Nonprofit CEO-Board Relationships

What Nonprofit Boards Are Not Doing – But Should! A 2013 Top Post With 681 Viewers!

What Nonprofit Boards Are Not Doing – But Should! A 2013 Top Post With 681 Viewers!

By Eugene Fram

A recent New York Times article* reports that public company directors are coming under scrutiny this proxy season based on what they are not doing. Based on my experiences with dozens of nonprofit organizations, the litany of complaints cited in the Times article, can easily apply to nonprofits, whether they are professional organizations, trade associations, educational institutions or charitable organizations. (more…)

Is Excessive Deference Shown To Nonprofit Boards?

Is Excessive Deference Shown To Nonprofit Boards?

By: Eugene Fram

Expectations of volunteers serving on a nonprofit board are often thought to be lower than necessary. Paul T. Hogan, Executive VP of the John R. Oislei Foundation, recently agreed with this position,

Because board members…are volunteering, their time to serve on a board, there is a tremendous hesitancy to ask them…to devote additional time, (especially for learning.) … Respect them enough to teach them what they’ll need to know to (fully) contribute (what they have to offer)*

Hogan’s point is a good one. Management and staff’s continued deference ** to the board can lead to an unhealthy power equilibrium that can weaken the organization’s performance.

Here are some thoughts on the challenges involved:

• The Board-Management Compact: Nonprofit CEOs and staff often feel that they have to defer to boards for various reasons.*** They can view the board as possessing ultimate powers, and its members having unusual insights because of their working positions. Many nonprofit managers, however, have much more management experiences than board members who work as independent contributors such as professors, physicians, attorneys and accountants. Also just because a board member works for a large complex commercial or nonprofit organization doesn’t mean he or she has had management education, experiences or has acquired the strategic know-how necessary to contribute to a state-of-art NFP board.

Excessive deference to the board can, in turn, lead board directors to passively accept lower performance standards, especially when it is a nonprofit with a human service mission, as Hogan has noted. (In some instances, CEOs even prefer this arrangement! It reduces their responsibilities, as a number with whom I have had contact, have openly admitted.) From my decades of experience as a nonprofit director and consultant, I have seen the development of an unwritten compact between nonprofit boards and managements, with each tolerating minimal performance from the other. Where subtly or overtly present, these compacts need to be eliminated in the 21st century. The organization needs a relationship between the two that provides an equal partnership, with a clear trust and respect for the differences in the required roles.

Directors’ Learning:

• Volunteer Time: Currently Baby Boomers and Millennials are the two age groups from which board candidates are being selected. Except for the leading edge of Baby Boomers, now beginning to retire, both cohorts have time-restricted schedules in terms of work-family obligations. Asking them for more time to formally learn about the nonprofit through traditional orientation sessions or classes, in my opinion, has a little potential to develop long-term learning.

There are alternatives that can be adopted. One is to first make certain that the board has a subgroup of directors with experiences in strategy development, management assessment, governance processes and the field of the organization’s mission. Then ask the “veterans” to become informal mentors for newly appointed directors.

Example: Ask these mentors to meet informally, or by phone, with the neophytes to review, for example, governance obligations for due diligence other important issues. (In some cases, the CEO, CFO or other senior managers can become mentors.) After a year, proactively schedule a series of brief convenient conferences or conference calls to enable the new directors to pose unanswered questions and make certain all are reasonably acquired the knowledge needed to effectively contribute. This shouldn’t be an unreasonable task, if about three to four new directors are elected each year.

• Teachable Moments: During the course of board meeting or committee meetings, issues can arise on which new directors may have little background. It should be the obligation for the board chair or committee chairs, prior to or after the meeting, to make certain that new directors are properly briefed in a non-judgmental manner on these issues.

Recently, I encountered a nonprofit board where the board chair, an experienced senior business executive devoted to the organization’s mission, privately complained that there was no one on the board who understood strategy development. The board was largely composed of millennials stressed with work-family obligations. They completed specific helpful time-limited projects in professional manners but just couldn’t find time to become involved in the essences of board responsibilities. Board turnover was high. In my opinion, it was a compact-type situation where the board performance was low, but the staff met goals that might have been higher.

Obviously the board needed a better balance with experienced directors having time to act as mentors for these busy millennials and to eventually eliminate the culture of deference to the board, its strong chair and to eventually form a true partnership culture between board, management and staff.

*Paul T. Hogan (2014), “Boards Cannot Be Sacred, Staffs Cannot Be Saints, and Founders Should Never Be Martyrs,” Nonprofit Newswire, May 20th.

**Hogan referred to the board as being “sacred.” I consider that to be excessive “deference.”

*** Compacts between students and faculty also have been reported in university settings, under which faculty require modest educational rigor in exchange for students providing their class room instructors with superior teaching ratings. See: Richard Arum & Josipa Roksa,(2011)Academically Adrift, Chicago, The University of Chicago Press p.5.

How Does Your Nonprofit Retain Termed-Out Board Members?

How Does Your Nonprofit Retain Termed-Out Board Members?

Nonprofit board members whose terms have expired are typically recognized at annual meetings with gifts, plaques or certificates of service. In many cases, this is like saying, “Here’s your hat—there’s the door.” Rarely does the organization have a plan for continuing to connect with these folks, many of whom represent significant assets – i.e. talent and expertise – that can be meaningful to the organization for years. For the very best among them, there is no guarantee that replacements will have the same or superior skills and talents.

Here are some new and established ways to keep them engaged or to reengage those who have drifted away from the organization.

http://www.huffingtonpost.com/eugene-fram/how-does-your-nonprofit-r_b_5393736.html

Can Nonprofit Boards Suffer From Agenda Deficits?

Can Nonprofit Boards Suffer From Agenda Deficits?

By Eugene Fram

In a recent study of 772 for-profit and nonprofit directors from around the world, McKinsey & Company found that 25% of the sample assessed their board impact as moderate or low, “… while others reported having a high impact across board functions. “ http://bit.ly/1iFEINR

Following, in italics, are brief abstracts from the study, followed by my analysis of the importance of the information to nonprofit boards. (more…)

Is Your Nonprofit Forward Focused or A Prisoner of the Past?

Governance arguably suffers most … when boards spend too much time looking in the rear view mirror and not enough scanning the road ahead. *
It has been my experience that nonprofits rarely address the possibilities and perils of “…the road ahead.” …. Here are some “prompts” that might guide nonprofit board members and CEOs as they attempt to provide leadership in this important but often neglected area:
http://www.huffingtonpost.com/eugene-fram/is-your-nonprofit-forward_b_5101415.html

Nonprofit CEOs Need To Be Peers NOT Powerhouses – Interface More Frequently with Individual Board Members

Simply having board meeting contact with directors isn’t sufficient for a 21st century nonprofit CEO. Following are three professional approaches the CEO can take for developing better communications with board members. This especially applies to those, who think as I do that the board should view the CEO as a mission focused peer, not an aspiring powerhouse.

http://www.huffingtonpost.com/eugene-fram/nonprofit-ceos-need-to-be_b_5060285.html

What’s in a Name? Benefits of the president/CEO title — Revised & Updated

What’s in a Name? Benefits of the president/CEO title Is it time to change your organizational title?

By Eugene Fram

Over the last 100 years, senior managers of nonprofits typically have held the title of “executive director.” During the past 30 years, many nonprofits have changed the title to “president/CEO,” following a common business practice. Many more nonprofits need to consider the same change to obtain some subtle but useful organizational benefits.

A wide range of nonprofits use the executive director title: churches, human service agencies, trade associations, and medical facilities. An executive director can be organizations; hospitals became regional healthcare systems;the only manager in a church with an annual budget of $200,000, or be the head of a medical facility with a $10 million annual budget and 200 employees. These significant differences in responsibility levels can:

•demean the contributions of many executive directors in the eyes of some important audiences
•minimize people’s perceptions of the organizations’ contributions.

The Executive Director in Nonprofit Organizations

According to Wikipedia, nonprofit senior managers are called executive directors instead of chief executive officers “to avoid the business connotation which the latter name evokes.” It also distinguishes them from “members of the (volunteer) board of directors and from non-executive directors, who are not actively involved in running the corporation.” (Non-executive directors are volunteers who mentor or advise an operating division within the nonprofit, such as the development office.)

Using the title of executive director made sense during the early part of the 20th century when nonprofit organizations were modest ones with a handful of employees, and volunteers regularly filled managerial or service roles. As late as the 1960s, one occasionally witnessed volunteer board members having internal operational roles.Those who advocate the continued us of the executive director title argue that the title’s use is empirical evidence of the board’s involvement in the organization’s activities. However, the negative side of the argument is that continued use of the title leads to board micromanagement of operations, which stunts organizational growth.

Nonprofit organizations became larger and more complex in the latter part of the 20th century. Local professional societies became regional organizations; hospitals became regional healthcare systems; and so on. The proportion of volunteers involved in management operations and staff work declined. Consequently the trend to use the president/CEO title became more appealing to focus operational responsibility on management and staff. If properly structured, the title requires the chair and CEO to develop a more trusting professional relationship that assures stakeholders of higher levels of performance. Organization results become focused on outcomes, not process.

The president/CEO in Nonprofit Organizations

In the latter part of the 20th century, businesses began to add CEO to the title of either their president position or board chair position.* The objective was to clearly designate which of the two had final operational authority, except for those actions reserved by the firm’s bylaws for the board (usually acquisitions, pension plans, and long-term contracts). In the business environment, as contrasted to the nonprofit environment, both the chair and the president can be corporation employees.

In the 1980s, nonprofit organizations began to mirror business organizations managerially. Many developed marketing departments and installed complex information technology. A few hired experienced business executives to head their organizations. The older philosophy of “avoiding the businesses connotation” was quickly eroded. When hiring new senior managers, nonprofit boards offered titles of president/CEO and made bylaw provisions for others in the senior management teams to become vice presidents.**

Some president/CEOs even became voting members of their boards, if permitted by their state laws. It wasn’t unusual for some incumbent executive directors to seek the new title if it was politically expedient. However, many conservative boards still look upon the change as a managerial power grab, which has slowed the change process.
Three decades have passed since early adopters made the first changes. Yet thousands of complex nonprofits are still headed by managers holding the executive director title, although they may have substantial, complex operational duties.

Changing the title of the chief staff officer to president/CEO can positively influence three things:

1. PERCEPTIONS OF THE ORGANIZATION

There’s little public understanding of the robust responsibilities of executive directors. Most people holding the title can relate stories of having to describe their jobs to those unfamiliar with nonprofits. But most people recognize that the president/CEO is the head of the organization with authority to lead its employees and to direct operations.

The senior manager from time to time may have opportunities to be interviewed by the media. This can be a critical responsibility when a rapid response to a crisis is needed or an unusual public relations opportunity arises. The president/CEO title enables the senior manager to move quickly and authoritatively; there is no ambiguity related to the leader’s authority.

How leaders and organizations are perceived by stakeholders are realities with which leaders must deal, whether or not the perceptions are accurate. Providing the chief staff officer with the president/ CEO title can help develop more desirable internal and external perceptions of an organization’s strength and the responsibilities of the person leading it.

2. ORGANIZATIONAL CULTURE

When organizations change the title, they often do so in connection with developing a structure that brings more formality and managerial professionalism to the culture. In the past, years of volunteer involvement in operations often developed a more family culture, which is a positive force when the nonprofit is in its early stages. But it’s hard to maintain a family environment as the number of employees grows. A new formality, brought about with the senior manager’s title change, along with a group of former managers now titled vice presidents, may be seen by older members of the staff as making the operation “uncaring” towards staff and clients.

As time progresses, with the president/CEO being the communications nexus between the board and staff, there will be less personal contact between the two groups. This requires the CEO to be concerned that a mistrusting atmosphere may develop. Under the CEO’s guidance, contact between board and staff can take place on ad hoc committees, on strategic planning projects, at various board orientations, and at organization celebrations. In these ways, the board can seek the participation and advice of all staff in establishing the major programs involved with missions, visions, and values.

The change in top titles and the greater formality it can bring may raise some trust issues with older staff. Management needs to convey a message to the staff that the change is a result of the board placing more trust for operations in the hands of management and staff.

3. FINANCIAL GROWTH

Some nonprofits take the position that fund development is the board’s responsibility, since board members have the broadest range of community and other outside contacts. With a president/CEO in the top management position, fund development becomes the joint responsibility of the president/CEO, the development person — if one is employed — and board members capable of fundraising. The new title gives the senior manager the immediate recognition necessary to credibly approach donors and, with the consent of the board, to make commitments on the organization’s behalf.

To involve the board more directly, the president/CEO can work collaboratively with board members to develop contacts opened by the board. (As one nonprofit executive person explained the situation, “Top people readily communicate with persons in similar positions.”) In seeking support funds, the new title can open doors and communications that might not be available to one holding an executive director title (which conveys such an unspecified range of responsibility). It might even raise an unarticulated question in the minds of some donors as to why the person hasn’t been given the title of president/CEO.

Which title Will Work Best for you?

Compared to the duties of a president/CEO, the duties of an executive director range much more widely on a management activity scale. Some executive directors are simply clericals while others are sophisticated senior executives. Any organization that ignores this fact can leave a psychological gap in public perceptions relating to the group’s strategic posture and the senior manager as a substantial leader. Where warranted by higher responsibility levels, changing a senior manager’s title to president/CEO can help present a better public posture for the senior executive and a better strategic posture for an organization.

Eugene Fram, Ed.D. (frameugene@gmail.com, blog site: http:// bit.ly/yfRZpz), is professor emeritus at the Saunders College of Business, Rochester Institute of Technology. In 2008, Fram was awarded the university’s Presidential Medallion for Outstanding Service. In 2012, a former student gifted Rochester Institute of Technology $3 million to establish the Eugene H. Fram Chair in Applied Critical Thinking. Fram’s book Policy vs. Paper Clips (available in new edition at http://amzn.to/eu7nQl) has been used by thousands of nonprofits to model their board structures.

*In the nonprofit corporation, the board chair is usually an unpaid volunteer who also might hold the CEO title, indicating that person has final operational authority. A volunteer holding the CEO title may be subject to more personal liability than other board members.

**This also assumes that those directly reporting to the president/CEO are concurrently given vice president titles.

Reprinted from the 2014 January/February/March issue of Nonprofit World Volume 32, number 1

Does the Nonprofit CEO Need to Go??

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.” Yet this type of change can’t be accomplished in a clear and pristine manner.

http://www.huffingtonpost.com/eugene-fram/does-the-nonprofit-ceo-ne_b_5019360.html

Is Your Nonprofit Strategically Deprived? Updated & Revised

Is Your Nonprofit Strategically Deprived? Updated & Revised

By: Eugene Fram

A vital concern to the future of any nonprofit organization is frequently neglected. Responsibility for the lack of strategic planning must reside with the chief executive, board members and the tactical challenges that inevitably flow to the board.

Before a nonprofit board can begin successful strategic planning, it must: (more…)

Are Nonprofit Chairs Roles Evolving?

http://www.huffingtonpost.com/eugene-fram/are-nonprofit-board-chair_b_4640044.html

Nonprofits can strengthen their governance procedures by experimenting with new ideas that have been successfully implemented in the for-profit sector. Whereas most nonprofit board chairs are independent directors (not part of management) and can be legally described as non-executive board chairs, some for-profits have two executive leaders: a board chair with management responsibilities and an elected independent “lead director.” The lead director is responsible for helping to focus the board on strategic planning and is empowered to call meetings of independent directors without the presence of management.