So You Want to be a Nonprofit CEO?
Top Ten Steps for Finding and Keeping Effective Nonprofit Leadership
The Last Step – Building an Effective Partnership
Most people become a chief executive in a nonprofit through their passion for the organization’s mission and their competence in implementing it. No matter what you call the chief professional officer or CEO (“current employee on-top”) – executive director/general manager/executive secretary/president – that person frequently has little training in how to manage staff and even less training in finance and the other essential skills needed to run an effective organization. While these technical skills can be learned, the most critical skill is left to chance – forging successful relationships with the board.
A new nonprofit CEO once told me, “I would be doing better if I didn’t have to work with my board.” Unless we change the rules, eliminating your board is not an option. In addition, with increasing scrutiny on charitable governance, the role of the board will become more important, not less. Too often people enter the nonprofit sector ill-equipped to manage this complex relationship.
Research tells us that the breakdown of CEO-board relationships is the primary reason executives fail. Because of this, The Foraker Group looked for a way to describe this complex relationship so it could be more easily understood. Just saying we need a positive working relationship, or that the board governs and the CEO manages, did not seem to get the point across.
We experimented and finally began to describe the relationship as a “marriage-like” partnership. While obvious dissimilarities exist, we focus our discussion on the common factors that each partnership needs to succeed. Both involve the ability and commitment to work together, the requirement to respect and trust each other, to support each other, not to take each other for granted, to do his or her share, not make assumptions for each other, and finally to define and accept appropriate boundaries.
Nonprofit boards are tasked to speak with “one voice.” Therefore while any board member can access the CEO for routine inquires, when a board is managing a CEO, it should be done through one designated individual, usually the board’s chair. The CEO should develop relationships with each member of the board. However, when CEOs address management issues to the board, they should work through the chair in order to ensure effective communication to the entire board. While this solution sounds simple in principle, as anyone who has been in a long-term relationship knows, it’s not as easy to practice as it would seem.
It is important that nonprofit boards understand and do their job well. This will help keep a balanced relationship with the CEO. When boards rely too much on the CEO and staff to make sure everything operates smoothly, they run the risk of not taking their Duty of Care seriously. It is also important that boards not micro-manage their staff. In the middle of these two extremes is the right place for most boards to operate.
It is equally important that nonprofit CEOs care for and support their boards. While boards should manage themselves, only the CEO has the responsibility to help boards provide appropriate oversight. It is never appropriate for a nonprofit CEO to fall into the “beg for forgiveness” trap. Partnerships that work are as transparent as possible, and that occurs when there are no surprises on key issues.
One may ask, “What comes first, the chicken or the egg?” In the partnership between the board and the CEO, it matters less which one comes first as long as it comes. When we suggest that it’s really the board’s job or the CEOs job to make sure this relationship works, we have done a disservice to both. In one of my past careers I was privileged to provide marriage counseling. Often, when a couple came in, the one who instigated the intervention wanted the other to learn how to change. What the instigators quickly learned is that the easiest way to get their partners to change was to be willing to make the first change themselves.
We encourage all leaders in the nonprofit sector to accept the responsibility to make change in yourself, make sure that your role in the organization is done with as much discipline and goodwill as possible. If you have made a change and others around you are unwilling or unable to follow your lead, then it may be time for you to find an organization that will better meet your need to serve. That is after all why we all get involved as board or staff in the nonprofit world; we want to make a difference. Let’s not let negative relationships get in the way of our collective success.
This article is the last of a series on CEO success. To summarize the most important points from all of the previous articles, we present the Top Ten Steps for Finding and Keeping Effective Nonprofit Leadership:
- Boards should take the time needed to find the right person to lead the organization. Too often boards rush to find the first warm body. If you think hiring a good person is hard, firing an executive mistake is much harder.
- Boards should use professional help to search for and check references of candidates. Too often boards rely on “volunteer” knowledge to find the right person. Boards have a much harder time holding each other responsible for the advice they give as volunteers. A CEO search is a high-risk venture and someone needs to be accountable.
- Boards should recruit who they think would be the best candidate and not wait for the right person to respond to a posted job opening. The best candidate for your new CEO may be very happy where they are and are not even looking at potential job openings. Too often, the people that respond to posted openings are people who may not be satisfied or performing in their current job and are looking for options that may not be in the new organization’s best interest. Boards should identify the characteristics they want in the new CEO and brainstorm the names of people they know that may be able to meet those characteristics; then call those individuals to see if they may be interested in the position. Professional executive search firms use this tactic as one of their most productive methods to provide clients with viable candidates for new positions.
- Boards should always have external candidates for an open CEO position. It is hard for people to succeed when moving from one position to another — this includes moving someone from a senior staff position into the CEO’s seat as well as having an acting board member resign from the board in order to be a candidate for the CEO’s seat. If an internal candidate gets the job and the board did not even consider an outside candidate, some members of the board will be less tolerant of the support the internal candidate will need to succeed. This strategy helps reduce “buyer’s remorse.” We do not believe that changing roles is bad, or that it will not work — we stress that it is hard to succeed when changing roles. When the board promotes from within, or employs an ex-board member as the CEO, the board should take extra care to ensure the role change is a success.
- Develop a CEO transition plan. As soon as a board hires a CEO, the first task should be to plan for both an unexpected CEO transition (illness, death, new job, etc.). The second task is to plan for the transition that can be predicted by the CEO and/or the board. This planning should be done at least six months before the departure to assure stability for the organization.
- Evaluate the CEO at least once a year using a performance-based contract with specific expectations, weighted for priority, and based on the organization’s strategic plan. All employees should have regular and meaningful evaluation. Successful relationships encourage open communication.
- Boards govern, staff operates. While this point is obvious, it is important that boards understand that governance means establishing and enforcing policy for the organization, as well as setting strategic direction with clear, agreed upon outcomes. Staff should make the day-to-day decisions on how the board’s policies and direction are implemented. The board should periodically review and evaluate the staff’s capacity to carry out policies and direction.
- Boards hire and manage the CEO. The CEO hires and manages the staff. With new guidelines concerning governance, more boards also have direct relationship with the CFO. We support boards having increased access to all financial information, but even with this new trend, the CEO is still responsible for the day-to-day management of all staff. When board members manage staff, they have clearly broken a boundary that should not be broken.
- Boards should appoint one individual to manage the CEO. All members of the board should address any management issues through that individual. Most boards ask the chair to assume this responsibility.
- CEOs should accept responsibility and go the extra mile to ensure a positive relationship with the board; boards should go the extra mile to ensure a positive relationship with the CEO. Some strategies to help with this relationship:
- A. The CEO and the board chair should communicate regularly, at least once a month in addition to regular board and committee meetings; more often when the relationship is new.
B. The board should meet in executive session, with no staff including the CEO, at each board meeting to discuss how to support and advise the CEO. The board’s designee should then transmit the consensus insights (one voice) of the board to the CEO.
C. Boards and the CEO should regularly negotiate appropriate boundaries.
D. Every board needs a Board Development Committee (Governance Committee) to manage the board. When CEOs try to manage boards, it diminishes appropriate boundaries. Boards manage the board, through such a committee; the CEO manages staff through the staff structure.
I hope you have found this series useful as you look for ways to enhance the board/CEO partnership in your organization. If you have other ideas, or would like to share your insights, please get in touch with us at The Foraker Group.