A Nonprofit Board’s Most Important Job!
By: Eugene Fram
Many people believe as I do that a nonprofit board’s job is to find the best possible person to act as CEO of the organization, then stand back and let that person manage. If your board is in agreement, here are guidelines for action: (more…)
Important: Robust Evaluations of Nonprofit CEOs
By Eugene Fram
Like any group, the vast majority of nonprofit CEOs are hardworking managers dedicated to the mission, vision and values of their organizations. The nonprofit evaluation processes of the past, typically involving a cursory examination of the financials plus a simple questionnaire to directors, simply isn’t sufficient for the 21st century. A much more rigorous process is needed if to keep the public’s faith in nonprofit world. I have been involved with these types of evaluations, and the professional CEOs involved understood their necessity.
Following are the steps I consider necessary for a robust CEO evaluation. (more…)
Nonprofit Directors Can Be Effective Ambassadors
By: Eugene Fram
Directors are definitively not rock stars! Yet business boards are suggesting greater visibility for those individuals whose names are on their letterhead, according to a recent article in a Canadian magazine. * The commercial rationale behind this growing trend is that well regarded and knowledgeable directors can make the best ambassadors to a wide variety of stakeholders, the most important group being stockholders.
The nonprofit board, in my opinion, is uniquely qualified to emulate this new corporate board focus. (more…)
The Challenge of the Nonprofit Board Meeting: Some Tips for Board Chairs
By Eugene Fram
The new director sits down at his first board meeting and turns to the director sitting beside him. “What am I supposed to do?” he asks the more experienced director who replies, “Pity the Board Chair!”
One of the biggest challenges for a president or board chair is to run a tight and meaningful meeting. Without careful planning and new approaches, the obligatory periodic 1.5 hours with the directors can also be a major frustration. Directors often either don’t show up or appear to be bored, tired, disinterested clock-watchers during this important effort to collectively oversee the state of the organization.
Here are some ideas- some innovative, some old stand-byes- that may help the chair ”Preside” more effectively. Be sure to sit down with the CEO well before the scheduled meeting to set the agenda, establish meeting goals and brainstorm the format. Anticipate the inevitable “bumps in the road’ and how best to handle them. Agree to try a new idea occasionally to facilitate discussion, nurture participation, and generally engage the directors. (more…)
What Is The Level of Your Nonprofit Board’s Behavioral Quotient (BQ)?
By: Eugene Fram
Most viewers will have a working knowledge of Intelligence Quotient (IQ), a predictor of academic achievement or Emotional Intelligence (EI), an assessment of a person’s social skills and intelligence.
I would like to suggest that nonprofit boards, as a team, assess their behavioral intelligence (BQ). BQ involves the acknowledgment that how leaders behave will directly impact the success of the organizations they lead. Following are some critical BQ questions for the board team.* Answering all these questions openly will enable a board to develop its own BQ. (more…)
Too Little Board Deference to CEOs – Typical of Nonprofits?
By: Eugene Fram
“Most nonprofit staff leaders still struggle to have a bona fide seat at the board table as a respected peer,” says Brian Foss, nonprofit consultant. He hypothesizes that this lack of respect is not so apparent on for-profit boards. “I rarely see nonprofit CEOs receiving the same deference. …they would enjoy in the for-profit setting.” Foss also notes that the situation has not changed appreciably during the 25 years in which he has served as a consultant.*
Attitudes in a working relationship such as Board/CEO are often deeply ingrained in board culture. Yet I am convinced that with the right oversight and approach they can be improved. Developing a new and mutually respectful management atmosphere will in time yield superior outcomes for the organization. Here are some basic thoughts for both boards and CEOs that I hope will upgrade the quality of the partnership. (more…)
J.C. Penney Board Flap: A Lesson for Nonprofits!
By: Eugene Fram
The Penney board wanted to fire one its leading directors. The Wall Street Journal reported that the board “… accused him of breaching his board room duties by disclosing confidential information about the CEO search and financial condition.” The director, William Ackman, initially refused to resign. It was only after days of tense negotiations and details hammered out by lawyers that a resignation agreement was forged, finally ending the flap. *
What Nonprofit Boards Should Learn.
• It is difficult, if not impossible, to dismiss an elected director even if he or she commits an egregious act similar that executed by Ackerman. Some nonprofits believe if a director violates the attendance regulation cited in many bylaws or other bylaw regulations, the board majority can unilaterally dismiss a director. Before taking such a step, the board should review the action with its legal counsel, since state laws vary greatly.
• In the Ackman case, the Penney board, with its huge legal power, could only wait until his elected term was over before refusing to reelect him. Such an occurrence in the nonprofit environment would significantly impact the organization’s reputation. Penney’s stock dropped 3.7% when the resignation was announced. While the nonprofit’s reputation can’t be measured in such a quantitative manner, it needs to plan to take protective PR actions should it find itself in such a difficult position, such as the Penney case. (more…)
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…)
Are Powerful CEOs Right for Nonprofit Organizations?
By: Eugene Fram
David Larcker and Brian Tanya, Stanford University Professors, have come to the following conclusions about CEO power and raise some pertinent questions about the role of the board, based on research mainly centered on for-profit organizations.*
The research literature clearly shows that having a powerful CEO creates the potential for him or her to abuse this position to extract personal benefits or engage in excessive risky activities. At the same time, the research also shows that (CE0) power is often critical to the successful completion of tasks and the achievement of corporate objectives (and nonprofit missions). To this end, powerful CEOs can ultimately be a success or a failure. Are shareholders (stakeholders of nonprofits) better or worse off with a powerful CEO?
While it is the role of the board of directors to oversee management, at some point the board must empower management to make decisions. Where should it “draw the line” between giving its CEO discretion and providing appropriate oversight? How much power is too much power?
My Response Related to Nonprofit Organizations:** (more…)
Focusing the Nonprofit Board on Strategy – Same for For-Profit & Nonprofits? Updated & Reissued
By: Eugene Fram
Writing in the third quarter, 2012, of Board Member.com, Peter Dailey begins with the following conclusions about for-profit company’s strategic process (es):
As directors become increasing involved in their company’s strategic process, it’s evident that some fail to have the competencies to meaningfully contribute. Some deficiencies may result in only benevolent dabbling. … But at the extreme, deficiencies can result in destructive deliberative processes and the adoption of faulty strategic decisions. Often these scenarios operate with the context of by well meaning directors – not within hostile environments. * Skill matrices related to specific director experiences are needed. But they fall short in addressing how a director might behave.
For example, I once observed two influential directors establish complex “management by objective” programs for which the staff was forced to focus on process minutiae rather than program outcomes and impacts. The organization suffered. Large company executives can be a problem source when they force extensive discussions on minor operational items. These are items that they would never allow on their own board agendas. Why this happens is a decades old mystery for those of us who have observed it (more…)
Nonprofit Management 