Fertile Ground — Boards that Work
People join boards initially and eventually secure leadership roles for any number of reasons. The traditional adage, “if you can’t stand the heat, get out of the kitchen” tends to typify public, non-governmental organizations. Unfortunately, recent failures and scandals, e.g., Hurricane Katrina, United Way, Enron, etc., have elevated the pressure, national outrage, and scrutiny of boards, both for-profit and nonprofit. Albeit these issues garner mass attention, they center on performance, expectations, and evaluation of those in charge — namely directors. They’re now being actively debated from the boardroom to 1600 Pennsylvania Avenue. Yet people remain passionate and eager to share their time, expertise, and skills with these volatile nonprofit organizations without pay. Why?
First, and maybe not so obvious, nonprofits are primarily local, community, and service-based organizations but publicly-accountable to a board of directors. Hence, their sphere of influence originates locally. Yet their impact is broadly felt and closely monitored by many. Second, these organizations offer countless opportunities to exhibit one’s expertise, which may be undervalued on one’s “day job.” Third, since volunteering has intrinsic values, understanding Maslow’s hierarchy of needs and a person’s drive for self-actualization are also intervening factors. Fourth, membership provides opportunities to pilot test and hone valuable multi-tasking skills, perhaps untapped at work. Last, local communities throughout the United States have loads of talented, busy people eager and willing to serve, if simply asked.
“Choose a job you love, and you will never have to work a day in your life.”
Believe it or not, neither boards nor directors are gurus. This principal applies to athletes, business leaders, politicians, pastors, stock brokers, and the like. Indeed, most are everyday people who chose to make a difference by serving others. Tragically, the public has been allowed to place boards too high on the food chain even though they have the right, as beneficiaries, to expect nonprofits to operate ethically. Think of driving a car with bad plugs and a dirty air filter and expecting it to run forever. Clearly, if not replaced, the vehicle eventually sputters and dies. Boards are no different than vehicles; they must be maintained to thrive.
Typically driven by a mission, case, and cause, a nonprofit organization is formed and approved, now the real work begins. Boards must now take full responsibility for leading and ensuring successful operations. That means they have a “fiduciary responsibility” by statute to provide prudent leadership and enterprise management.
The Board Source (Washington, DC) cites several of those core responsibilities: defining a mission and purpose for the nonprofit; hiring/evaluating the CEO/ED; ensuring effective organizational planning, resources, and sustainability; managing those resources; monitoring and strengthening programs; enhancing the nonprofit’s image; maintaining ethical/legal standing; and recruiting, orientating, and training new board members. Serving on a board of directors that lacks these skills is troublesome.
Organizations lacking a core mission, vision, and values and prudent management techniques are much more likely to fail. Moreover, the board is responsible for establishing, maintaining, and monitoring its mission and preparing others for service. A critical challenge for contemporary boards will be finding ways to beef-up, improve, and prepare younger middle managers to fill key leadership roles within the organization.
Ask yourself: “how many nonprofits have this mission in writing?” Next, make time to visit an agency you’re interested in before jumping in head first, and then informally ask each director or staff member to cite, from memory, the mission without looking it up. Don’t be surprised if they fail this defining litmus test.
Many American organizations, including nonprofits, are striving to lure new talent by promoting their culture, diversity, ethics, and opportunities for career growth. Demographically, some less-endowed agencies are desperately trying to achieve parity by back-filling vacancies left open by an aging workforce of retiring baby-boomers.
A better strategic strategy for nonprofits seeking to add expertise and value lies in attracting directors based on expertise, political savvy, skills, and access to resources. Granted, wooing them with smoke and mirrors may produce quick results — but remember: boards are mandated by law to respond to community issues, needs, and problems, not put a familiar face on them.
Obviously, directors themselves profit from joining a nonprofit organization. First, boards give directors unlimited freedom to build, form, propose, and sustain their programs. Second, this group of talent professionals can create interpersonal, networking, and political training that yields lifetime benefits beyond the boardroom. Third, by adding new members, the body grows intellectually and operationally to better serve local ills. This fills a real void left by governmental agencies and self-serving private enterprise.
Knitted altogether — boards, directors, staff, clients, funders, and local stakeholders — all benefit from healthy local/state/national nonprofit organizations.
How Are Directors Evaluated?
Sadly, numerous nonprofits have absolutely no system of evaluating directors, except for the occasional absenteeism policy hidden within its bylaws or a proposal at a regular meeting to terminate a dissonant director. Engaging in ongoing self-evaluations is critical for measuring the overall effectiveness of both the organization and its directors. Operationally, it’s no different than being evaluated on the job, except many nonprofits lack standardization of training, forms, and processes.
For example, it starts with an initial interview, orientation, and offer to become a director. Accordingly, the person is recommended to the board, accepted, and begins tenure. Each director receives a handbook, job description, list of colleagues, and schedule of regular meetings. Contained within this handbook is the history of the nonprofit, lists of programs and services, periodic evaluations, and a process for exit interviews once a board member leaves.
Some agencies now use a 360-degree method of evaluation. They try to include all key stakeholders — staff, customers, etc. — in the overall process. Although inclusion is useful, it may be less efficient and expose glitches in the fabric of the agency if built on shaky ground. Clearly, this can lead to negative press and hostility in and outside of the boardroom. Thus, internal board evaluations must be perfected and agreed on before including public scrutiny. Regardless of choice, some formal method of evaluating directors is vital to overall organizational health and success.
When Do I know It’s Time to Leave?
Succession planning is crucial. Board chairs, presidents, executive committees, and community stakeholders alike should be actively engaged is this process. Arguably, each should have their say, not necessarily their way in this process. Generally, becoming a director is not analogous to being appointed to the Supreme Court; it’s not a lifetime gig, nor should it be.
Consider this: most Fortune 500® companies visit top colleges and universities annually to recruit new employees. Ever wonder why? It’s because they are keenly aware that self-investments eventually yield benefits company wide, including a larger market share, fertile ideas, intellectual growth, and, yes, profit. Nonprofit boards essentially compete for talent in a global marketplace which includes for-profit enterprises. Hence, the infusion of new talent can be contagious for an organization akin to banks and blood in our bodies — when it stops moving, you’re dead.
Procedurally, applications, contracts, evaluations and, in some cases, sabbaticals, are all useful tools in determining when a director should go. Additionally, amending bylaws and terms of board service can offer valuable aids for boards attempting to evaluate, or remove under performing directors. Boards prefer having directors resign instead of firing them. This leaves less of a stigma over the organization. Some options to termination include:
- Voluntary resignations, rotating terms/limits, and “without cause” contracts
- Honoring selected seasoned directors at the annual meeting/dinner, then allowing them to voluntarily announce their future plans
- Assigning directors to chair periodic special board-directed projects to be evaluated by the full board
- Establishing a “board member emeritus” program that honors several years of service, yet eliminates his or her vote
- Actively soliciting sponsors to contribute perks, such as country club or golf memberships, to recognize superior service to the board and community
Here, the goal is twofold:
- To prepare directors for service and hold them accountable for their collective actions
- Creating ongoing board vacancies by announcing the appointment is not in perpetuity — simply put: “you are now free to restructure the body”
Conclusions and Recommendations
To summarize, below are seven “tune up” strategies for creating boards that work:
- Seek directors that are knowledgeable and busy — don’t settle for neighbors, colleagues, or immediate family members.
- Establish firm expectations for new and seasoned directors — use interviews, orientations, covenants or contracts, evaluations, and exit strategies for obsolescent directors.
- Require directors to contribute to the organization with their time, expertise, and money. No matter how nominal, this ensures buy-in.
- Equip each director with a board manual that includes mission, history, programs, services, funding, expectations, and evaluation procedures.
- Create monetary and non-monetary perks for directors that are supported by donations from local merchants, businesses, and corporations.
- Engage, invest, and require directors to attend seminars, retreats, and training while serving, including, but not limited to: fiduciary/legal responsibilities, director roles, scope and level of service, marketing, and stakeholder expectations.
- Devise ongoing opportunities to “celebrate” directors.
Bottom line: boards are not constructed by magic, sorcery, or voodoo — they result in normal people choosing to take pensive responsibility for their collective “work.”
Ronald Arrington, MBA, MPA, CTC is a practicing consultant, trainer, and coach. His unique triad (BLT) approach for ensuring organizational health is achieved by improving processes — namely boards, leaders, and pivotal management teams. For three decades, his clients have encompassed an array of public, private, education, and faith-based organizations. Comments and inquiries are welcome at: firstname.lastname@example.org or P.O. Box 580026, Modesto (Central), California 95358.