Supporting the nonprofit board in fulfilling its responsibilities and directing the successful fulfillment of its duties is, as I wrote last week, a significant executive function for the CEO. However, being able to act in various ways to help the board do what it is supposed to do effectively is going to be tempered by the quality and capability of the board. In this article, I will explore the CEO’s role in making sure that the directors who serve on the board possess the experience, education and skill needed to govern the organization – not only as it is currently constituted, but as the organization it aspires to be in the future.
Four Contexts for Board Development
Every nonprofit organization provides a historical and cultural context within which the board and staff must work together to keep the organization in alignment with the mission. I can think of four different starting points for this discussion about board composition which reflect different points in time and circumstance in the life of a board. I have been involved in examples of all four and will share some of my experience as I talk about the CEO’s role in building the board. The important thing to stress is the fact that boards evolve in the same way organizations evolve. Therefore, the kind of governance needed and the collective skill set of the directors should evolve as well to meet changing conditions.
The Mature Organization
The first, and most common, is that of a mature organization which has been in existence for a long time, in which one or more CEOs have preceded you and the board has well-established policies and practices. In accepting your current position, you have inherited a board that has its own history, capabilities and culture. The challenge facing the CEO comes from having to assist the board in assessing its strengths and weakness and its ability to adapt to meet future governance requirements. The dynamic in this situation runs in two directions. The board hired you presumably because you “fit” the profile of what they were looking for in a CEO. At the same time, you have to view the board in terms of its ability to support you and the mission of the organization as it faces its future.
I was hired by a strong and well-established board to be the CEO of a century-old social service agency to individuals with intellectual and developmental disabilities. I had been the board chair prior to being hired to provide merger integration project management. Decades of effective leadership by previous CEOs supported by large boards contributed to a strong sense of identity, history and a very definite board dominated governance culture. Inheriting a seasoned executive team along with long-term board members provided a strong sense of stability for the organization. It also meant that changes needed to face major shifts in how services were provided was going to be a challenge. Board reorganization after the merger was only the beginning of my journey with the board toward more effective governance practice.
The Start-up
The second situation at the other end of the spectrum exists when the CEO is the founder of the organization and, in order to organize as a 501(c)(3) nonprofit, must recruit the first board of directors. As the organization begins to gain traction and experiences initial growth, this may present significant challenges to the founder, especially when some organizing activities would seem to take absolute control away from the founder. Moving from independence and entrepreneurial control to collaboration and consultation requires a mental shift. The move from autonomy to accountability requires an awareness of roles – both on the part of the CEO and the board – and a willingness to grow into increasing levels of organizational maturity together.
As a consultant, I am privileged to provide pexecutive coaching to the founding CEO of a legal clinic that serves a marginalized population. The organization has grown quickly in both staff and influence. The CEO has been quite adept at recruiting new board members and has done an admirable job of surrounding herself with directors who have influential community connections, professional skills and strong commitment to the mission. She has recognized, however, that the demands on her time to manage others and to evolve into more of an executive role has put her in a vulnerable position. How she will navigate the treacherous waters of growth while keeping her board appropriately engaged is producing a measure of tension and uncertainty. Adapting herself into a changing leadership role by delegating work to others and trusting their competence is a challenge. Knowing how to use her board effectively and appropriately to help her through this transformation is a learning process for both the CEO and her board.
The Founders
A third starting point occurs when a group of like-minded individuals choose to do some good work together and create an organization in which they, the founding board members, are all the volunteer worker bees, responsible for every aspect of the work. This might include raising money, providing services, tending to the finances and managing other volunteers. Many church-based social ministry organizations had their beginnings this way. It is a natural expression of compassion for others in need to find ways to organize charitable, volunteer programs, some of which eventually grow large enough to become nonprofit corporate entities. Upon legally organizing as a nonprofit charitable organization, the first huge challenge for such groups is the hiring of their first executive director. Giving up the day-to-day, hands-on work of the organization to an employee is psychologically something board members often struggle with.
As a founding board member for a television ministry, I experienced first-hand the challenges of hiring the first president and the difficulties inherent in transferring responsibility to the chief executive. All the board members were corporate leaders, most of whom owned their own companies. While they shared a big vision for the ministry, executing that vision was driven by a few, strong-willed individuals. Eventually, the founding board brought in new members and was able to transition into a strategic, governing board as the organization grew into a staff of over a dozen, including a president and CEO, a chief operations officer, fund-raising professionals and the lead presenting pastor, who had a larger-than-life personality. In time, the board divided the president and CEO position and hired a retired corporate executive to be the CEO. The board and leadership recognized its evolving needs and adapted accordingly. The new CEO has taken a much stronger leadership role vis-à-vis the board.
Upheaval and Change
The fourth situation arises when the organization is in a state of major transformation and must significantly alter its governance structure. Such circumstances may arise from a crisis in leadership, merger with another organization, financial exigency, or some other significant event. The importance of cooperation and collaboration between the CEO and the board cannot be overstated.
As a consultant, I worked with a veterans service organization that provided mobility devices for wounded veterans of the war against terrorism in the Middle East. At the time of my engagement, the organization had experienced leadership turnover, attrition of board members, had just promoted its development director (the wife of a wounded veteran) into the CEO role. The new executive director was passionately determined that the good work of the organization should continue. The CEO and the remaining board members proceeded to rebuild the board from the bottom up. Over a period of months, I worked with this board to revise its bylaws, develop a new operations and policy manual, and recruit and onboard new board members. Concurrent to this activity, the organization seized several opportunities to expand its mission to include advocacy, family support and adaptive sports. Today, the CEO and her board are positioned to capitalize on her connections in government to make a significant difference for all veterans.
My digression into examining four organizational scenarios is intended to place the following strategies into context. I wish to repeat that I am not advocating that the CEO should manipulate, control, rig, or pad his or her board of directors. The board is ultimately responsible for the mission, vision and programs of the organization, but it is the CEO who is entrusted with leadership responsibility. The relationship between governance and management should ideally be characterized by mutual respect and support. The desired leadership environment I am advocating is one of reciprocal, mission-driven – some might say, symbiotic – mutuality. Boards and their executives need each other and need to support the respective work of each. My purpose in this article is to show how the CEO can help make sure that the board is comprised of the right people who can function at the right time in the right way for the benefit of the organization.
Six Ways to Build a Better Board
Having described possible historical, political or leadership contexts a CEO might find himself or herself in, I’d like to offer a number of strategies which CEOs can employ to build a better and more effective board. I believe these strategies can be utilized in any one of the scenarios I described above, although I would readily admit that means and methods of implementation might vary according to the CEO’s personality, the composition of the board and how roles and responsibilities are defined. I won’t maintain that this list is exhaustive. I merely offer up these strategies as possible avenues for the CEO to exert executive leadership to build a better board.
Board Development
The first way that the CEO can assist the board is to make sure it has the knowledge about the organization, its environment and itself to understand the kind of governance leadership that is required. Ongoing education about the field of service, the issues and challenges it faces, the financial and human resource needs it has, changes that are anticipated in the operating environment, imminent regulatory requirements, best practices in nonprofit governance, and ethical and legal issues facing nonprofit boards are a few of the numerous areas of information that boards need to provide effective generative leadership. The CEO should have a board development plan to provide on-going education around the issues that influence the organization’s future. Such a plan should ideally be developed collaboratively with the board, but the content of education and training should come from the CEO, his/her leadership team, and/or carefully chosen consultants or knowledge experts in the field.
Asset Mapping
A second way the CEO can assist the board is to help manage a type of talent assessment process with the board. This might look like an asset map or matrix in which current board members are profiled in terms of profession, education, relevant experience, donor potential, age, gender, race and other skills or assets. While it may seem controversial in today’s politically and racially charged culture to call out age, race or gender, organization’s that are committed to having diversity on their boards must be intentional about identifying and recruiting board members who are women, younger and persons of color. Working with the board’s governance or nominating committee to annually map the attributes of board members can identify gaps or vacant spots on the matrix for attention when recruiting and reviewing potential new board members. The CEO can help the board by managing this process and graphically reporting the results for the board to review.
Director Candidate Management
A third way the CEO can help build a better board is to make sure that the board has a highly qualified pool of candidates from which to select new board members. Some boards want to be very active in identifying successors to the board. In fact, some boards have an explicitly stated expectation that retiring board members should nominate their replacements. I personally do not advocate that position for a couple of reasons. First, retiring board members are most likely to nominate people like themselves in terms of social, political and economic position. This may not meet the real needs of the board and may not address one or more gaps in the board’s make up. Second, I have found that retiring board members often nominate board members who will allow them to remain connected to the organization and its board by proxy. In other words, the successor nominee provides a conduit to what the board is working on and allows the emeritus board member’s voice to be expressed through the successor. I’m not impugning motives. I’m merely pointing out the potential downsides of such a practice.
In my mind, the CEO is in a good position to identify and recommend highly qualified individuals for board membership. In his or her roles as chief communicator, chief fund raiser and chief advocate, the CEO is going to encounter individuals with exceptional talent and relevant background to be of great service to the board. To me, that meant keeping a file of potential board candidates which I regularly reviewed, added to and amended as I obtained more information or had additional contacts with candidates. You have to think about managing such a file of potential board members in the same way a fund-raising professional manages a donor prospect file. I also noted issues of timing, current service on other boards, job changes, relocations, family circumstances and other factors that would suggest either immediate or deferred recruitment. Thinking back to the board asset map, such candidates should be qualified in terms of those attributes that would be of greatest benefit to the board. I was especially mindful of the kinds of talent that were needed in light of possible challenges the organization was likely to face in the future or the skills that were lacking for the current board to attend to current realities. In short, I actively worked a candidate list to determine interest, willingness, relative value to my board and timing. From this active list I could, therefore, advance candidates to the board’s nominating committee who I knew would become strong assets to the board. Ultimately, the board (or membership, if a membership organization) chooses board members. But as the CEO, I felt it my duty to provide the board with the best candidates possible from whom to choose.
Board Effectiveness Assessment
A fourth way the CEO can help build a better board is by assisting the board in conducting its own effectiveness assessment. This process can take two forms, both of which are strongly encouraged in governance literature: periodic assessments of overall board effectiveness and individual board member effectiveness. The former can be conducted using a variety of widely available tools and resources, such as those developed by BoardSource. Such an overall assessment should evaluate the board’s performance around the commonly accepted duties of board members that I described in last week’s article “What do boards do?” Evaluating individual board member performance is a much trickier process, but one that is incredibly important to make sure the board has the right people on the bus. Most often this evaluation occurs when board members are approaching the end of a term and are considering being elected to another term. When I was a CEO, my board allowed for the possibility of four consecutive terms of three years each. Facing the prospect of having the same person serve for twelve years necessitated a process of triennial review. While the CEO shouldn’t conduct this review, it is important to provide input. Generally, such an assessment is done with a combination of self-evaluation, peer evaluation and an interview, with the results managed by the nominating committee. What the CEO can and should provide for the committee is data around the incumbent’s value and contribution to the board as the CEO sees the organization moving into the future. This contextual data is important to make sure the nominating committee is focused on talent and not personality.
I have to be very honest, however. Individual board member evaluation is very difficult for boards to do objectively. Nonprofit boards tend to be very collegial and enjoy each other’s company – even apart from their passionate support of the mission. They are volunteers who don’t get paid to participate and enjoy the board experience and the friendships they develop on the board. In my experience, nobody likes to tell another colleague on the board that they haven’t contributed meaningfully or that they are not providing value to the board. This reluctance has shown itself even in the face of board members who are disruptive, negative, critical, non-participative, absent or who in other ways diminish the board’s effectiveness. While a sensitive matter, the CEO should (assuming a good, trusting relationship between the CEO and the board chair) delicately urge those responsible for doing the evaluation to hold their colleagues accountable. This at the very least should include an honest review of board member expectations and a plan of development or improvement if the review committee does not feel comfortable withholding nomination for reelection.
Terms of Service
While it is outside the control of the CEO, term limits present a fifth opportunity to build the board. In my experience, the total number of years a board member is eligible to serve should be inversely proportionate to the age of the organization. A very young start-up organization which is founded by volunteers who become the first board members can benefit immensely from having those founders serve through the inevitable pains of organizational childhood and adolescence. When an organization has been around for a long time, however, more frequent turnover on the board provides opportunity for expanding the network of support, provided that former board members continue to support the organization financially and with connections and influence.
So, how can the CEO exert executive influence on term limits in order to build the board the organization needs for each stage of development? Term limits are defined in the organization’s bylaws and the CEO should be very knowledgeable about the processes for amending bylaws, policies and procedures governing elections and terms of service. In this regard, the CEO should be able to provide perspective to the board about the organization’s governance maturity and how regular bylaw, policy and procedure review can be responsive to these evolutionary changes. Recommending shorter overall terms of service could appear to be self-serving, unless it is framed in the CEO’s and board’s commitment to mission and to achieving the organization’s preferred future.
Orientation and Onboarding
Finally, a sixth way in which the CEO can build a better board is through a process of orientation and onboarding of new board members. Even if new directors were not of the CEO’s choosing, how that new board member is introduced to the organization, the staff, its programs and services, management functions, expectations for board members, board meeting agendas and supporting materials and a whole array of other information is entirely under the control of the CEO. I viewed this activity as of paramount importance as my one great shot at telling the organization’s story through my lens.
My staff and I assembled a formal orientation program that usually ran for a full-day, preferably the day before the new director’s first board meeting. We prepared a range of materials, beginning with a PowerPoint presentation of the organization’s history, programs, services and organization. We had the new director visit briefly with all the key executives who shared information about their areas of responsibility and the issues they believed were on the horizon. I also made a point of going through the board’s operations and policy manual which contained a detailed explication of board member responsibilities, including expectations around philanthropic support. Feedback from new directors invariably were positive and indicated that the experience was of great value.
Now, as a consultant, I have had the opportunity to consolidate these processes into an orientation program for new directors at other organizations. One of the deliverables I provide is an orientation system that can be used by other CEOs to orient their new board members. Careful attention to thorough and comprehensive orientation can go a long way toward avoiding having to urge the board to “get the wrong people off the bus” at a later date.
Conclusion
I have offered up six ways in which a CEO can exercise executive leadership and effective management practice to build a better board. As I stated earlier, I believe they are applicable and relevant to every one of the four scenarios I described at the outset. However, I’d love to post comments and reactions from CEOs who are willing to share their experiences in trying to build a better board. If you have strategies you have employed successfully in this regard, I’d love to add them to the discussion so others can benefit from your experience.
Finally, as you think about how you would answer the question, “Who is on the Board?” you might also ask yourself, “What help might I need if I am interested in developing and executing strategies to build a better board?” To help you answer that question, I urge you to give me a call. You are under no obligation. It would be my pleasure to have the conversation with you.
