Managing Nonprofit Boards
Board and CEO
- Chait, Ryan, and Taylor:
Governance as Leadership
- John Carver:
- Herman and Heimovics:
Governance As Leadership
(Chait, Ryan, Taylor)
- Diagnosis: CEOs are leading, boards are managing
- Board and CEO partnership
- Working together in three modes
Type I: Fiduciary
Type II: Strategic
Type III: Generative
- When board performs well in all three modes (Type III board),
that is governance as leadership
Typical Questions in Three Modes
What will it cost?
Will we make money?
What are the risks?
Will it help us achieve our goals?
Will it open up new opportunities?
Will it impact other goals, what are the tradeoffs?
Is it consistent with our mission and values?
What do we want to be?
- Boards spend time on trivial,
only react to CEO recommendations, reports
- Leaky accountability—boards go around CEO, make judgments about subordinate staff
- Diffuse authority—line between board and management not clear
Principles of Policy Governance
Board represents the owners
Board focuses on defining organization’s values
Rather than follow staff, board leads through policies that reflect values
Board policies in 4 categories:
- Ends to be achieved
- Means to those ends (executive limitations)
- Board-staff relationship (delegation to CEO)
- Board/governance process
- Policy governance empowers strong CEOs, have total latitude beyond the level of board policies
- CEO and board chair are colleagues, not employer and employee Different functions
CEO reports to board as a whole
Chair also reports to the board
Carver prefers “chief governance officer” to “chair”
- CEO’s responsibility is to achieve ends, accountability is to do so without violating the means policies
- Policies arranged in hierarchy from broadest to more specific—different from traditional way of dealing all the way down a silo, as presented by staff (i.e., approving plans, personnel policies, budget, reports).
- Board deals with all silos, but only to certain level of depth, delegates rest to staff.(Says boards should not approve budget, let CEO do within defined “constraints”)
- Board usually doesn’t go beyond second level—everything below is delegated to CEO
- Policies are explicit, current, literal, centrally available, brief, and comprehensive (board policy book)
- Clearly separate ends from means
- Focus means on changes affecting people (mission)
- Second level addresses consumers, products, and costs (the “swap” with society)
- Long-range planning: Board should establish the “reason,” but should not do the planning-should “stand just outside it”
- Evaluation of ends — often a premature emphasis, handicapped by “academic mentality”—“A crude measure of the right thing beats a precise measure of the wrong thing”
Means statement (executive limitations)
- Pro-active requirements actually limit CEO flexibility and involve board in implementation; means statements should be in the negative, saying what CEO cannot do, leave the rest to him/her
- Start with can’t be “imprudent or unethical,” then add more detail as needed
- Address board “worry areas” – vendor relations, treatment of customers, asset protection, indebtedness, financial condition, budgeting
- Board should not approve budgets, personnel policies, etc.—leave to staff. Board monitors and asks “does it violate our policies?”
Criticisms/Questions About Carver
- One size fits all
- All or nothing, too rigid, requires unrealistic discipline
- No board involvement with mission programs, discourages giving and fundraising
- Top-down view of organizations
- Not possible to separate policy from management
- Not consistent with SOX
- Lenders would require board budget approval, etc.
- Requires talented CEO
- Link to organizational performance not clear
- Can part-time amateurs really determine realistic ends?
- Are the owners always identifiable?
Effective Nonprofit CEOs
(Herman and Heimovics)
- Accept executive psychological centrality
- Provide board-centered leadership
Initiate and maintain structure for the board
Show consideration and facilitate board inter-action
Provide information to the board
Promote board accomplishments and board productivity
Envision change and innovation with the board
- Focus on external relations
- Informal information network
- Know your agenda (dramatize, bread crumbs, simplify)
- Improvise, accept partial solutions
- Use a “political” frame
Other Issues and Considerations
- CEO/ board chair relationship
In strategic planning
Board recruitment and development
- Separating personal and professional relationships
- Role of the board in executive transitions
- CEO as member of the board, vote or no vote
- CEO evaluations