In a changing health and human service market—a market with more competition, value-based contracts, the need for collaboration, and more—how does the relationship between a non-profit board of directors and their chief executive officer (CEO) need to change? First, board members need to have a different understanding of the organization they are part of and their role and responsibilities to that organization. Second, CEOs—especially those that have been in the field a long time—need to understand that what worked 15, 20, or 25 years ago probably won’t work next year. Keeping a “fresh” board comes down to having access to resources, including expertise and networks.
That was a key theme from today’s 2018 OPEN MINDS Executive Leadership Retreat session, Non-Profit Board Management: Keys To Attracting & Managing A Board That Can Operate In A Competitive Market, featuring OPEN MINDS Senior Associates Howard Shiffman, George Braunstein, and Paul Neitman—all former c-suite executives of non-profit human service organizations.
The challenges for non-profit board members starts with how informed they are, from fundamentally knowing what the organization does, to knowing the sources of organizational funding, to knowing which services have a “profit” (if any) and which need to be subsidized by charitable contributions. With that knowledge, the challenge comes down to what the board expectations are for the CEO, and vice versa.
If you are the CEO, understanding the board/CEO relationship means knowing whether it is “your” board, or you are the board’s CEO—and maintaining that balance between the two. Mr. Shiffman explained, “The board directs the marching orders, and the CEO must be the administrative force. As the CEO, you must balance that power dynamic and make sure the lines aren’t crossed.”
Mr. Braunstein also noted that the board hires the CEO based on that executive’s experience, which sets a power dynamic with the need for trust. He noted, “Is the power balanced? If not, the board might be like mushrooms that stay in the dark and just do what you tell them to do, or they think that they oversee operations. If you don’t see it as a power dynamic, you are missing something. You are working, to some degree, in chaos theory. That means there needs to be a flexibility of thinking, especially in budgets. There must be a level of trust to be flexible and effective.”
For a board to be valuable to the organization, an investment in the board members is critical. They need to be developed into effective board members. But, a conundrum for CEOs is figuring out how involved they want the board to be. The answer to that often comes down to education and training. If the board is kept “too far” from decisionmaking, then they will be under-educated and of little real worth to the organization. This can also lead to another power imbalance. Mr. Neitman explained, “If you don’t have enough investment in the education and development of the board, including board roles and responsibilities, they may try to micro manage. They need to know and trust the CEO, and buy into what the organization is trying to do. It’s really important that they understand your strategic plan and business plan.”
Some CEOs may recruit board members for their expertise. Other CEOs may recruit solely for their participation in governance. But in both situations, it’s key for the CEO to make sure that incoming board members are brought up to speed. Mr. Braunstein explained, “I never expect any new board member to understand the organization until they had been on the board for a year. If you have people coming on, they need to be mentored on the role as a board member. It’s also about helping them understanding the culture of the organization, which is often different than the corporate culture. Unless I have a really small organization that needs board member to do functional roles, I’d rather get my expertise from the outside.”
Our panel’s advice to current non-profit CEOs and board members?
- CEOs must be actively involved in board development to build the trust, honesty, and transparency needed for success.
- Education is key to the board understanding what it means to be in this market, with this competition, with this funding, and with this technology—no matter what those specifically are.
- If board members understand their role, then they know they have a large fiduciary responsibility—and that means they are making decisions that may scare them. Support from the CEO is essential to helping the board understand those decisions.
This may sound simple, but the market and the many intricacies to board relationships are complicated. If you think you need a new board, ask yourself, is your relationship with that board where it needs to be? If not, what do you need to do to get it to that place? To that end, we have some great resources in our OPEN MINDS Industry Library:
- Measuring The Performance Of Non-Profits-What Yardstick To Use?
- From An Extension Of Government Policy To Competitive Service Providers – The Strategy Evolution For Non-Profit Executives
- Guide To Good Governance: A Quick Overview Of Governance Models
- Your Non-Profit Board & Money
- What Do Board Members Need To Know?
- What Governance Model Is Right for Your Non-Profit Organization? The Options (From Operational to Advisory) Available to Health & Human Service Organizations
- Managing Your Boards Of Directors: Strategic Advice For CEOs
- Keeping Your Board “On Board”
- Improving the effectiveness of your board
- Quick Overview of Governance Models
For more, stay tuned from our live coverage this week of The 2018 OPEN MINDS Executive Leadership Retreat—@openmindscircle will be providing live social media coverage of this year’s event. To join the discussion on Twitter, use this year’s official hashtag: #OMLeadership.