Archive for the ‘Non-Profit’ Category

Accountability and nonprofit boards

Friday, March 4th, 2016

Expectations of nonprofit boards – and of those who serve on them – are established by tradition and maintained by the status quo (Carver, 2002).

An expectation of nonprofit boards is they are accountable to achieve something on behalf of the community that created them. How do boards establish what is expected of them?

Last night, I was struck by the ethical issues at the Wounded Warriors nonprofit. In the CBS News report, a long-time supporter and major fundraiser was asked if the board of directors should be held to account for the scandal that is now emerging. Without hesitation, the supporter said “Yes.” (You need to note that a CBS executive serves on the Wounded Warrior board.)

But what is accountability? How does a board know to whom it is accountable? How does the board know for what it is accountable? How do people in the community know that they are accountable to ensure the board is truly representing them? How does the board know what their community really thinks?

Over a period of several months, the Xylem Group has explored these questions with academics, nonprofit leaders, and elected government leaders. What we’ve been hearing and learning are being brought to a broader audience on Blab.

Look for more on Blab and join us when you can!

Carver, J. (2002). John Carver on board leadership. San Francisco: Jossey Bass.

Policy Governance and Tone at the Top – When Nonprofits Fail

Friday, May 23rd, 2014

Nonprofits are failing at a high rate (e.g., Flanagan, 2012; Nonprofit Trends, 2014). Despite strategic planning and fund development, supporting resources are not available to many nonprofit organizations. You and I may be familiar with the relentless begging of most nonprofits. Yet, if the organization’s mission is compelling and the business model is sound, why do nonprofits have problems attracting resources? If organizational leadership (i.e, the board of directors) cannot determine the underlying cause of business failure, then the problem may be the process of decision-making or making judgment. Are decisions based on intuition or reasoning? Can Policy Governance provide boundaries for rational or reasoned decision-making that underlie better business outcomes for nonprofits?

Yes, IF the board is committed to using their policies and following PG principles. John Carver provided a framework of governance that can help a board define its job and the job of management. PG is built on what are comfortable and known – organizational values. Organizational values are expressed in policy and policies are organized around the work that needs to be done. However, PG is far more than creating a new set of policies. The PG model goes beyond the boardroom and applies it to everyone in the organization that touches the population or consumers served. PG means that everyone in the organization has a commitment to achieving the desired future state or Ends. Everyone in the organization is aligned with organizational values and constantly seeking better ways of attaining the Ends. That alignment and commitment is what attracts resources to an organization.

In my 23-year career of either working for boards or counseling them, I’ve never seen Policy Governance® (PG) fail. Conversely, what fails is the board process. Board process refers to the culture of interactions in the boardroom. Policy Governance creates a framework for sound decision-making and robust assessment for making judgments. What it doesn’t do is dictate culture or how a board should interact. Think about it. Ground rules in any social interaction make a difference but they don’t work if people don’t commit to them or follow them. PG also takes practice, practice, practice. PG is powerful. But a board needs the skill that comes through practice to use it to its fullest effect.

PG works. But only if the board has the will to make it so.

See Flanagan (2012)
See also Nonprofit Trends (2014)
See Carver & Charney (2004) The Board Member’s Playbook

Corporate accountability – blah, blah, blah

Monday, May 13th, 2013

This morning, The Xylem Group had a very interesting teleconference. We discussed the debates and dialogs going on over corporate governance, the focus on profits, doing more with less, and accountability. Accountability to whom? That’s the big question.

Friday, The New York Times reported the average carbon dioxide reading surpassed 400 parts per million at Mauna Loa on Hawaii. Carbon dioxide is the heat-trapping gas that scientists believe is responsible for global climate change. The operative word is “average”. Readings have exceeded 400 PPM before, but now the readings of 400 PPM have reached an average daily level. Many countries (with the notable exceptions of the U.S. and China) have adopted a maximum target level of 450 PPM. At that point, we’re likely to experience some major changes that we humans may not be able to adapt to very well. If the scientists are right, without some major limiting efforts we will reach that level within 25 years.

Our children and our grandchildren will be living through the effects of global climate change. What will they see?

Rising temperatures mean significant climate change and implications for fundamentals like water and crop production. People can live without a lot of things, but not without food and water for very long. How will humans cope with long-term droughts in major crop-producing areas throughout the globe? The UN says that nearly 1 in 10 people don’t have clean water. Despite reduced birth rates in the developed nations, the population continues to grow. With over 7 billion people on the planet, the demand for fresh water continues to grow. Shortages of water mean shortfalls in crop production. In areas that are already suffering from dearth of water development projects and lack of food (where we already see major conflicts and human suffering connected with a winner-take-all mentality), how will the additional stress impact those people?

Rising sea levels will put billions of people in harm’s way. Where will they go?

How will all of this change global economics?

My colleague Robert Ballantyne has long been pointing to the unbridled power of our global corporations and lack of accountability. In a recent tweet, he said “Our systems of government, money, and corporations were developed when unlimited growth seemed possible. Those systems are obsolete.” Similarly, I have long lamented the “taking” mentality of financial institutions. John Bogle created my awareness of this issue. When you consider the amount of money that the financial sector takes out of our economy and never puts back (it is called asset management), what is the value of digital wealth? You can’t eat it and you certainly can’t drink it. With all of that power, the state that empowers creation of corporations requires some body of people (the board) to be accountable. What’s missing with many of our corporations is clarity about accountability, don’t you think? If (for example) a corporation board believes their only accountability is to the bottom line profits (shareholder ROI), what might be sacrificed in that pursuit? We see it happening all too frequently (JP Morgan Chase, Wal-Mart, Enron, garment industry and Bangaladesh).

Same is true for non-profits. In their non-ending quest for money (there is never enough), often the boards fail to recognize how resources could be better leveraged or possibilities for partnerships/collaborations. In other words, constantly focusing on the means does not ensure successful achievement of the Ends. In the larger scheme, how many more people could be served with better quality and at a reasonable cost to society (the commons) if boards took a holistic view of their existence/accountability?

Maybe a different dialog about accountability can start small with cities or municipalities, but it needs to start somewhere. Without incentive to change, nothing will change. A protest here, a shareholder reaction there, none of it is working.

Protests and government penalties? It’s like water off a duck’s butt.

I love the settlement the major banks made with our US government. The average homeowner who was wrongly or illegally evicted from their home will receive $300 on average. Oh, and by the way. The checks bounced. Great. Was that fair compensation for uprooting a family and forcing them to rely on relatives, friends, and the community to help?

As much as financial institutions want to blame the homeowners for poor financial judgment in taking out loans they couldn’t afford, it’s no wonder those same institutions believe it’s okay to shift the blame for their own lack of lending judgment to the rest of us. Oh, and yes, they made us responsible for the consequences, too. Notice how their fingers are pointing everywhere else? No accountability here! Dear banks: when you point at someone else, remember that three fingers are pointing back at you.

What is the board’s responsibility for a fair economic and environmental exchange? Is it fair for Wall Street to hoard billions and banking institutions to lend only to those who have demonstrated economic success? I’m not against people having money. I’m for the idea of creating institutional accountability for what is taken out of our resources (yours, mine, everyone’s). I’ll close with one of Robert’s tweets, “We, humans, have the power of change and transformation. We now need to create the organizational skills to be responsible stewards.”

Classic NPO mistakes in hiring a CEO

Monday, March 25th, 2013

I recently got this question from one of my professors in I-O Psychology:

“Have you noticed that non-profit organizations tend to write vague job descriptions, even when looking for an executive director? Perhaps it is due to the fact that most non-profits operate with limited funds.

Recently I found out about an executive director position for a local non-profit. When I read the description, it was lacking detailed information especially important interpersonal characteristics. Although these characteristics are important to the executive director role, the job description lacked these characteristics and it was vague. As a result of this, the organization generated over twenty-five candidates. Before they started interviewing candidates, the search committee ended up sifting through all of the applications to narrow down the list. However, what would have happened if the interim director had decided to write a more detailed job description, including interpersonal characteristics. Do you think they would have generated fewer and more qualified applicants?”

NPOs are my area of expertise and I have several answers to this question. Let’s begin by understanding the context. Often board members’ tenure is shorter than the CEO (e.g., they don’t have the institutional history or understanding that the CEO does). The long-term CEO often could not begin to describe in detail what he/she does (e.g., growth and development over time led to professional or personal changes that she/he has not devoted conscious thought to). Priorities can shift with the economic conditions. Depending on the type of organization (e.g., charitable, trade association, foundation), culture often dictates desired characteristics. Also depending on the type of organization, board member volunteers vary in expertise, background, and skills. Even the most gifted human resources person or bank manager will not have the depth of understanding to write the job description that will lead to hiring an effective NPO CEO. Volunteer board members tend to want to adapt what they know about hiring and employment to hiring a NPO CEO. It is not the same situation.

One board I worked with was faced with the retirement of a long-term CEO. When I asked what attributes or characteristics they were looking for, the chairman said (in all seriousness), “We don’t know, but we’ll know what we’re looking for when we see it.” Good thing I kept listening. I had to suppress my astonishment because I almost laughed and asked if that was a joke. The next comments left no doubt that the board intended to go on a fishing expedition. That’s likely why the NPO my professor asked about got what they got. Classic mistakes by NPO boards in hiring a CEO:

1) Hiring on the rebound. Like a recent breakup, losing a long-term CEO is a gut-wrenching affair. Boards inevitably will try to hire someone as quickly as possible to avoid the pain of loss. Rather than think through strategically what type of leader is needed for the future, the board seeks to replace what was lost. Bad idea. I’ve seen these rebound hires time and again. They never last (usually not past six months). Just like dating on the rebound, the board can never replicate what they once had. Besides, organizations change. What the organization needed in a leader 20 years ago is likely not the same as what the organization needs today.

2) Hiring someone from the board ranks. Familiarity and cameraderie with a person is never a good reason to hire that person for the top job. Boards think it a great/smart idea because they don’t need to wrestle with messy stuff like job descriptions and interviews and background checks. Yuck! However, the relationship changes the minute the person goes from “peer leader” to “employee”. Intimacy and trust turn to fear (and sometimes loathing) when expectations are not made clear. Another problem is when new members come on the board, they may not be so enamored with the other board members’ good buddy…I’ve seen this happen at least a dozen times. None but one worked out.

3) Going on a fishing expedition. This is what the board client I already mentioned did. Boards end up writing a job description that in no way resembles what the board needs and/or only vaguely describes what it wants. This one is classic because it’s similar to writing an RFP for services without thinking through what outcomes one expects and articulating those into specific skills or experience needed. One small staff (3) organization board thought they wanted a great financial manager because of increasing revenues and organizational complexity (investments and such). They got one. Only one teensy problem: this is a community entity that also needs a charismatic leader who will interact with the public and members. The new CEO is an introvert. Not gonna happen. But the books and investments are in great shape! Which set of skills/characteristics would have been easier to outsource — charismatic leader or introverted financial guru?

What do I think about writing a detailed job description? Do it. But hire someone who can be objective and ask critical questions to help. My favorite saying is, “What will end up biting you in the butt are the things you don’t know you don’t know.” No one knows everything and not even the smartest collection of board members will know everything. A healthy dose of outside perspective can cause light bulbs to light all over the boardroom.

Would you buy 30-year-old technology?

Saturday, March 3rd, 2012

The ad reads: “Car ‘phones. They’re no longer the privilege of the chosen few.” In 1982, I actually had one of these Vodaphone babies. I was climbing the corporate ladder of a Fortune 500 company in Chicago and got one installed in my company car. Yes, the company provided me with a personal car (every 50,000 miles I got a new one) and all the gas and maintenance (those really were the good old days). My employer was on the cutting edge of management effectiveness and efficiency. I was part of testing the technology.

My “mobile” car phone was the size and weight of a very large brick. And it was truly a car phone because the base was mounted to (and used power from) the car. I didn’t need to go to the gym to lift weights because the handset provided a good deal of dead weight training. Those of us testing the Vodaphone used to joke that if it quit working, it would make a great boat anchor. I’m surprised I never got whiplash from lifting the handset to my ear while driving. Okay, so yeah. If using your cellphone with your bluetooth is a driving hazard, just imagine how dangerous I was on Lakeshore Drive!

Now here’s what I carry around today: a phone that is not tethered to anything (except maybe my hand or earbuds). It’s about the weight of a pair of scissors and about the size of three packs of dental floss laid side-by-side. And it doesn’t merely connect me by voice-to-voice over cellular. It’s my personal data assistant, office manager, and personal entertainment center. It also responds to my whims. (Siri is my new love, but don’t tell my husband!)

So why do boards of all types and sizes still run with 30-year-old technology? Yes, the basics are still sound. Compare today’s smart phones with my car phone 30 years ago. Why would you choose to carry around a big, old brick that doesn’t do much versus a small, sleek device that caters to your every whim? Is your board functioning with a mindset from 30 years ago? Before you say no, consider this.  Nonprofit organizations proliferated in the 1980′s (Board Source, 2003). Much nonprofit regulation did too. Not surprising that governance structure, culture, and practices emanated from that period. Businessmen populated boards and they brought their management expertise to the boardroom. Unfortunately, management expertise does not necessarily translate to governing expertise. In the management mindset, governing is typically viewed as “management one level up” and tethers a board to the past instead of creating the future.

Why does it seem like transformational governance is still the privilege of the chosen few? Board members and executives, please throw the 30-year-old+ mindset out the window. C’mon now. Don’t say that you don’t know what I’m talking about. At association and nonprofit organization conferences, I still hear the same complaints that I was hearing 20 years ago. Here’s the chronic complaint: why does my board micromanage (i.e., get caught up in administrivia)? Because they don’t have anything more important to do. Because they haven’t found a way to delegate effectively and know their wishes for the organization will be fulfilled. Or, the board recently had a crisis that involved a major financial risk (e.g., embezzlement, lawsuit, the ED who was the “rainmaker” just left). The list goes on and on. People tend to revert to old, dysfunctional behaviors when they feel unsure or threatened or are just plain bored. Governing from this mindset is like picking up the Vodaphone and expecting to have Siri grant your next wish. Remember the implication when you expect different results from doing the same thing over and over again.

The magic of smart phone technology did not happen because Steve Jobs said, “Let’s redesign the Vodaphone!” The magic happened because Steve Jobs had a vision of something sleek, powerful, and ready to go to work for you out of the box. Why would you buy 30-year-old technology when you could have an iPhone?

Unleash the power of your board and explore how you can best use the collective wisdom of all those smart minds in the room. Don’t make them sit through one more staff report or approve one more budget until you think about why you’re asking them to do it. What is the value added? What magic could they envison if given the time?

 

What do nonprofit governing boards do?

Tuesday, February 17th, 2009

Defining governance is not easy. If you google “definition on governance,” you will find over 500,000 entries. Governance is a generic term with applications in information technology, Website management, research, corporations. I’ve found that how the term governance is applied in various disciplines is somewhat confusing. That’s why a simple definition for nonprofit board governance may not be enough to gain clarity and understanding.

For nonprofits, relating the process and practice of governing to a familiar or commonly shared experience helps. In my post “On board service“, I use ships. In April, I wrote an article for the Charity Channel Nonprofit Boards and Governance Review. In this one, I use the train analogy. It seems I’m attracted to transportation analogies when describing governance!

From the review in Charity Channel:

Executive Directors who dump a pile of financials in front of board members, expecting them to have the background and expertise necessary to make heads of tails of them, are not meeting their obligations to the board, according to the latest NBGR article by Sherry Jennings. Taking the point of view of a new board member, she writes, “Most of the financial information was incomprehensible to Martin. What was nagging at Martin was that he didn’t feel like he had a complete ‘picture’ of what was going on. The information he had plodded through last night seemed like a box of spare parts.”‘
In If I’m Not Running the Train, How Do I Know We’re On Track? the author uses a down-to-earth story-telling method to drive the point home and offer up the solution.

Caroline Oliver (brilliant author and consultant on governance) likens practicing good governance to riding a bicycle. You need to take the appropriate steps and practice to do it right. She said that the traditional approach to governance is okay but it’s a bit like pushing the bicycle along rather than riding it. Riding a bicycle is difficult at first. One needs to learn a new way of balancing and may fall a few times. But once one is confident and dancing on the pedals, it feels effortless and like flying (another transportation analogy!)

From Caroline’s reflections:
“Most of us want practical solutions and would prefer to skip the theory bit. However, the boards that tend to excel in the way that they practice governance are the boards that have an idea of what they are doing and why – in other words – the ones that have a good theory!”

I would add a good process and good balance.

See Caroline’s article on Creating a Board Dashboard, also at the Charity Channel and her new book Getting Started with Policy Governance

Organizational Culture: Open or Closed?

Wednesday, December 3rd, 2008

Culture in an organization is comprised of shared values, goals, norms and processes. One overarching theme uncovered in studying organizational culture is that leadership creates and reinforces culture. A traditional organization operates in a hierarchical model with an authoritarian culture that seems to foster privacy or secrecy. An open culture is the foundation for creating a high performance organization. An open culture within an organization fosters transparency and accountability to its customers and the public. If management doesn’t have a culture of open communication, then that culture suffers.

One of the best practices of high performance organizations is for leadership to nurture a culture that allows for people to question openly and have honest dialogue. A leader’s beliefs and values create the direction and the boundaries that people need to perform well. In “Good to Great” (2001) Jim Collins asserts, “good-to-great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of that system.” This is Policy Governance in a nutshell.

When organizational leaders have an authoritarian culture where people are afraid to question decisions, diverse viewpoints cannot be heard. When people can raise objections when they think they need to, it paves the way to better decision-making. If an organization follows Policy Governance principles, it will find that Policy Governance creates a “safe” way to have meaningful dialogue around an issue (instead of a personality), and largely, reduces organizational barriers to having the dialogue in the first place.

Warren Bennis is a professor at USC’s Marshall School of Business. Bennis cited by Koestenbaum, Keys, and Weirich says, “Exemplary leaders create a climate of candor throughout their organizations. They remove the organizational barriers — and the fear — that cause people to keep bad news from the boss. They understand that those closest to customers usually have the solutions but can do little unless a climate of candor allows problems to be discussed.”

On board service

Sunday, June 22nd, 2008

Dear Association Executive:

Recently on the American Society of Association Executive’s (ASAE) Executive Section listserv, there have been many questions about how to get the board out of the minutiae in order to find time to work on strategic direction or Ends policy. The board’s focus on the day-to-day is not their fault (entirely.) Board members want to to a good job. But most have learned the traditional approach of board service — showing up at meetings, approving staff work and debating whether or not the office can afford a new copier.

When your board is busy with staff reports, committee reports and working on day-to-day operations, they don’t have the time to focus on strategy or governing. Board members come to your meetings with dozens of other competing priorities and thinking about their own business or family decisions. Once they get to your meeting, the agenda is full of operational (staff) reports or decisions. Is it any wonder board members default into operational mode?

Hildy Gottlieb at Help4Nonprofits.com says it’s like running a ship. You, dear Association Executive, are the captain. You manage the crew, read the charts, navigate and ensure the safety of crew, ship and cargo. You make sure the cargo is delivered. The board’s role is representing the owners of the ship. The board decides what kind of ship, what cargo it will haul, where that cargo will go, to what customers and at what cost. They monitor performance based on how well you deliver. Too often, the board thinks they’re supposed to be captains. When you have nothing but captains on a ship, you have anarchy! (Plus, you sacrifice some much needed crew.)

The board’s job isn’t to run the organization. That’s what they hired you (the captain) to do. The board actually has its own job and it’s not an “extension” of yours. Their job (and their added value) is to represent the owners of the organization (people who expect certain outcomes or results.) This can be the community at large or a specific, defined group of stakeholders such as a neighborhood or micro business owners. In other words, they represent a subset of the community and sit at the board table on behalf of those who are not there. They are representatives.

My point is that, most board members don’t know that their job is representing and governing on behalf of those they represent.

if board members don’t know what their constituents think, how can they represent them? How do stakeholders have a voice in where your organization is headed? How does the board know unless they ask? Their job is to provide that vital link to the owners or stakeholders or their constituency.

Most board members don’t have a clue that that’s what they’re supposed to do. And, that’s what makes your job more difficult.

John Carver (author of Boards that Make a Difference) describes a traditional nonprofit board of directors as a group of competent individuals who get together to do incompetent things. Nonprofit board members tend to think that a nonprofit is a different animal than a for-profit. This perception is to the detriment of the organization. A nonprofit is an artificial entity created for the purpose of some pursuit — a corporation. The law gives corporations a great deal of power. For-profit corporations recognize this.

For some reason, nonprofits seem to think they have little or no power. Nonprofits have as much power as the board believes they have.

A board\'s job is to add value to the organization -- not run it
You can unleash that power by helping your board see a vision of what they can become when they’re not busy swabbing the decks and running the crew. Good board members are hard to find and harder to keep. Let’s not drive them away with mind-numbing operational matters.

Very sincerely,

Sherry

Is It Time to Assess Your Environment?

Friday, November 23rd, 2007

Assessing Organizational Ends Starts with Questions – Not Answers

In his book “Good to Great”, Jim Collins offers this wisdom for CEO’s:

“Leading from good to great does not mean coming up with the answers and then motivating everyone to follow your messianic vision. It means having the humility to grasp the fact that you do not yet understand enough to have the answers and then to ask the questions that will lead to the best possible insights.”

This wisdom applies equally to a Board of Directors.

Boards need to be a disciplined as they expect their staff to be in gathering information. Good information gathering starts by crafting the right questions prior to conducting an environmental scan to assess whether your organization is meeting the needs of the community.

An environmental scan should insure that a board’s Ends consider the needs, concerns and demands within the community it serves. An organization should exist to create change. It should be the change itself that drive the Ends.

External Environmental Scans

The “value add” of a board as trustees of the owners is to be the link with the external environment and bring that information to the organization. This linkage needs to be regular and periodic. The information gathered will help a board assess whether or not its Ends are relevant and current.

Just as a for-profit corporation conducts an environmental scan to assist with the strategic planning process, a governing board should periodically conduct an environmental scan and ask questions for which it doesn’t already have the answers.

Open meetings, focus groups, surveys, and presentations from third party experts are all dynamic ways to gather information. In addition, a board could consider:

• Board-to-board meetings

• Researching community needs assessments and demographic data

• Breakfast or lunch meetings with groups in the community (one of my clients found this to be so successful that it launched a new entity of like-minded organizations who have similar funding needs)

• Open forums

• Town hall meetings

• One-on-one meetings with community leaders

• Board committees to gather intelligence

Governance Solutions

Thursday, August 23rd, 2007

WHAT’S ALL THE FUSS ABOUT GOVERNANCE?

We Need “New” Solutions

People seem to believe that the status quo still isn’t working because they are still looking for “new” solutions. I’ve been in the nonprofit world for over 17 years and the same problems keep coming up. The spectrum runs from “my board is micromanaging” to “my board members are disengaged.” CEOs continually tell me about the need for their boards to become future-focused as opposed to functionally operational boards. Why, after all these years, are CEO’s still seeking solutions these problems when a perfectly good one has been there all along? It’s called Policy Governance®.

Muddle is an Acceptable Way of Life

Most boards and CEO’s don’t have a good grasp of governance. Governance is not management although nonprofit boards have a tendency to think of themselves as “uber managers.” Among those who are aware of Policy Governance®, there is still a great deal of misunderstanding about what Policy Governance is and is not.

(Download a concise description of Policy Governance — go to http://www.policygovernanceassociation.org/index.html and click on the #3 Quick Link.)

The term governance is used very broadly in the nonprofit world. CEO’s tend to become focused on tactics to manage board behavior – instead of seeking a system or process of governing. That’s why CEO’s are as frustrated with board politics, meddling, micromanagement* rubber stamping, etc. as ever. One CEO summed up this frustration by saying: “We’re kidding ourselves if we think we can set up a process [that is sustainable.] Living in chaos is normal.”

Reflections from a PG Perspective

As Policy Governance professionals it’s clear we have a lot of “undoing” to do. We need to overcome the perception that Policy Governance is a “cookie cutter” approach which causes it to be dismissed out of hand without any dialog on how it can lead to eliminating the chaos and creating an effective board of directors. In part, my fellow consultants and I think this is due to the perception that a model is a die-stamped, rigid structure.It’s unfortunate that the term governance is being used as a generic term to describe everything from organizational development to operations and web content management.

The term governance is used so generically, this is going to be a tough one for Policy Governance. It may be like trying to preserve a brand name like Kleenex and differentiate it from other tissues, but is worth some discussion. Give me your thoughts.

*(for a great article on micromanagement go to:http://www.help4nonprofits.com/NP_Bd_MicroManage_Art.htm