Shared Wisdom for Successfully Leading Organizations

The role of the non-profit CEO in developing a strong governance model

image: business people talking (iStockphoto)

Good governance is not a one-size-fits-all solution. Once you have been hired as the CEO, you will want to make sure that the organization has a governance model that is appropriate to its size and scope. It is important to articulate this model to your board, staff and stakeholders to ensure buy-in and support. This model includes the structure and size of the board and its committees; roles of the officers, directors, and members; and reporting and decision-making procedures.

Successful CEOs manage their board to help it serve the organization effectively. Less successful CEOs manage their board to minimize its impact. Failing CEOs allow their board to manage them.

A well-governed, healthy organization can have only one type of board: one that will meet its fiduciary responsibilities for oversight and accountability. A board should not be involved in day-to-day work, as it must always have the impartial distance necessary for accountability. Once board members take on operating roles, the lines become blurred. It should be obvious to know who is watching whom. Just as staff cannot do the work and oversee it as well, the same is true of board members.

Maintaining a healthy degree of detachment from operations also allows directors the space needed to think of questions and issues that may not occur to someone who is intimately familiar with operations. For example, a board member might ask, “is this project worth doing at all?” — an unlikely question from a staff member who has just spent six months working on the project.

At the same time, a board cannot be so detached and irregular in its involvement with management that it does not have the understanding and, by extension, the authority to properly oversee the work of the CEO.

The skills and talents of individual board members should always be fully engaged to benefit the mission of the organization, but board members need not ever cross the line into management and compromise the integrity of the decision-making process. Unfortunately, it is quite common for CEOs of charities to ask someone to serve on the board with the intention of involving them in the operations.

For example, you may be tempted to put someone on the board because she volunteered to help you put together your IT plans or is willing to design and manage your website. A CEO of a small organization with limited resources might be so grateful and determined to ensure a continued commitment to the organization that he will nominate the individual to the board.

A better strategy is to establish a management committee for IT and ask the volunteer to chair the committee. You can find a role for anyone who is interested and has skills that will help your organization, but you must ensure that a volunteer is taking on an appropriate role that fits her skills, without ever jeopardizing the integrity of the oversight and accountability that the board provides.

Once you have made sure that your board is clearly separated from the day-to-day operations of your organization, your governance plan should include written mandates for the board that clearly state what is expected of directors. These should include the term limits of the positions, the responsibilities of specific officers, and the formal responsibilities of the directors.

The informal responsibilities should also be clear: for example, if a director is expected to donate at a particular level or is expected to attend a certain number of events.

You should also share the established calendar of meeting dates and times with forward agendas. Too often meetings are not planned far enough in advance or are rescheduled, which makes it difficult for directors, who are often very busy, to live up to their responsibilities. If they know ahead of time, they can make sure to be present.

Some boards have a document that is periodically circulated to members reminding them of the agreed-upon governance principles. Sometimes board members are even asked to sign the document to acknowledge that they’ve received and read it. This helps a board feel comfortable with the relationship between CEO and board. Periodically endorsing the agreed-upon principles will make sure the board has the opportunity to tell the CEO what it needs to live up to the agreement.

Another aspect of the governance plan is the size of the board and the structure of its committees. Neither should be cumbersome for the organization. For example, there is no point in an organization with a $500K budget having a huge board with a lot of committees because too many resources will be spent servicing the board.

The appropriate committee structure for an organization should be one that streamlines and focuses the decision-making process of the board. If the board can oversee the work, then there is no need for a committee. In the same vein, if the work relates more to programming, then the committee may not need to exist at all.

Read about Franca Gucciardi’s experience when she started her first CEO position:

When I started at the Loran Scholars Foundation, the organization had six committees (finance, fundraising, strategic planning, nomination, audit, academic programming), each with anywhere from four to seven members, and a board of 23 people. We had a staff of six. It was simply unruly. I was spending more time putting together reports and planning for meetings than doing the work. It was also a huge waste of time for the directors. The hours they spent preparing and attending the meetings could definitely have been better used in more tangible and productive ways. We initially cut the number of committees down to two: an executive committee and an audit committee. The executive met once between board meetings and took on many of the tasks of the finance, strategic planning, and nomination committees. The board could manage some of the work directly, and other pieces were management’s responsibility. A few years later, as we established an endowment fund and our investments became more complex, we established a separate investment committee.