Nonprofit CEO-Board Relationships

Nonprofit Organization Mergers: What to Do.

Nonprofit Organization Mergers: What to Do.

By Eugene Fram

A Fast Company article by Alice Korngold about nonprofit mergers lists seven steps for a successful nonprofit merger. * Korngold used these steps to describe nonprofit merger activity with which she had been involved.

In October 1998, Family Service America (FSA) merged with the National Associations of Homes and Services to Children (NAHSC) to form the Alliance for Children & Families. I chaired the FSA investigating committee in the merger process and later served as co-chair of the Alliance board during a two-year transition period. This article adds another experience example to the model described by Alice Korngold. (more…)

Attn: Nonprofit Directors, Trustees & Mangers – New Reviews of “Policy vs. Paper Clips: Applying the Corporate Model to Nonprofit Boards”

Positive reviews continue to arrive for my recently updated & expanded nonprofit governance book. Click on this link for a story about the book.
Policy vs. Paper Clips See the latest reviews below.

Must Read for Nonprofit Boards, December 9, 2012
By: Casey Wheeler

This review is from: POLICY vs. PAPER CLIPS – THIRD EDITION: How Using the Corporate Model Makes a Nonprofit Board More Efficient & Effective (Paperback)
This book was an informative and entertaining read. The author uses the techniques of a series of emails between two individuals to explain how using the corporate model for nonprofit boards is beneficial to the organization. The exchange of emails takes the reader through the process from needs assessment to implementation.

What I enjoyed most about the book is that it was written so that the concepts are easily understood through the question and answers presented in each set of emails. In addition, the concept has been successfully implemented in a number of nonprofits around the country that are mentioned in the introductory section of the book and examples in the emails exchanges.

At the end of the book an additional series of questions and answers with suggestions on how to successfully implement the corporate model. An added benefit is that a Leader’s Guide is available for use to facilitate a discussion of the corporate model process.

I must admit that nonprofits that are totally volunteer operated or with a limited staff may find the overall process unachievable, but there are many useful ideas within the email exchanges from which small organizations can benefit.

I strongly recommend this book to any nonprofit CEOs or Board Members who feel that too much time is spent on operational issues and not enough spent on planning and policy.
Help other customers find the most helpful reviews

Fram Nails It! November 16,2012
By Philip G. Bookman (Los Gatos, CA)

This review is from: POLICY vs. PAPER CLIPS – THIRD EDITION: How Using the Corporate Model Makes a Nonprofit Board More Efficient & Effective (Paperback)
When I joined the not-for-profit board that I now have the honor of chairing, I struggled with how to apply my business experience to a non-profit. I was often heard saying, in frustration, “We should be discussing policy and strategy, not counting paper clips!” Then I came across this book with a title that I obviously could not resist, and found that Fram has formalized what I was struggling to figure out. And his approach works.

As with any model, you need to pick and choose which parts of it your organization needs to adopt, and in what order. But he sure gets you to think about the important things the board needs to address. This is a must read for any non-profit board leader who wants to make the organization more effective in meeting community needs.

A Little Book that Yields Big Results, November 18,2012
By: A. Hopf (Geneseo, New York United States)

This review is from: POLICY vs. PAPER CLIPS – THIRD EDITION: How Using the Corporate Model Makes a Nonprofit Board More Efficient & Effective (Paperback)
Our Board applied the principles in Policy Vs. Paper Clips after the first edition came out many years ago. We were fortunate to have the author himself consult with us. I can unequivocally state that the Corporate model spelled out in this book works and is responsible for the incredible growth and success my not for profit has experienced over the last 15 years. More importantly the Board members love it because they are engaged at a strategic level that allows them to use their brains and contribute in a meaningful way. Every not for profit CEO and Board member should read this book regardless of size or scope of the organization. Its how Boards need to work in the 21st century.

Nonprofits: To Which Group Do You Belong – The 5% Having Successful Strategies or the 70% Who Do Not?

Nonprofits: To Which Group Do You Belong – The 5% Having Successful Strategies or the 70% Who Do Not?

By: Eugene Fram

According to a recent Deloitte report, two Harvard Professors issued a recent study* that highlighted the above statistics, also showing the remaining 25% having “middling success.”
I recently attended a presentation by Cynthia Montgomery, also a Harvard strategy professor. Following are some major strategy guidelines she presented, with examples mainly relating to the business community, and how I see them applying to nonprofit and trustee boards. (more…)

Designating a ‘Lead Director’ Can Help Nonprofit Boards Improve Their Operations

For several years, I have suggested that some NFP boards experiment with the addition of a Lead Director to their rosters, just as for-profit boards successfully have since 2002.  This blog is divided into two sections.  First is an abstract of an article published I published on  the topic in the Chronicle of Philanthropy (June 2, 2011, p.34). This will help the viewer understand how I am adapting a business board process to a nonprofit board   Following that is a field critique of my proposal provided by Mark Soundie.   Mark is uniquely qualified to comment. He provides counsel to boards for the following types of nonprofits:  social housing providers, voluntary & social enterprise organizations from all sectors and all sizes & types of charities,  His essay below  provides an excellent summary of the pros and cons. Also, I have noted from a current study that about 37% of a small subgroup of 420 nonprofit directors responding to an NACD study have designated directors on their nonprofit boards. In addition, 88% of the group concluded that their lead directors enhanced board effectiveness.* These nascent results are encouraging news. Finally, a link follows to a comprehensive article on lead directors that appeared in April, 2012 in The International Journal of Not-For-Profit Law, Vol.14, Numbers 1-2.pages 52-57.
Lead director article: bit.ly/15s4eVv

At this point, April 2013, there has been little field interest in my proposal.  If some NFP boards are interested in conducting a trial or experiment with the idea, I would be  delighted to be in contact. Please send me an e-mail at frameugene@gmail.com . 

ABSTRACT

Few nonprofit boards do a great job of overseeing their organizations. Both nonprofit board members and CEO’s share that concern: Asked to rank their performance with academic-style grades by the nonprofit group BoardSource, chief executives gave their boards a C+, while board members gave themselves a B. <!–more–>

The use of such directors became popular as a way to deal with the public concern about the business world that prompted passage of the Sarbanes-­Oxley law in 2002. That legislation spurred the New York Stock Exchange to enshrine the idea of lead directors as a way to show that a company was well governed.

Given how time consuming it is to serve as a nonprofit board chair, especially of a complicated organization like a university or hospital, it seems logical to empower another volunteer to formally fulfill some of the responsibilities expected of a board chair.

A lead director can assist the chair in the day-to-day needs of leading a board (while not micromanaging) and to assist in rehabilitating a dysfunctional board. This is especially important when the chair has little management or board experience. (Example: a concert pianist chairs a social-services board.)

At first glance, adding a lead director to the structure of a nonprofit board seems like formalizing a position in a way that could impede the relationship among the chair, the CEO, and other board members.

The lead director should be viewed as just the opposite, as the business world has demonstrated.  H/she can help the CEO work more effectively and efficiently with board committees, especially in driving the work of the strategic-planning groups.

What’s more, the lead director can be an additional consultant or mentor to the CEO, especially when the board chair is unavailable. Because the lead director would help the board run better, this move could also do much to build morale at nonprofit groups.

CRITIQUE FROM MARK SOUNDIE

I think this is a great concept and the introduction of a Lead Director into most non-profits could make a huge difference.

These are my thoughts;

The role of Lead Director as outlined is a real departure from the established governance model that NFP organizations have worked to since their inception. The successful implementation of this new model would be a real challenge to many organizations that may see this as a criticism of their performance.

This is a multi-skilled and multifaceted position that most would find daunting (more than most are prepared to do). To support prospective Lead Directors there would have to be a specific and quite intense training programme (although I hate to use qualifications in respect of board members in the NFP sector this role could call for this level of commitment and validation). I believe that the title (Lead Director) is unhelpful in the NFP arena due to the connotation that a board member has a higher role than others and is a possible barrier to organizations looking at this model. I will continue to use the title in my response, but strongly recommend a change of title (still with director in it).

The relationship with the Chair and other board members needs a Lead Director to have great people skills, otherwise there is a danger of a “Big Brother” feeling developing. There also needs to be clear lines of demarcation between this role and that of others such as Company Secretary. I feel that as each of the identified roles in your article are developed for the NFP sector; they are built into a framework document for Lead Directors that contains a set of guidance documents, good practice examples and reference points. I see a real need for flexibility of approach within a strong framework as an essential factor in the successful delivery of Lead Directors.

To ensure continuity of role and delivery a Lead Director may have to be appointed in the same way that a Company Secretary can be and not subject to Board rotation/renewal in the same way as other board members. The role would then have to be written into the rules/constitution of the organization

To ensure quality and standards for Lead Directors an assessment criteria would have to be developed (probably internal and external validation).  Some sort of organisation/resource for Lead Directors would be needed to provide information, advice, training and networking opportunities. [Note: For-profit boards in the U.S. have a group of lead directors, from Fortune 500 companies, which meet several times a year.  Their suggestions are published in [Lead Director Network–Tapestry-Network — See Google]

There is a challenge in trying to sell this to a sector that does not have a great deal of confidence in its boards. The NFP sector sometimes need a proven model before they will adopt new thinking, this could be delivered through a pilot programme either delivered through academic means or by attracting funding or private sector support, this would probably take three years to design, implement, trial and evaluate. If the value of having a Lead Director can be established and then championed by those in the pilot, the sector is far more likely to adopt this.

Unfortunately some CEO’s are happy to have a weak board that does not challenge them too much, and this role could be perceived as a real threat by them (resistance from organisations in most need)

It is a shame that non-profits have not as yet seen the benefit of this but as with all new ideas a level of marketing/promotion is needed before people begin to see the possible advantages.

Mark Soundie, Governance Matters UK & Independent Community, Housing & Tenant Advisor

* NACD Nonprofit Governance Survey, 2012 – 2013, pp.10-11

The truth is that ALL nonprofits are actually businesses. And–they need to.be run like a business.

Sylvia Helper of Launching Lives commented to one of my recent blogs tilted : “What’s in a Name? Benefits of the Nonprofit President/CEO Title”    

“While this irritates and offends many nonprofit senior staff, the truth is that ALL nonprofits are actually businesses. And–they need to.be run like a business.”

Sylvia: I strongly agree with your statement. Too many board and staff members in the nonprofit environment ……

Do not realize that a nonprofit can focus even more effectively on “caring” missions, visions and values while operating under a business model.

Mistakenly conclude that using business titles (such as CEO) appears more prestigious than is merited. This mistaken attitude persists in organizations with well over 15 employees and budgets well over $1 million!

Associate business boards with financial disasters such as Enron and Tyco, while failing to perceive the business board model’s benefits, such as having only a few standing board committees.

Fail to appreciate  that today’s nonprofit managers must have the tools of professional executives to lead their organizations towards accomplishment.

Choose to continue to implement the 20th century governance practices in which staff members, often without the requisite managerial expertise, are promoted to chief executive positions.  A few succeed by growing into the job but  most continue on to do little more than “mind the store.” Truly, this can result in a significant waste of board and staff resources.

After many years of participating in nonprofit activities as a volunteer director, consultant and author, I recognized how the adaptation of a business model will positively impact the governance of a nonprofit. This prompted me to write “Policy vs. Paper Clips” which, based on sales of the first two editions, has influenced thousands of nonprofits to convert their governing structure to the model described in the book. The third updated and expanded edition was published in 2011 http://amzn.to/eu7nQl     .

My blog site http://bit.ly/yfRZpz  now contains over 100 blogs on nonprofit governance.

In summary, many nonprofit boards, managers and staff figuratively stand ten feet tall for what they accomplish.  They deserve to have the better aspects of business boards and business venues to do their jobs. 

 

What’s In a Name? Benefits Of The Nonprofit President/CEO Title

What’s In a Name? Benefits Of The Nonprofit President/CEO Title

Note: This article has received constant attention since being published

in May 2010 by The Alliance for Children & Families.

I am reissuing it here in the event some new readers might have missed it.

Best wishes to my U.S. viewers for a happy and healthy Thanksgiving holiday.

What’s in a Name? Benefits of the President/CEO Title

BY EUGENE FRAM

Over the last 100 years, senior managers of nonprofits typically have held the executive director title. For about the last 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 recent study reports that only 22 percent of trade association chief staff officers hold the president/CEO title. For professional societies, the proportion is only 9 percent.1 Many chief staff officers in larger faith-based human service and health-related organizations still hold the executive director title. Even the senior manager of Carnegie Hall in New York City still carries the executive director title.

A wide range of nonprofits use the executive director title: churches, human service agencies, trade associations, and medical facilities. An executive director can be 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 serve to: <–more–>

    1. demean the significant contributions of many executive directors in the eyes of some important audiences, and
    2. minimize audience perceptions of the contributions of their organizations.

The Executive Director in Nonprofit Organizations

Nonprofit senior managers are called, “executive director instead of chief executive officer in order to avoid the business connotation which the latter name evokes. … It also distinguishes them from … members of the (volunteer) board of directors from non-executive directors who are not actively involved in running the corporation.”2

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 for the continued use of the executive director title argue that use of the title is empirical evidence of board involvement in the activities of the organization. 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 and assures the 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, business organizations began to add the title of CEO to the title of either their president position or board chair position.3 The objective was to clearly designate which of the two had final operational authority, except for those actions which are 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.

Share your thoughts. Choose the appropriate survey from below. Surveys are quick, and responses are anonymous.

About 1980, nonprofit organizations began to mirror business organizations managerially. Many developed marketing departments, installed complex information technology, and a few even hired experienced business executives to head their organizations. The older philosophy, listed above, of “avoiding the businesses connection” was quickly being eroded. Today, specialized programs operated by many associations prepare aspiring nonprofit executives to advance through managerial positions to presidential positions.

Nonprofit boards, after 1980, when hiring new senior managers, offered titles of president/CEO4 and made bylaw provisions for other persons in the senior management teams to become vice presidents.
Nonprofit board chairs can do their job well without final CEO operating authority. Traditionally, chairs are volunteer personnel who should focus board activities on strategic issues not operational concerns. Some president/CEOs even became voting members of their boards, if permitted by their state laws. It was not 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 evidently has slowed the change process.

Nearly three decades have passed since the early adopters made the first changes. Yet, as indicated before, there are still thousands of complex nonprofits operationally headed by managers holding the executive director title, although these persons may have robust and complex operational duties.

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

  1. the organization’s internal and external perceptions,
  2. its culture, and
  3. its financial growth.

Perceptions of the Organization

There appears to be little public understanding of the robust responsibilities of an executive director of larger nonprofits, although a board may have delegated him or her full operational authority. Most persons holding the title can relate stories of how frequently they have had to describe their jobs to persons not familiar with nonprofits. On the other hand, a substantial portion of the population recognizes that a person holding the title of president/CEO is the head of the organization with substantial authority to lead its employees and to direct operations. (Nonprofit senior managers are not the only ones who face this issue. Persons in legal firms with titles of managing partner and those in financial organizations with titles of managing director also face the same title recognition challenges.)

Read the original article, which prompted Eugene Fram’s response.

A nonprofit operating head with a president/CEO title can more easily help focus on building the public brand image of the organization through his or her force of personality and the clear perception of who is leading the organization’s mission. She or he should be in the best position to staff the “bully pulpit” for the mission of the organization.

Staff discipline and morale may also be compromised when the executive director title is employed. In local or regionally based nonprofit groups, staff members often are personal friends of their board members. It is not unusual to have disaffected staff personnel directly complain to the board when they disagree with one or more of management’s operational or human resource decision.5 It can be hypothesized that some of these cases may have their roots in a lack of understanding of the role of the executive director and who has final operational authority in the organization.

Also, 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. Consequently, the president/CEO title enables him or her 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 the strength of an organization and the responsibilities of the person leading it.

Organization Culture

Organizations which make the title change quite 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 is hard to maintain a family environment as the number of employees grows. A new formality, brought about with the senior manger’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 his or her guidance, contact between the 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.

If managed properly, the change in top titles and the greater formality it can bring may raise some trust issues with older staff.6 However, 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.

Financial Growth

Some nonprofits take the position that fund development is the responsibility of the board, 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 behalf of the organization.

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 because the title conveys such an unspecified range of responsibility. It might, per se, even raise an unarticulated question in the minds of some donors as to why the person has not been given the title of president/CEO to clearly demonstrate his or her operating authority.

Summary and Final Thoughts

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.

END NOTES:

1. Mark Alcorn, “Evolving Titles for Association Executives,” Articles & Whitepapers, ASAE, September 2006.

2. See http://en.wikipedia.org/wiki/Executive_director. Non-executive directors are volunteers who mentor or advise an operating division within the nonprofit, such as the development office.

3. 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.

4. Eugene Fram, “Changing Expectations for Third Sector Executives,” Human Resource Management, Fall 1980, pp. 8-15. Eugene Fram with Vicki Brown, Policy vs. Paper Clips: Selling the corporate model to your nonprofit board, 1988. 1st edition, 1995, 2nd edition, Families International, Milwaukee, 3rd Edition Policy vs Paper Clips: How using the corporate model makes a nonprofit board more efficiency & effective, Create Space, March, 2011.

5. This action is often called an “end run” by nonprofit managers.

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

Eugene Fram, Ed.D, is professor emeritus at the E. Philip Saunders College of Business of the Rochester Institute of Technology. In 2008, Fram was awarded the university’s Presidential Medallion for Outstanding Service, and in 1997 he received Rochester Institute of Technology’s highest award for outstanding teaching. Recently (2011) an anonymous alumnus donated $3 million to establish the The Eugene Fram Endowed Chair in Critical Thinking.  Now semi-retired in California, Fram continues to add to his published list of more than 100 articles, is involved in for-profit and nonprofit consulting, and is frequently quoted in newspapers, magazines and blogs. Marketing, corporate governance, and nonprofit management are his major expertise areas. Well known in the Alliance community, Fram served on the board of Family Service America, which merged with the National Association of Homes and Services for Children in 1998 to form the Alliance for Children and Families. He was an active participant in the merger. After the merger, he served as co-chair of the first Alliance Board of Directors. He also served on the board of Families International, the parent organization of the Alliance.His book, Policy vs. Paper Clips,Third Edition (2011), has been used by thousands of nonprofits to model their board structures. Available on Amazon.com (http://amzn.to/eu7nQl).  His blog site on nonprofit governance  and management can be found at http://bit.ly/yfRZpz

Who is Primarily Accountable for Long Term Planning – Board or CEO?

Who is Primarily Accountable for Long Term Planning – Board or CEO?

By: Eugene Fram

THE QUESTION

 Can you further clarify whom you see as accountable for making what decisions in relation to the various aspects of corporate strategy creation and execution? If the board approves the CEO’s decisions do they not become board decisions? Where is the scope for the CEO to be accountable for making his or her own decisions?

MY ANSWER
“(My model)… promotes accountability. It requires the board and the CEO to work together to paint the big picture for the organization. It then holds the CEO accountable for implementing that vision. The (board’s) planning and resource committee (also) plays a major part in painting this picture by helping the organization and the CEO to look ahead to look to the future.” <!–more–>

Now for some details also found in “Policy vs. Paper Clips. *  (http://amzn.to/eu7nQl)

The CEO is asked, in addition to heading operations, to be looking ahead in the organization’s mission focused field. This is very important where the board is largely an eclectic group of volunteers. The CEO should be thinking about these issues 24/7 and bringing what S/he considers the important ones to the board’s planning and resource committee, from which the board has a process for selecting those that have potential for further study by a board-staff ad hoc committee or task force. Where the board is composed of field professionals, like the Associated Press, the CEO still has an obligation to be on the frontiers of field changes and opportunities, obviously very important to the AP.

* Board members from all backgrounds have an obligation to bring GENERATIVE, out-of-the-box, thinking to the board. Where this often falls short with nonprofit boards is that many attempt to acculturate directors to the culture of the organization, instead of being open to the person’s expertise and culture. For example, if a director has expertise in financial planning, nonprofits often will ask the director to be involved with immediate accounting issues, instead of expanding the organization’s financial outlook.

Many of these field insights are covered in my blog site, now numbering a selection of over 100 current blogs. http://bit.ly/yfRZpz

See previous blog:  Differences: Nonprofit Board Board Policy/Strategy Development vs. Management Operations

*PS: Recent Comment on the Model

Our Board applied the principles in Policy Vs. Paper Clips after the first edition came out many years ago. We were fortunate to have the author himself consult with us. I can unequivocally state that the Corporate model spelled out in this book works and is responsible for the incredible growth and success my not for profit has experienced over the last 15 years. More importantly the Board members love it because they are engaged at a strategic level that allows them to use their brains and contribute in a meaningful way. Every not for profit CEO and Board member should read this book regardless of size or scope of the organization. Its how Boards need to work in the 21st century.

Difference: Nonprofit Board Policy/Strategy Development vs. Managing Operations

Difference: Nonprofit Board Policy/Strategy Development vs. Managing Operations

By: Eugene Fram

Following is how I view the difference between the nonprofit board functions versus operations management functions. Based upon my governance model (see bottom of page), all of the responsibilities listed below are board functions. <!–more–>

A. DIRECTS MANAGEMENT
1. Establishes, in partnership with management, long-term organizational objectives
2. Sets overall policies affecting strategies designed to achieve objectives.
3. Employs the CEO.

B. JUDGES MANAGEMENT ACTIONS
1. Evaluates short-term and long-term management performance.
2. Determines whether policies/strategies are being carried out and goals achieved.

C. APPROVES MANAGEMENT ACTIONS
1. Critically reviews, approves, or disapproves proposals in policy areas (for example, major capital needs or expenditures and major contacts)
2. Provides formal recognition and acceptance of executive decisions when related to operational concerns.

D. ADVISES MANAGEMENT
1.Acts in an advisory consultative capacity, when sought by management.

E. RECEIVES INFORMATION FROM MANAGEMENT
1. Regularly receives reports on the organization (e.g., performance, program development, external factors, other challenges or concerns).

F. ACTS AS A PUBLIC AND COMMUNITY RELATIONS RESOURCE FOR MANAGEMENT.
1. Keeps the organization attuned to the external environment in which it operates.

G. FUNDRAISING PARTNERSHIP BETWEEN BOARD & CEO

1. CEO & staff act as “scouts” for fundraising opportunities.  Board members act as the “cavalry” to team with management,  to make generative proposals, to make formal proposals and to make needed interpersonal contacts.

For more detail on how this fits into my policy/strategy model, see: “Policy vs. Paper Clips,” Third Edition, (2011). Available on

Amazon.com: http://amzn.to/eu7nQl

My blog site: http://bit.ly/yfRZpz

Focusing the Nonprofit Board on Strategy – Same for For-Profit & Nonprofits?

Focusing the Nonprofit Board on Strategy – Same for For-Profit & Nonprofits?

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 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–>   

Dailey presents options as to how these situations can be corrected on for-profit board by seeking directors who have seven behavioral attributes.  Following is how I think the behavioral attribute mix can be applied to nonprofit boards to keeping strategic planning on the rails:  “Seven (attributes) standout as key differentiators of directors’ ability to shape strategy and long-range planning“ in both for-profit and nonprofit boards.

1.Curiosity –  “Curious thinkers explore far and wide, into areas that my have no obvious connection to the core” mission of the nonprofit.  For example, a banker may be on the board of a hospital, with no experience in health care issues, but a curious banker can contribute to the hospital by the ability to think about the hospital’s problems in broad terms.

2. Debate Skills –  “Directors who … engage in persuasive arguments with others, which serves to polish and clarify the thinking of all members of the board.”

3. Tolerance of Ambiguity – Some may perceive their way is the only right way. “  It is also difficulty for them to accept other ways.”

I have often observed these types of people are staff people  (such as lawyers, IT programmers and accountants) who have little management experiences and want to try to show a faux management expertise.   Because they hold significant staff positions in, but many have had only managerial responsibilities for one for two people, the nonprofit’s management, staff and other directors often accepts their recommendations with disastrous results.  Another opportunity is often missed by nonprofits in terms of culture.  These organizations often attempt to acculturate a new director to organization instead of allowing the director to bring his/her expertise to the organization.  For example, a person with financial strategy expertise is asked to overview a bookkeeping operation, instead of being asked to lead the board in developing a financial strategy.

4. Prudence –  “Rule-bound directors are strong in compliance and less comfortable in gray areas in which many board discussions may dwell upon.”

They may be what I call process people who consistently want to continually cross check everything. “Rule– lax directors… believe everything can be nuanced or ignored.”   For example, I was on a nonprofit board that made a major acquisition with only the approval of the executive committee and then asked the board for post hoc approval. The results were quite costly.  I resigned quickly after the acquisition with the usual excuse of having increased job responsibilities.

 5. Analytical Speed – “Analysis of facts, arguments and assumptions depend upon experience and perspective, but, most important, on cognitive processing cognitive ability. “  Nonprofits boards need more of this type of director but they are in short supply for for-profit and nonprofit boards.

6. Coaching –  “The transition from executive leadership to board service requires the emotional maturity to dial down personal competitive practices, (reduce the emotional desire to micromanage), and to dial-up interpersonal skills so directors may more successfully engage peers and senior mangers in (critical thinking, civil discourse), problem-solving or developmental conversations.”

7. WHO TAKES THE LEAD IN THE NONPROFIT WORLD?

“Board engagement is fine, but overall the consequences for (nonprofit boards like for-profit boards) are not all positive. “It is the job of the nominating committee to seek diverse (behaviorally based) candidates on “who we need” rather than “who is available” criteria.

 

 

 

Once Again: How to Keep a Nonprofit Board Informed.

Once Again: How to Keep a Nonprofit Board Informed.

By: Eugene Fram

At high-performing nonprofit boards, members of the board will rarely be invited by the CEO to participate in operational decisions. Yet the board still needs to know that is going on in operations.

The name of the game is for the CEO to communicate the important information to board members and to keep them informed of significant developments.  Still, there’s no need to clutter regular board meetings by reporting endless details about operations. <!–more–>

Probably the most effective way of keeping board members aware of what is going on within the organization is to have staff frequently make short presentations.  However, I have seen this approach used in dozens or nonprofit board meetings without success.  Two problems frequently occur.   First the staff person is so enthusiastic about an opportunity to talk with the board that the presentation time continues well beyond the allotted time, and, second, board members raise “micromanagement” level questions, which further extends the presentation session. To solve these problems, the board chair needs to suggest to detail seeking directors that the questions are very operational and can be answered “offline.” Second, the chief executive must meet with the staff person well ahead of the meeting and make sure that the material to be presented is succinct and the staff person is well aware of the time constraint. A “dress rehearsal” might even be appropriate for some staff personnel

Another technique is to use a consent agenda.  With a consent agenda, routine and previously agreed upon items are organized together in the pre-meeting agenda and then, hopefully, approved as a group.  If one or more board members questions an item in the group, it is placed on the agenda for the next board meeting. This process eliminates the time consuming effort of having a separate discussion for each item.

A third way is for the chief executive to meet with board members informally about every quarter. Occasionally, these meetings are with two directors at one time.  At these sessions, the chief executive can discuss the more “entrepreneurial or wild ideas” that might need testing and update them on operational decisions in greater detail.  Some of the meetings can happen quite informally, before or after a committee meeting or after a monthly board meeting. Some can occur at  appropriate social events. It is important to have the executive’s assistant keep track of the meetings and then to have authority to make new appointments to meet the quarterly schedule.  Obviously, the CEO would need to meet wit the board chair more often, and if the board is a national one meeting less frequently, a scheduled phone call is appropriate. One veteran CEO I know meets frequently with two board members. One is a long serving member, and the other is a newly appointed board member.

Source: “Policy vs. Paper Clips” Third Edition (2011).  Available on Amazon

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