Standing Beside Alaska's Non-Profits

Board Member, Staff Member; Is That a Question?

Alaska’s nonprofit sector is facing an issue nonprofits are facing throughout the nation, only here it’s on an extreme scale: where will we find sufficient leadership for the future? It is becoming harder for boards to find the right candidates for key professional positions. Not only are boards spending more time recruiting the right CEO, they have also become more aggressive in their recruitment of other key positions such as Development Director and Finance Director. It is not just the nonprofit sector experiencing this concern. The health sector reports not being able to recruit new nurses and doctors, and the service and commercial sectors spend as much or more time in recruitment and training of new employees due to turnover as they do in any other activity. Human resources management is by far the biggest line item in every sector’s budget.

However, the nonprofit sector has one unique aspect to manage in finding leaders that other sectors do not: even with new undergraduate and graduate degrees in nonprofit management, most nonprofit leadership positions do not require specific credentials. Therefore, many people think they are qualified to take on key jobs. Unfortunately most of those well meaning people minimize the skills needed to lead a successful nonprofit. So the problem exists that too many people without the right skill set are applying for nonprofit leadership positions, and learn too late that running a nonprofit is more complex than they first thought. There is one group of potential applicants in particular that seem to be seeking CEO positions in increasing numbers: nonprofit board members.

Some boards assume that because someone serves on a board, supports the mission, and has contacts and experience in the community, that person is qualified to become a nonprofit CEO. While there are examples where this strategy worked, boards should become more cautious with this solution, especially as a permanent solution. Both parties need to be aware of the potential issues that could arise. While there is no legal restriction keeping a nonprofit CEO from serving on his or her board, nor from switching roles, it has never been the sector’s practice primarily because of potential conflicts of interest and ethical dilemmas that inevitability arise in the organization.

In Alaska, many nonprofits hire former board members to serve as CEO. The reason this seems to be a growing practice is the difficulty in finding qualified candidates for CEO positions. Therefore, more board members feel the urge to cross over to staff leadership. Most of these board members do “the right thing” and resign from the board when they become candidates; and while that gesture shows sensitivity to their need to relinquish a fiduciary role in order to avoid conflicts of interest, conflict alone does not address another equally significant problem. We have interviewed many current and past nonprofit CEOs who switched roles and most acknowledge that it was very difficult to serve in the governance role one day, and the next to become a staff member. This difficulty is due to the boundary confusion and isolation that inevitably occurs. This role change requires immediate redevelopment of relationships with the board and with the other staff.

Many people reading this article know of people that have considered switching these roles. We could also name examples of how a board member became a CEO and it worked, maybe even worked well. For example, George Hieronymus (the current COO at Foraker Group) left the board at Bean’s Café and became its successful CEO.There are other examples for sure. But in our reflection, chances are we could name many more situations where this reversal did not work and caused major problems for the organization and/or the new CEO. These failures occur because of the board’s or its former member’s (now CEO’s) ability to handle the boundary confusion that occurs after such a transition. It is difficult for the new CEO to be candid with the board about the true efforts it takes to be a successful CEO and/or the now apparent condition of the internal workings of the nonprofit.

Since it seems inevitable that we will continue to have board members applying for CEO positions, we can at least become conscious of the boundary confusion that will occur and watch for signs of potential dysfunctions that can result as a consequence. Some of the signs would include:

  • The new CEO makes too many unilateral decisions, not sufficiently involving the board in key decisions;
  • The new CEO does not engage and appreciate the board’s contributions;
  • Some of the strong, long-term, capable members on the board begin to resign or become disengaged;
  • Attendance at board meetings begins to falter;
  • The board delegates too much autonomy to the new CEO (he/she is one of us);
  • The new CEO seems to be more concerned about personal gain, rather than organizational success;
  • The board expects a “quick fix” for any internal problems;
  • The CEO feels isolated and does not know who to confide in with questions or concerns;
  • Long-standing partnerships with other providers or funders begins to wane; or
  • Tension between the new CEO and the board or staff amplifies.

All of these signs are real examples that have occurred when a board member switched roles and The Foraker Group was asked to help. While these symptoms could occur with any CEO transition, we would suggest that it is far more likely when the boundaries between board and staff are broken. Another significant reason the board to staff strategy can fail was outlined in the Foraker CEO’s article titled “Managing the Board and CEO Relationship ” (December 2006). It states that while the business functions of running a nonprofit — including finance, human resources, and information technology — may be better managed by someone with significant business experience, the problem identified in research that causes the largest problem in nonprofits is that most CEOs and boards have difficulty in managing their relationship with each other.

Recent research clearly shows that most boards are not satisfied with their CEO’s relationship and support of them; and most nonprofit CEOs resign because of lack of support from their board. While these issues are prevalent in all nonprofits, they are often amplified in organizations where role boundaries have been broken. Some boards look for months to find the right person and when all else fails, someone on the board steps up to the plate and volunteers to help out “for a while.” Those board members are most likely assuming the CEO position for the right reason: to help the organization, not themselves, succeed. They volunteer because no one else is willing to make the sacrifice. However, when board members want to apply for their own personal advancement, a real conflict is already apparent.

People should serve on boards from a commitment to the organization’s mission and success, not their own success. The IRS is scrutinizing nonprofits more than ever to ensure that individuals, board and staff, involved with nonprofits are there for the public’s good, not just their own good. Therefore, if individuals could envision themselves benefiting professionally as a potential professional leader with a nonprofit while they are serving on the board, they should agree to a one or two year sabbatical from the organization before seeking such employment. Such a “vacation” would help with the inevitable boundary confusion. Many nonprofits already have a policy in place that states that any staff or board member wishing to “switch roles,” must be off the staff or the board at least 1-2 years before serving in the other role. The Foraker Group would suggest that such a policy is a best practice.

We would not want opinions such as this to become dogma for the sector since every situation is different and should be evaluated on its own merit. However, we would encourage individuals who seek future employment in the nonprofit sector to not underestimate the complexity of these jobs. If someone wants to become a nonprofit staff leader, they should learn the necessary business skills, but most important, they need to learn the hardest part of the job for most: sharing power with a volunteer board. This social skill is the most difficult for most new CEOs (especially former board member/CEOs) to learn and practice.

We would also encourage nonprofit boards to be aware that while someone performs well on the board or in a private or social sector job, it is often difficult to successfully transplant those skills into the nonprofit sector. Some of the nonprofit sector’s strongest leaders did get here that way, but they would be the first to reinforce the reality that they had to learn many new skills in order to succeed. We need new, emerging leaders for the nonprofit sector in Alaska, but successful nonprofit leadership is not an easy job and should never be underestimated, especially by board members that want to make a transition and work for an organization where they once served on the board.