balancing governance binghamton 6 2011

Community Focus w Statewide Impact w National Network

Balancing Good Governance & Management for Nonprofits

June 9, 2011 | Binghamton, NY

Presented by

Doug Sauer, CEO

www.nycon.org | 800.515.5012

Key Learning Objectives

• Understanding ways to effectively balance the authority & responsibilities of the board & management

• Learn the keys to balancing proactive leadership with good management

• Gain awareness of ways to enhance mutually constructive & supportive communication between the board & executive leadership

• Become aware of best practices for executive evaluation & compensation

• Be prepared for managing staff leadership transition

Basic Definitions

Governing “to exercise authority or control”

Managing “To bring about or succeed in accomplishing”

Leading “Coming in advance of others”

“Management works in the system; leadership works on the system.”

Stephen R. Covey

Nonprofit Leadership is

a Process that is…

• Defined by the mission, history, culture & services of the nonprofit

• A team experience where power & roles are distributed

• Influenced by position, personality, style, knowledge, & skills

Ethical Nonprofit Leadership

• Actions are consistent with the nonprofit’s mission, values, promises & obligations

• Actions have Integrity: Not driven or influenced by personal interests, gain or inurement

• Adheres beyond the “letter” of legal & regulatory requirements to “the spirit of”

• Focuses on the question of what is the “right” or “correct” thing to do

• Documents decision-making processes & actions to demonstrate & record proper conduct

“Management is doing things right;

leadership is doing the right

things.”

Peter Drucker

Balancing Roles for Organizational Leadership

Managers

Vision

"Managers Who Lead;

Leaders Who Manage"

Leaders

Building Your Leadership Team

• To harness the collective talent & energy of your team members, both board & staff, to accomplish your mission, vision, goals & objectives

Leadership Starts with the Board

• Volunteer Leaders who advance the Mission in a Responsible Manner

• Duties of the Fiduciary–Care – Loyalty –Obedience

The Board-Staff Leadership Team

• Board of Directors• Board Officers• Committee Chairs• Executive Director/CEO• Assistant/Deputy Director• Fiscal Officer• Top Division/Program Heads

Clearly define decision authority along withresponsibilities in bylaws, job descriptions & policies

The Leadership Team…

• Sees & understands the big picture - external & internal

• Motivates - inspires trust & confidence in staff, board members, constituencies & stakeholders

• Recognizes own limitations; recruits & uses staff & board members accordingly

The Leadership Team… (continued)

• Mobilizes & uses resources wisely

• Governs & manages well – holds self & others accountable

• Resolves crisis & embraces change

• Provides vision & strategic direction

“Management is efficiency in climbing the ladder of success;

Leadership determines whether the

ladder is leaning against the right wall.”

Stephen Covey 

Major Governance-Management Areas

1. Board Management & Development

2. Human Resources

3. Finances/Fixed Assets

4. Resource Development

5. Stakeholder-Constituent Representation

6. Programs & Services

7. Strategic Directions & Planning

Policy & Implementation Spheres

Policy-making

Implementation

Board of Directors

Area of Shared Responsibilities

Executive Director/CEO

Area of Shared Responsibilities

Staff

Operating

Policies

Balancing Leading with Managing

Managing…– See the trees in the forest– Maintain systems– Control & tinkers– Manage crises– Seek efficiencies– Focus on procedures & personalities

Leading…– See the forest through the trees– Change systems– Shape & influence– Turn crises into opportunities– Seek investment– Focus on vision & concepts

The ED/CEO

• At-will or contract employee

• Is accountable for all organizational performance & exercises authority as designated by the board

• Accomplishes expectations as established by board policies & directions

• ED’s performance is significantly related to organizational performance, at both the board & operational level

Clearly Define ED/CEO’s Authority vis-à-vis the Board

• Define general & lasting parameters in bylaws

• Have updated, board approved job description or clearly defined contract

State Key ED/CEO’s Job Responsibilities in the Bylaws

• Chief paid administrative officer• Administers day-to-day affairs (financial, personnel,

program, etc.) within policies established by board• Ensures compliant & ethical implementation of board

policies & directives & all applicable laws & contractual requirements

• Hires, supervises, evaluates, & terminates all staff • Inform, support & advise the board & its committees• Safeguards fiduciary obligations & Signatory

Executive Limitations

• Constraints on executive authority which establish prudent & ethical boundaries. Within these boundaries lie the “acceptable” arena of executive activity & decisions– To not risk losses beyond those necessary in the

normal course of business or as otherwise determined by the board

The Delicate Balance of the Board

Board of Directors

Board Committees

Executive Committee

Officers:SecretaryTreasurer

Vice PresidentPresident

Program and Support Staff

Managerial Staff

Fiscal Officer

Assistant Director

Executive Director/CEO

Critical Relationship

Center

Core Elements to Positive Board-ED/CEO Relations

• Openness• Mutual understanding of & respect for

responsibilities, boundaries & limitations• Define & follow an accountability structure• Competence• Style “fit” – managerial, leader,

entrepreneurial, decision-making methods, personality, etc.

• Mutual trust & confidence – earned & tested

Ways to Support the ED/CEO

• View as a mutually supportive partner• Convey sense that challenges are shared• State appreciation of achievements• Encourage professional growth• Recognize and respond to administrative

needs• Watchdog workload• Encourage earned time off• Evaluate regularly

Tips for Evaluating the ED/CEO

• Conduct written evaluations at least annually• Design instrument that is comprehensive,

goal oriented & looks at past as well as future

• Consider including a written self-evaluation• Design process that involves the board’s leadership &

informs all board members– Avoid involving staff & one board member or officer doing

the evaluation– Assign committee in bylaws – Executive and/or

Compensation Committee

Tips for Evaluating the ED/CEO (continued)

• Meet without the ED/CEO to prepare & anticipate sensitive and confidential matters

• Handle serious problems or disciplinary issues carefully….be risk management conscious

• Link compensation to the evaluation

• Allow limited ED/CEO feedback regarding the board’s functioning & how it relates to his or her performance

Considerations for Determining Executive Compensation

• Salary vs. Benefits vs. Perks: “Total Compensation”– IRS 990 Key Employee Report; “Excess Compensation”

• Evaluation results with respect to individual & organizational performance

• Current & future needs & directions of the organization• Job requirements • Competitive labor market• Equity• IRS & state agency criteria • Funder or donor perception• Should be determined by full board action

ED/CEO Succession Planning

• Goal is to maintain continuity with minimal disruption in an emergency, temporary or permanent transition

• Control the message to the various audiences

• Expect the unexpected!

• Maximize opportunities for positive change

• Create framework for search process; who is going to do what & how

• Consider an Interim Executive

• Then hire the right candidate

Role of ED/CEO in Succession Planning

• ED/CEO should have plans for back-up when he or she is not available

• ED/CEO needs to think succession & back-up when key management staff turn-over occurs

Key Points to Remember to Board-ED Relations

• To act in good faith & with the diligence, care, loyalty, & skill which reasonable persons would exercise under similar circumstances

• The board as a collective is the employer as a collective, not individual members

• The ED/CEO is the board’s key employee & partner• Both the board & ED/CEO provide leadership

– The board governs – The ED/CEO contributes to governance & is accountable to the board

for all management & staff functions – The interactions between the board & ED/CEO sets the organizational

climate

Added Ideas, Comments, Questions?