Standing Beside Alaska's Non-Profits

Managing Board CEO Relationships

The traditional role of the nonprofit board was to establish and monitor policy as well as determine the strategic direction for the organization. For the past two decades, a third more challenging role has emerged — the result of research on effective governance in addition to a better understanding of organizational management. The new role is managing the relationship (partnering) with the nonprofit’s CEO.

Dr. Richard Chait proclaimed in his most recent research, “After analyzing data from 4,000 nonprofit boards across the country…effective governance by a board of trustees is a relatively rare and unnatural act.” Chait also determined “a lack of board support or ongoing internal board problems are the first or second reason why nonprofit CEOs are resigning in record numbers.” What is going on, and what can we do about it?

The Foraker Group’s theory on nonprofit sustainability includes four factors identified as crucial to organizational stability. These factors are:

  • Focus – a clear, succinct understanding of the organization’s origins and where it envisions itself going long term;
  • Collaboration – working well with other nonprofits in effective collaborations;
  • Unrestricted Dollars – dollars, primarily from earned income or individual charitable giving, that nonprofits can spend to carry out their mission(s); and
  • Human Capacity – both quality and quantity, and specifically staff/board partnerships that remain in balance, especially between the board and the CEO.

While a governing board is a legal requirement for the establishment of a nonprofit organization, and while the positive impact of volunteers for nonprofits cannot be denied, the fact is that most nonprofits cannot become sustainable without staff; and once a board adds staff, the board’s role changes forever. While boards should take every role seriously, we suggest that the new role of managing the relationship with the CEO has become the most complex, and if not addressed, will have the most severe impact on today’s nonprofits.

Several studies show that boards are increasingly unhappy with their CEOs, mainly because they perceive the CEO doesn’t value or trust them. It seems many nonprofit CEOs do not share power with their board. This could be described by nonprofit CEOs as the “beg forgiveness, not permission” tactic. Other CEOs only want their boards to raise funds. While volunteers, especially boards, do have the responsibility for fundraising, few are motivated to support an agency’s mission in that way alone.

Maybe one of the most disturbing trends in nonprofits is that CEOs increasingly see their boards as a nuisance, rather than an asset. There have been serious discussions by some nonprofit leaders on the relevance of boards in today’s fast moving world where reaching consensus takes so much time. All of these behaviors are discouraging people from serving on boards, at a time when we need them the most.

Not only are boards unhappy, but CEOs are also unhappy due to lack of respect from the board. Research shows nonprofit CEOs are leaving their jobs in record numbers. Boards engaged in executive searches have found it more and more difficult to find qualified candidates. CEOs are dissatisfied, according to research, because of poor relationships with their boards, specifically over four concerns:

  1. Disagreement over the agency’s mission;
  2. Disagreement over the core values for the organization;
  3. The board’s inability to adequately judge the success of the agency and the CEO;
  4. And finally, disagreement over who should do what – the board or staff.

In order to have a viable organization, it is imperative that we have active, engaged boards that understand their role and perform at capacity, as well as CEOs who are competent to address their mission, manage the organization and most important, understand how to manage their relationship with the board. Today’s nonprofit leaders – both boards and staff – need to reach a new level of relationship competence.

Trust is an essential part to any good relationship including that between the board and the CEO. Trust is built upon:

  • Shared values tied to those of its leadership and visa versa;
  • Clear expectations for both partners;
  • Transparent communications and decisions;
  • Mutual respect for intent and competence;
  • A learning environment;
  • Shared power; and,
  • Building on assets, not obsessing about problems.

In its board training series, The Foraker Group describes this board/staff partnership as “marriage-like” — one where assumptions are not made for each other, ongoing communication is the norm, and trust is paramount. We refer to the chapter on marriage in Kahlil Gibran’s book, The Prophet, where he uses the metaphor “for the pillars of the temple stand apart.” Partnerships require at least two “pillars,” standing side by side, not in a hierarchy, not too close nor too far apart, rather, they stand as equals, independent, sturdy, and strong in holding up their side of the “temple.”

So, who’s responsible for making this relationship successful? As in all partnerships, both partners are responsible, although those responsibilities vary. For example, the board’s obligation is to “speak as one” when managing the relationship with its CEO. Too often, difficulties arise when a few board members try to impose too much influence on the organization and the CEO. Boards must learn how to minimize this destructive behavior.

The board is a deliberative body and can only make decisions as a group. The best practice is that boards use a Board Development or Governance Committee to manage board behavior. Some tools to assist such committees include a written job description that clearly outlines the expectations for board members, signed annually to remind them of their duties, and their limits. Another is a recruitment matrix that assists the board in recruiting members strategically, maintaining an appropriate balance of skills, background and traits. Finally, boards must agree to manage their relationship with their CEO as a group, specifically designating one member to actually work with the CEO — usually the board chair.

That said, nonprofit CEOs must learn to better manage their relationship with the board. They should become more diligent in involving their boards in all key decisions. They should listen more attentively to their board’s advice, as well as do a better job of expressing their dependence on and appreciation for their board’s involvement. Daniel P. Forbes said, “The quality of board performance was the only thing that consistently showed up in the studies on what makes nonprofits effective;” not staff leadership. Staff leaders must find better ways of engaging boards. When staff changes its behavior with the board, the board behavior will also change. The result will be better, more sustainable organizations, and most important, more missions accomplished.

At a recent Foraker Group Operations Board meeting, some of the most respected nonprofit CEOs in Alaska were asked to describe their relationship with their boards. While some reported good relationships, too many felt they were not adequately supported by their board. Others voiced frustration at finding enough of the right members to serve. That may be at the root of this problem.

The most recent ISER study for The Foraker Group suggests Alaska now has over 6,000 active nonprofit organizations. In the future, we may see as many nonprofits fail because of ineffective governance due to under-trained, under-appreciated, under-utilized boards as we see going out of business due to a lack of diversified, unrestricted funding.

If we want a sustainable sector, we will need to work on this issue and not rely on fate to solve this problem. All human relationships are messy, unpredictable, and frustrating. However, as Margaret Wheatly states in Listening to Each Other, “in the end, none of our policies and procedures can be depended upon… all we can do is learn to depend on each other.”