit Board/Staff Relationships: An Uncomfortable Partnership?

Nonprofit Board/Staff Relationships: An Uncomfortable Partnership?

By: Eugene Fram

I have always been of the opinion that nonprofit directors don’t give sufficient consideration to the relationships between the board and staff. The following passage reasserts the complexity of such relationships and why misunderstandings might occur on either side of the fence. (more…)

How Nonprofit Boards Can Support Management & Staff and Refrain From Micromanaging!

 

How Nonprofit Boards Can 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 directors 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. (more…)

Different Strokes For Nonprofit Board Folks

Different Strokes For Nonprofit Board Folks

By: Eugene Fram     Free Digital Photo

Over decades of service on nonprofit boards, I have interfaced with board colleagues who possess a variety of performance styles and behaviors. Certain of these types seem to be common to all boards. My comments below are based on adaptations of a director classification system suggested by David Frankel, Partner of Founder Collection. *

The Eager Beaver  

This board member (30s to early 40s) has probably been successful as an entrepreneur or is, perhaps, rapidly rising through middle management in a larger organization. He/she wants to “get things done”. His/her impatience with the typically slow nonprofit rate of progress can be channeled and directed by the CEO or Board Chair. Discouraged by lack of action, this director may quietly exit the board on the pretext that work pressures have increase. On the other hand, if properly nurtured, this category can offer substantial leadership contributions.  

The Checked-Out Check Writer 

Serving on a nonprofit board has likely become a family or company tradition for some directors. (Some local nonprofits are now about 100 years old or older.) Regardless of the person’s dedication to the mission, nonprofit board service becomes part of this director’s DNA. Often they develop into respected leaders and can be conduits to modest or substantial donations. In addition, they have access to interpersonal networks that are useful in recruiting other able board members. This cohort should be valued and their contributions, acknowledged.

The Vanilla Director 

This is a director who attends meetings regularly, occasionally makes an interesting comment. He/she is dedicated to the mission of the organization and can make substantial financial or other contributions. One such director I observed, volunteered to assist the staff with a difficult field problem.   According to Frankel, these directors are “less critical and offer encouragement…. ” However, like many other nonprofit board members, across behavioral types, avoid rigorous discussions at board meetings. If substantial conflict appears between factions of the board on a major issue, they may resign instead of taking an unpopular stand.

The Nonprofit Entrepreneur

This is a director who has a substantial understanding of the nonprofit sector. He/s has served on other nonprofit boards and is dedicated to the nonprofit’s mission. He/s has a desire to help move the nonprofit to its next level of service to clients. He/s often brings bold or different perspectives to the board and management. She/h knows that to achieve growth and improve client services, it is necessary to “sell” ideas to other board members, as well as the CEO. It’s important that the nonprofit entrepreneur and CEO are on the same page in terms of the organization’s future and potential to serve clients. If not, the CEO, unfortunately, may view the entrepreneur with his/h “fast track” style as a disrupter.

An overview of nonprofit boards tends to focus on the unique set of skills and work experience they bring to the table (doctors, professors, accountants, full-time homemakers etc.) A closer look at the board suggests another layer of classification i.e. individual styles, motivation and behaviors. Herein is challenge and opportunity to develop meaningful board experiences for each individual who has said “yes” to the call to service.

* https://hackernoon.com/eight-people-youll-meet-on-your-board-of-directors-8963863d4a03  

 

 

 

 

 

 

 

Do Nonprofit Directors Face Cyber Security Risk?

Do Nonprofit Directors Face Cyber Security Risk?

By: Eugene Fram      Free Digital Image

Solarwinds and Target and others may seem far afield from the concerns of nonprofit directors, except for the giants in the area, like AARP. However, think about this hypothetical scenario.

A group of high school students hacked into the computer system of a local nonprofit offering mental health services and gain access to records of clients, perhaps even placing some of the records of other teenagers on the internet. (more…)

Want Better Nonprofit Board Cultures? Look for Four Board Behaviors–Part I

Want Better Nonprofit Board Cultures? Look for Four Board Behaviors–Part I

By Eugene Fram                Free Digital Image

Board cultures can be difficult to modify or change in for-profit and nonprofits. A recent McKinsey study demonstrated the strength of the board culture in three different levels of board operations—ineffective, complacent and striving. * Differentiated achievement seems to be largely dependent on four behaviors. (See bold type.) Centered on my experiences, they can be applied to nonprofit boards. At the least, the behaviors can motivate considerations for board modifications.

• There is a culture of trust & respect in the boardroom: Study data showing respondents’ agreement with the statement: 39% of ineffective boards; 66% of complacent boards and 88% of striving boards.
Trust and respect are also critical for nonprofit boards, but they are probably more difficult to achieve for several reasons. First, nonprofits are often seen as lacking efficiently and effectiveness because they operate on smaller budgets and are often housed in marginal physical facilities. In addition, a long-standing nonprofit tradition is for board members to become directly involved with operations. This leads to external perceptions of nonprofits needing managerial support.

Boards will trust management to a higher degree when managers can demonstrate they have the necessary abilities to meet challenges with care and insight.

Finally, nonprofit boards are less homogeneous in terms of director backgrounds since they represent a much broader base of society.

• Board & management-team members constructively challenge each other in meetings: Study data showing respondents’ agreement with the statement: 44% of ineffective boards; 53% of complacent boards and 76% of striving boards.
Nonprofit board environments are not well known for being challenging, but the potential really stands out in the for-profit sector—striving boards are about 31points ahead of ineffective ones on this behavior. But with nonprofit directors being comprised of volunteers, this will require a huge cultural shift. “Going along to get along” is a common mantra in the nonprofit sector. Few nonprofit directors, through rigorous discussion, possibly leading to “no” votes, want to be the cause of internal conflict.

• The chair runs meetings efficiently and effectively: Study data showing respondents’ agreement with the statement: 37% of ineffective boards; 56% of complacent boards and 69% of striving boards. Among dozens of nonprofit boards with which I have interacted, the chairperson’s views receive a great deal of deference to avoid conflict. But note that there is value in choosing a chair who can lead meetings in an efficient and effective manner—69% of striving directors thought this a factor of success versus only 37% of those on ineffective boards.

• Board members seek out relevant information beyond what management provides, to deepen knowledge: Study data showing respondents’ agreement with the statement: 31% of ineffective boards; 59% of complacent boards and 62% of striving boards.
The tenor of the Sarbanes-Oxley Act (2002) called for for-profit directors to seek information beyond that which management provides. Again, note the wide data differences between ineffective and striving. In my experiences with nonprofit boards, the openness of management to having board members interact with staff below the C-Suite levels varies significantly. Some are open to it. Others who fear that such contact will lead to “end-runs”–staff will take grievances directly to board members. Since transparency and openness are board values in the 21st century, every nonprofit should have provisions for directors seek information below the C-Suite level.

* http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/toward-a-value-creating-board Note: The study does not list the criteria used to determine the three categories—ineffective, complacent, striving.

 

 

Nonprofit Boards’ Relationship with Executive Directors: A Delicate Balance

 

Nonprofit Boards’ Relationship with Executive Directors: A Delicate Balance

By: Eugene Fram 

When an individual with business board experience agrees to serve on a nonprofit board, the result can be culture shock! The new arrival can become impatient with the deliberate crawl of action in the nonprofit sector. Or the fact that he/she has no stake in the organization’s financial outcome can diminish interest and participation. Even more disturbing is the fuzziness of the relationship between board member and Executive Director, a sharp contrast to the corporate director/ CEO interaction. In the nonprofit, the ED can assume a more entrenched position due to cultural and governance protocols.

  • Long before and after the new board member’s four to six year term has expired, it’s likely that the same ED will be in place. Based on national data, a nonprofit executive director’s average tenure is 12 years. In addition, directors’ career interests are likely to be very different from those operating the nonprofit. These two factors invest the ED with “institutional memory.” This requires him/her to structure a field of vision on which directors are often dependent. If the ED lacks foresight, the nonprofit will probably not reach its potential to serve clients during his/her tenure.
  • Board members will have a difficult time modifying a nonprofit’s conservative ambiance. Full support of the ED will be required for change. If a board is unable to modify his/her behavior, a termination action will be needed—this will likely create board conflict.
  • Nonprofit directors are often not eager to replace an ED who “minds the store” but doesn’t move it significantly forward. Without malfeasance or performance issues, many directors are willing to maintain an ED in place whose performance is, at best, undistinguished.

Based on my experiences with 12 nonprofit boards as a board member plus having consulted with dozens more, following are ways I have seen business persons become acculturated to the nonprofit ED’s leadership styles. Instead of resigning, as some do, there remain many who continue to work productively with the ED to enhance the organization. Following are profiles, albeit stereotypical, of undaunted directors with business board experience (and without). (more…)

Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem

Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem

By: Eugene Fram            Free Digital Photo

Revised viewer favorite post

At coffee recently a friend serving on a nonprofit board reported plans to resign from the board shortly. His complaints centered on the board’s unwillingness to take critical actions necessary to help the organization grow.

In specific, the board failed to take any action to remove a director who wasn’t attending meetings, but he refused to resign. His term had another year to go, and the board had a bylaws obligation to summarily remove him from the board. However, a majority of directors decided such action would hurt the director’s feelings. They were unwittingly accepting the “nice-guy” approach in place of taking professional action.

In another instance the board refused to sue a local contractor who did not perform as agreed. The “elephant” was that the board didn’t think that legally challenging a local person was appropriate, an issue raised by an influential director. However, nobody informed the group that in being “nice guys,” they could become legally liable, if somebody became injured as a result of their inaction.

Over the years, I have observed many boards with elephants around that have caused significant problems to a nonprofit organization. Some include:

• Selecting a board chair on the basis of personal appearance and personality instead of managerial and organizational competence. Be certain to vet the experience and potential of candidates carefully. Beside working background (accounting, marketing, human resources, etc.), seek harder to define characteristics such as leadership, critical thinking ability, and position flexibility.

• Failure to delegate sufficient managerial responsibility to the CEO because the board has enjoyed micromanagement activities for decades. To make a change, make certain new directors recognize the problem, and they eventually are willing to take action to alleviate the problem. Example: One board refused to share its latest strategic plan with it newly appointed ED.

• Engaging a weak local CEO because the board wanted to avoid moving expenses. Be certain that local candidates are vetted as carefully as others and that costs of relocation are not the prime reason for their selection.

• Be certain that the board is not “rubber-stamping” proposals of a strong director or CEO. Where major failures occur, be certain that the board or outside counsel determines the causes by conducting a postmortem analysis.

* Retaining an ED who is only focusing on the status quo and “minding the store.” The internal accounting systems, human resources and results are all more than adequate. But they are far below what can be done for clients if current and/or potential resources were creatively employed.

* A substantial portion of the board is not reasonably familiar with fund accounting or able to recognize financial “red flags.” Example: One CFO kept delaying the submission of an accounting accounts aging report for over a year. He was carrying as substantial number of noncollectable accounts as an asset. It required the nonprofit to hire high-priced forensic accountants to straighten out the mess. The CEO & CFO were fired, but the board that was also to be blamed for being “nice guys,” and it remained in place. If the organization has gone bankrupt, I would guess that the secretary-of-state would have summarily removed part or all of the board, a reputation loss for all. The board has an obligation to assure stakeholders that the CFO’s knowledge is up to date and to make certain the CEO takes action on obvious “red flags”.

* Inadequate vetting processes that take directors’ time, especially in relation to family and friends of current directors. Example: Accepting a single reference check, such as comments from the candidate’s spouse. This actually happened, and the nominations committee made light of the action.

What can be done about the elephant in the boardroom?

Unfortunately, there is no silver bullet to use, no pun intended! These types of circumstances seem to be in the DNA of volunteers who traditionally avoid any form of conflict, which will impinge upon their personal time or cause conflict with other directors. A cultural change is required to recruit board members who understand director responsibilities, or are willing to learn about them on the job. I have seen a wide variety of directors such, as ministers and social workers, successfully meet the challenges related to this type of the board learning. Most importantly, never underestimate the power of culture when major changes are being considered.

In the meantime, don’t be afraid to ask naive question which forces all to question assumptions, as in Why are we doing the particular thing? Have we really thought it through and considered other possibilities? http://bit.ly/1eNKgtw

Directors need to have passion for the organization’s mission. However, they also need to have the prudence to help the nonprofit board perform with professionalism.

A Nonprofit’s Reputation Rests on the Quality of its Directors

A Nonprofit’s Reputation Rests on the Quality of its Directors

By: Eugene Fram         Free Digital Image

Reputations are universally seen as valuable, but reputation risk is poorly understood. As a result, reputations are left unnecessarily at risk.*

Reputation matters in the nonprofit world. Few nonprofit boards exist today that don’t worry about how they are perceived in the communities or associations they serve. And to make sure their images remain pristine, many turn to crisis consultants and other forms of expert assistance. A tarnished reputation can have a huge impact on a vast network of stakeholders as confidence in the organization ebbs and support starts to dwindle. Nonprofit board members must be sensitive to signals of impending reputation risk and immediately roll up their sleeves in an attempt to rebuild confidence.

I was once involved in a board that was bitterly divided over an issue—so much so that the intense conflict in the boardroom became public knowledge. As an anomaly, the staff continued to be productive and the organization maintained its functionality. But the damage had been done. The United Way placed the organization on “probation,” warning that financial support would be reduced unless the board took measures to heal the rift.

Recalling this near-catastrophe, I resonated with a recent post that focused on board composition. (http://bit.ly/1BFQcLh) (more…)