Succession planning

More Than Passion Needed in Prospective Nonprofit Directors

(Free Digital Image)

More Than Passion Needed in Prospective Nonprofit Directors

By: Eugene Fram

What nonprofit selection committee would reject a candidate who demonstrates passion for the organization’s mission?   I can attest to the fact that in many recruitment processes, an interviewee who shows strong empathy for the cause is a “shoe-in” for the director position regardless of any obvious weakness in other skill areas. By contrast, one who appears ambivalent about the organization’s mission can be overlooked or even eliminated from the list. (more…)

The Search For a New Nonprofit CEO Needs To Be Realistic

The Search For a New Nonprofit CEO Needs To Be Realistic

By Eugene Fram in its October 11, 2012 issue carries an op-ed item by Nathan Bennett and Stephen Miles titled, “Is your Board About to Pick the Wrong CEO.” Although targeted to for-profit boards, all of the five items listed can be applied to nonprofit boards. Following are my applications to nonprofit boards. (more…)

Once Again! What Does Nonprofit Board Oversight Mean?

Once Again! What Does Nonprofit Board Oversight Mean?

By: Eugene Fram

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

Other Governance Actions

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

“Trust But Overview &Verify.”

A PS to Harvard Business Review Blog Post: Boards Can Be Terrible at Their Most Important Job:

A PS to Harvard Business Review Blog Post:
Boards Can Be Terrible at Their Most Important Job:

By: Eugene Fram

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

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

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

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

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

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

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

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…)

A Special Relationship: Nurturing the CEO-Board Chair Bond*

A Special Relationship: Nurturing the CEO-Board Chair Bond*

By Eugene Fram

Here are tips to assure the best possible partnership between the board chair and CEO.

Keeping boards focused on strategic issues is a major challenge for nonprofit leaders. One problem is that non- profit CEOs are leaving their jobs in droves, partly because they’re reaching retirement age and partly due to the increased stresses of the position. ** This leadership crisis is intensified by the fact that board chairs tend to have short terms (according to BoardSource, 83% stay in office only one or two years). Thus, nonprofit CEOs and board chairs need to bond quickly. For the good of the organization, they must come together swiftly and create a partnership that works. Here are golden rules for the CEO and board chair to follow: (more…)

When Will Nonprofit Boards Learn to Plan for Succession?

When Will Nonprofit Boards Learn to Plan for Succession?

By: Eugene Fram

The CEO has resigned with two weeks notice. Whatever the scenario, the pace of the organization will likely slow. Some senior managers may vie for the position or, in self-interest begin to look for new positions, as insurance. Staff members begin to speculate about the future of their department and their positions.

A search committee is cobbled together to explore possibilities for a replacement. According to a recent study, such turmoil is not unusual among nonprofits in transition periods. (more…)