Transcript Board Responsibilities - masonnonprofitfellows

Chapter 4: Nonprofit
Governing Boards
© 2014 SAGE Publications, Inc.
Terminology
• Governing boards -- boards that hold ultimate
responsibility for ensuring that the organization
serves its mission and for the overall welfare of the
organization itself
• Terminology depends on specific organization
• Board of directors
• Board of trustees
• Board of governors
• Governing council
• Other terminology
• Boards that lack legal responsibility for governing
their organizations are not governing boards (e.g.,
advisory boards)
© 2014 SAGE Publications, Inc.
Types of Governing Boards
Elected boards
• Common in member-serving and advocacy organizations
• Governing board elected by the membership of the
organization; can lead to a “popularity contest”
• Membership terms of an elected board may be
brief/turnover
• Skills of board members may be uneven
• CEO must have a high tolerance for uncertainty
• Board members less likely to become stale, uninvolved or
homogeneous in their membership
© 2014 SAGE Publications, Inc.
Types of Governing Boards
Self-perpetuating boards
• New members are selected by the existing members
of the board who recruit them according to criteria
established by the board
• In a new nonprofit, the initial board members are
known as “founding board members” who then
develop bylaws, etc., which outline how the
organization will be governed
• Creates a relatively stable situation for the
organization and its CEO as board members change
less frequently; boards recruit new members with
skills/expertise needed at the time
• Board needs to maintain diversity to guard against
becoming homogeneous
© 2014 SAGE Publications, Inc.
Types of Governing Boards
Appointed and hybrid boards
• A typical model for public organizations such as
universities
• Members selected through appointment by some
authority such as the governor of a state, etc.
• In hybrid boards, some members may be elected
and some appointed or serving ex-officio
• Hybrid boards can keep organizations responsive to
their constituencies as well as better accountability
• Appointed or hybrid board members may lack the
commitment to the organization and may not fully
participate in the work
© 2014 SAGE Publications, Inc.
© 2014 SAGE Publications, Inc.
Advisory Boards & Councils
• Better term should be “councils” rather than “advisory
boards” to avoid confusion with governing boards
• Have no legal responsibility or authority for governance
of an organization
• Members may provide a nonprofit with technical
assistance/expertise, assist with fundraising activities,
serve as advocates or ambassadors in the community
• May or may not be formally established in the
nonprofit’s bylaws
• Role and parameters should be formalized with
guidelines that outline the responsibilities of the council,
etc.
© 2014 SAGE Publications, Inc.
Board Responsibilities
• Board members are “fiduciaries of the
organization’s resources and guardians of its
mission” (Hopkins, 2003, p. 1)
• Board members are accountable “for everything
the organization does and how those things are
accomplished” (Howe, 2002, p. 30)
© 2014 SAGE Publications, Inc.
Board Responsibilities: Legal
• The Sibley Hospital Case (1974)
• Care – exercising due diligence in monitoring and
supervision
• Loyalty – members put the interests of the nonprofit
above their own personal financial interests
• Obedience – members ensure that the organization
complies with all laws and actions are consistent with
the mission
• Intermediate sanctions (1996)
• Sarbanes-Oxley Act (2002)
• Destruction of documents
• Protection for whistle-blowers
• Form 990
© 2014 SAGE Publications, Inc.
Board Responsibilities: Functional
• Appoint, support, and evaluate the CEO
• Establish a clear institutional mission and
purpose
• Approve the organization’s programs
• Ensure sound financial management and the
organization’s financial stability
• Establish standards for organizational
performance and hold the organization
accountable
© 2014 SAGE Publications, Inc.
The Board and the CEO
• Who leads the nonprofit organization?
• Extreme scenario 1 -- CEO manipulates the
board, orchestrates board meetings, and
relegates the board to the role of a rubber
stamp for his or her initiatives
• Extreme scenario 2 -- Board micromanages the
organization and usurps the authority of the
CEO
• Partnership between the board and the CEO as
ideal, but different views on exactly how this
partnership should be constructed and how it
should operate
© 2014 SAGE Publications, Inc.
Three Models of
Board-CEO Relationship
• Policy Governance Model (Carver, 1990) -- need to
establish and enforce a clear line between the
board’s responsibility for policy making and the
executive’s responsibility for implementation
• Governance as Leadership (Chait, Ryan, and Taylor,
2005) -- board should assume a leadership role that
blurs the distinction between policy and
implementation, focusing everyone’s attention on
“what matters most”
• "Psychological Centrality and Board-Centered
Leadership (Herman and Heimovics, 2005) -- CEOs
should accept the reality of their “psychological
centrality” in the organization and provide “boardcentered leadership”
© 2014 SAGE Publications, Inc.
“Twelve Principles that Power
Exceptional Boards”
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Constructive partnership
Mission driven
Strategic thinking
Culture of inquiry
Independent-mindedness
Ethos of transparency
Compliance with integrity
Sustaining resources
Results-oriented
Intentional board practices
Continuous learning
Revitalization
© 2014 SAGE Publications, Inc.
Source: Board Source, 2005
Problems with Measuring Board
Effectiveness
• Reliance on practitioner wisdom rather than
science
• Lack of a substantial body of research on
nonprofit board performance
• Lack of a single definition of board effectiveness
Board effectiveness is “whatever significant
stakeholders think it is, and there is no single
objective reality"(Herman and Renz, 2002)
© 2014 SAGE Publications, Inc.
The Challenge of Nonprofit Governance
• Janus metaphor -- nonprofit boards are
positioned on the boundary between the
organization and its external environment
• Inward-looking role in fulfilling fiduciary
responsibilities on behalf of the membership
or society
• Outward-looking role in meeting
responsibilities to the organization itself and
advance its interests
• Complex responsibilities require diverse qualities
in the individuals selected to serve on the board
© 2014 SAGE Publications, Inc.
The Board’s Sometimes Competing
Responsibilities
To Society
• Accountability for
resources and results
• Adherence to mission
and law
• Representation of
community needs
© 2014 SAGE Publications, Inc.
To the Organization
• Advocacy and
authenticity
• Protection of autonomy
• Fiscal stability and
sustainability
Chapter 5: Executive
Leadership
© 2014 SAGE Publications, Inc.
CEO Responsibilities
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Commit to the mission
Lead the staff and manage the organization
Exercise responsible financial stewardship
Lead and manage fund-raising
Follow the highest ethical standards, ensure
accountability, and comply with the law
Engage the board in planning and lead implementation
Develop future leadership
Build external relationships and serve as an advocate
Ensure the quality and effectiveness of programs
Support the board
© 2014 SAGE Publications, Inc.
Source: Board Source, 2006
Observations About CEO
Responsibilities
• Significant overlap between CEO responsibilities and
governing board responsibilities
• Mission, financial stewardship, fund-raising,
accountability, planning, performance standards,
and the work of the board itself
• CEO responsibilities involve both managing and
leading
• Management -- generally concerned with day-today operations, emphasizing policies, procedures,
rules, and processes
• Leadership -- more about purpose, vision, and
direction: more about the “where” and “why”
rather than the “how”
© 2014 SAGE Publications, Inc.
Managers and Leaders
Managers
Leaders
• Concerned with mastering
routines
• Adopt impersonal or
passive attitudes toward
goals
• Excel in problem solving
and work design
• Work with people in
carefully controlled ways
• See themselves as
conservators or regulators
• Concerned with vision and
judgment
• Active and visionary about
the future
• Seek out opportunities and
take risks
• Passionate about their
work and likely to cause
turbulence
• See themselves as agents
of change
© 2014 SAGE Publications, Inc.
Leadership Theories: Introduction
• Key questions
• Are leaders born or made?
• If they are made, what specific knowledge or
skills do individuals need to acquire in order to be
strong leaders?
• What are there specific behaviors that are
associated with effective leadership?
• Key caveats
• Most of the theories are generic (i.e., intended to
apply to all types of organizations, not just
nonprofits)
• There may be no one right theory of leadership
that is applicable in every situation, at all times
© 2014 SAGE Publications, Inc.
Leadership Theories: Overview
• Trait theories -- emphasis on innate characteristics of leaders
• Skills theories -- emphasis on specific skills leaders possess
• Technical skills – knowledge of the job/profession/task
• Human skills – ability to work with people
• Conceptual skills – ability to understand ideas and
principles
• Behavior theories -- emphasis on behavior or actions
• Task behaviors – actions that relate to the work to be done
• Relationship behaviors – actions that focus on the feelings
of subordinates
• Managerial grid (Blake and Mouton, 1985)
• Contingency theories -- emphasis on the situation
• Servant leadership -- emphasis on values and commitment
© 2014 SAGE Publications, Inc.
Transformational Leadership
• Transactional leadership – rewards or punishment
exchanged for behaviors of others
• Transformational leadership -- inspiring and
empowering individuals to go beyond self-interest
and pursue goals that are in the common interest
• Emphasis on developing personal relationships
• Appealing to shared values and ideals
• Transactional versus transformational leadership
(Burns, 1978)
• Transformational leaders use transactional
techniques, but should not overemphasize them
(Bass, 1985; Bass and Avolio, 1994)
© 2014 SAGE Publications, Inc.
Charismatic Leadership
• A leader is someone who behaves in certain ways that cause
others to see him or her as charismatic
• Behaviors that cause others to see a person as charismatic
(Rainey, 2003)
• Advocates a vision that is different from the status quo but
still acceptable to followers
• Acts in unconventional ways in pursuit of the vision
• Engages in self-sacrifice and risk taking in pursuit of the
vision
• Displays confidence in his or her own ideas and proposals
• Uses visioning and persuasive appeals to influence
followers, rather than relying mainly on formal authority
• Uses the capacity to assess context and locate
opportunities for novel strategies
• Need for social distance (Fisher, 1984)
© 2014 SAGE Publications, Inc.
Effective Nonprofit CEO Behaviors
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Focus on mission
Focus on the board
Focus on external relationships
Share leadership and empower others
Focus on key roles and priorities
Use the “political frame”
Right person, right place, right time
• Alignment model (Dym & Hutson, 2005)
• Founder syndrome and life-cycle theories
• Executive transitions and leading change
© 2014 SAGE Publications, Inc.
Right Person, Right Place, Right Time
Alignment Model
• Seeks to integrate the major leadership theories
• The leader’s fit with the organization involves traits,
skills, leadership style and situation
• Alignment must be achieved between the leader, the
organization, and the community
Founder Syndrome
• Organization’s need for leadership may change over
time due to nature of nonprofit life-cycle theories
• Can pose challenge and even crisis for a nonprofit
Executive Transitions
• Preparation should take place before a transition is
needed
• Viable plan and procedure to be proactive vs. reactive
© 2014 SAGE Publications, Inc.
Leading Change
Eight-step change process to ensure momentum and
provide for real and permanent change:
1. Establish a sense of urgency
2. Create a guiding coalition
3. Develop a vision and strategy
4. Communicate the change vision
5. Empower broad-based action
6. Generate short-term wins
7. Consolidate gains and produce more change
8. Anchor new approaches in the culture
(Kotter 1996)
© 2014 SAGE Publications, Inc.