Wednesday, April 16, 2014

Good to Great Governance: Who Cares?

You’ve heard the sad story of the board that belatedly realizes their CEO has learned very little from 20 years of CEO “leadership.” Instead, the scorecard would reveal that he or she has had just one year of leadership—but repeated 20 times.

How about your board?

Are your governance competencies improving, plateauing, or declining—and who is monitoring this? As a Christ-centered organization, are you—actually—becoming more Christ-centered? Are you more concerned about “how many” or “how well?” And who cares about this?

After the success of Jim Collins’ book, Good to Great: Why Some Companies Make the Leap…and Others Don’t, he supplemented that best-seller with a 35-page monograph for nonprofits, Good to Great and the Social Sectors: Why Business Thinking Is Not the Answer.

Collins wrote, “The moment you think of yourself as great, your slide toward mediocrity will have already begun.” He doesn’t footnote that statement with Scripture, but you could.
Do your vision and mission statements
trumpet arrogance or humility? 
And what are you measuring?

“Greatness is not a function of circumstance,” adds Collins. “Greatness, it turns out, is largely a matter of conscious choice, and discipline.” Your board will appreciate his insights on how a nonprofit or church measures results.  As an example, Collins notes how the Cleveland Orchestra measures “greatness.” 

Yet contrast Good to Great with the new book, The Choice: The Christ-Centered Pursuit of Kingdom Outcomes, by Gary Hoag, Scott Rodin and Wes Willmer. The authors add insight and richness to the critical measurement questions that great boards must ask. (Order one for every board member from ECFAPress.)

Collins says, "All data is flawed. It doesn't really matter whether you can quantify your results. What matters is that you rigorously assemble evidence—quantitative or qualitative—to track your progress."

The authors of the The Choice challenge Christ-centered boards and CEOs to care about results, yes, but, more importantly, to
understand the mega-difference
between “Earthly Oriented Metrics”
and “Eternity-Oriented Metrics.” 
Now that’s a boardroom conversation I’d like to videotape.

QUESTION: Hoag, Rodin and Willmer write, “Just because a goal is so big it can only be accomplished if God shows up, does not mean it aligns with His will.” Do you agree? How do you “right-size” kingdom goals in your organization?

Thursday, April 10, 2014

Laughter Is an Instant Vacation

Sometimes board members take themselves too seriously. I speak from personal experience.

I chair the board of a credit union and last week our CEO emailed me some very disappointing news (I thought). I quickly scanned the news release—and was dumbfounded! 

In credit union circles, the regulators have a rating system, C.A.M.E.L., to assess a financial institution’s condition -- (C)apital adequacy, (A)ssets, (M)anagement Capability, (E)arnings, and (L)iquidity (also called asset liability management).

Trust me. I had created a brilliant memory device for C.A.M.E.L.—and it helped me pass the rigorous Board Financial Literacy online exams the regulators now require of all board members.  So when the news release, from a professional services firm, arrived in my inbox—I was fit to be tied!  The regulators had dropped C.A.M.E.L. for a new rating system, C.O.U.G.A.R.  All that work and study gone to waste!

At our executive committee meeting last week, I suggested that this important new requirement be addressed at the next board meeting—and, perhaps, it might require a full one-hour discussion at our next board planning retreat.  Our CEO just nodded his head and asked for our recommendations.

Then Mike, who obviously reads ALL of the materials more thoroughly than I do, gently interrupted:

“John, did you notice the date on that C.O.U.G.A.R. press release? It was April 1—April Fools’ Day.”


In Jerry and Mary White’s new book, To Be a Friend: Building Deep and Lasting Relationships, they quote Milton Berle’s great line,
“Laughter is an instant vacation.”

So, apparently, I treated our CEO and executive committee members to a mini-vacation.

QUESTION: Do you laugh enough at your board meetings? (And do you laugh at the appropriate times? Read the wisdom from Olan Hendrix who said, “There are two things you should never joke about: prayer and fundraising.”)

Tuesday, April 1, 2014

Benchmarks for the Perfect Board Member!

I’ve been hanging out with board members for more than 40 years, including 30 years as a nonprofit CEO, so what I’m blogging today is remarkable. I’m stunned. You’ll be stunned.

Last month I met
the Perfect Board Member!

We spent 48 hours together, including the three-hour trip from the airport to the board retreat center (just the two of us), and ditto for the return trip. 

Connor (not his real name) left me speechless. He is truly my new benchmark for the Perfect Board Member.

I’ve always resonated with Jim Brown’s practical book, The Imperfect Board Member: Discovering the Seven Disciplines of Governance Excellence. But now, perhaps I could write the sequel, The Perfect Board Member

At the board retreat that weekend, I heard Connor share what I’m calling “7 Stunning Commitments.” I’ve wordsmithed them a bit, but the core idea came from Connor, a young entrepreneur with a generous passion for the organization’s mission—and a savvy understanding of God-honoring governance. Here are my new benchmarks:

“Connor’s Commitments”

1) “I only serve on one board at a time—so I can give high priority to leveraging my time, talent and treasure—and my passion and spiritual gifts—for this wonderful ministry.”

2) “My spouse and family are enthusiastically ‘all in.’ God has called each of us to give high priority to this ministry, as volunteers and ambassadors. In fact, my wife wants me to cut back my hours at work—so I have more volunteer time.”

3) “I usually respond to our CEO’s emails and phone calls on the same day, but never more than 24 hours later. I guess others don’t do that—because she thanks me every time!”

4) “I read board and committee reports, financial reports, and all supplementary materials prior to board meetings. I jot down comments and questions—and email those to the CEO at least two days before the meeting. I don’t want to surprise her or play ‘The Gotcha Game’ in a board session.”

5) “I honor our board policy protocols and never bring my ‘Volunteer Hat’ questions or concerns to a board meeting. I bring those to the staff person overseeing my volunteer role.”

6) “I send birthday cards to our CEO and last year several of us treated the CEO to lunch on her employment anniversary.”

7) “Prayer changes things, so recently I’ve been encouraging the board to move from decision-making to discernment. We are trying to build spiritual discernment into all of our thinking and planning. Prayer is changing my life (and my day job) too!”

So how did this CEO recruit the Perfect Board Member? She didn’t. (Today is April Fools’ Day.)

QUESTION: But seriously, when your board members are driving home from a board meeting or board retreat, do they have benchmarks for self-assessing their effectiveness as board members?

Friday, March 28, 2014

Embed Succession Planning!

In a brilliant new governance board, Boards That Lead, the co-authors devote an entire chapter to CEO succession, which they call “The Ultimate Decision.”

When I think of an “ultimate” decision for a Christ-centered board, I’m thinking about giving God the glory—and ensuring that our fork-in-the-road decisions are guided by a spiritual discernment process, grounded in Kingdom values with eternity in view.

Yet certainly one of those big decisions is about CEO succession.  Even the book’s subtitle is a helpful guide for board members:
“When to Take Charge,
When to Partner, and
When to Stay Out of the Way.”

Warning boards that “nothing can fully make up for the choice of a wrong CEO,” the three co-authors, Ram Charan, Dennis Carey, and Michael Useem present an insightful list—and color commentary—on “Ten Principles for Finding the Right CEO.”  

This list in Chapter 6 is just one of 18 practical checklists from these experienced governance gurus who work on the for-profit side. Here are their 10 points:
   1. People set strategy.
   2. Implement a CEO and successor evaluation methodology.
   3. Include in the CEO’s evaluation an assessment of how well the company [ministry] is building a succession plan for the next generation of company leaders.
   4. Place the board leader [board chair, in nonprofit circles] in charge of the succession process.
   5. Retain a high-performing chief executive, but also work to keep capable successors.
   6. Seek candid comparative data on inside CEO candidates from those who have worked with all of them. (Here they reference a 450-degree assessment.)
   7. Make direct contact with both sources and candidates to verify information.
   8. Review outside consultants carefully to prevent conflicts of interest.
   9. Maintain confidentiality.
   10. Embed succession planning in corporate culture.

At your next board meeting, ask “What would it look like for us to embed succession planning in our culture?” And you’ll need to address the obvious next question: “What board chair, or board member, or search committee has time to thoroughly meet these high expectations?” 

My answer: That’s why I encourage people serving on Christ-centered boards to ask themselves two questions: 
     1. Is my calling crystal clear? Has God called me to serve on this board—and is that calling affirmed by my spouse (if married) and perhaps even my organization (if not retired)? This will take big doses of time, thought and prayer!
     2. And to engage deeply and effectively as a board member/steward of God’s work, have I limited my board service to just one or two boards (until retired)?

The Christ-centered board, of course, will add to this above list of 10 principles. For example, David L. McKenna’s excellent book, Stewards of a Sacred Trust: CEO Selection, Transition and Development for Boards of Christ-centered Organizations (published by ECFA Press), reminds us of the holy opportunity and duty for Christ-centered boards:
CEO selection
is a sacred trust.

Are you ready?

QUESTIONS: If tomorrow, your current CEO gave you a 60-day resignation notice, is your board prepared for the succession process? Who should read these two books—and recommend next steps at our next board meeting?

Sunday, March 16, 2014

The Empty Chair Syndrome

An analyst for a forensic crime lab, an attorney who works with the poor, and a young entrepreneur…all walk into a two-day board training session.

Sorry…no punchline.  It actually happened last week.

No joke.  These three were joined by 35 other board members, plus nine CEOs, at a foundation-sponsored board leadership and development program for nine non-profit ministries. Before the program ends, these highly committed board members will miss four days of work at their day jobs this spring because they want to improve their competencies in their board jobs.

Lately, I’ve been stunned at the commitment level of hundreds of board members.  One university professor had unavoidably missed two board meetings recently, so to be both physically and mentally present at a board meeting last month, she skipped a long-planned, albeit short, family vacation.

I’ve noticed that when board chairs—and the whole board—set the bar high, the “empty chair syndrome” is not a problem at board meetings.
Fruitfulness starts
with faithfulness.

And when boards are plagued with absent board members and unexcused absences are the norm, and not the exception, it's past time to address the syndrome.

My Christian camp and conference center colleagues often say, “You can’t minister to empty beds.” We could turn that around for board members, “You can’t spiritually discern God’s direction with empty chairs.”

Sometimes the empty chair syndrome has a simple solution:
   • Perhaps the board meeting agenda needs to be more compelling—with background reports, ready-for-the-minutes recommendations, and think pieces.
   • Maybe, as John Maxwell suggests, you need to have the meeting before the meeting.
   • Or maybe the board materials need to arrive sooner (7-14 days in advance)—with a call-to-prayer request for the fork-in-the-road decisions ahead.
   • Or the chair needs to reiterate the board attendance policies—and have one-on-one conversations (in person, if possible) with board members teetering on the edge.  (Sometimes there are legitimate reasons for absences, and with relief, a board member might appreciate the grace given to step down.)

Well-executed board meetings inspire high commitment.  And highly committed board members inspire board chairs and CEOs to deliver board meetings that are God-blessed and joy-filled.  We all experience deep satisfaction, and an indescribable sense of God’s leading in our lives together, when we have our board ducks in a row.

Galatians 5:22-23 reminds us, “But when the Holy Spirit controls our lives he will produce this kind of fruit in us: love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self-control…”
QUESTION: Are you inspiring your board members to be faithful in board attendance—not for the rules, but for the Kingdom opportunities?

Friday, February 28, 2014

Big Egos and Hallway Power Plays

“To recruit new board members because of their position versus their passion.”

This is old school board recruitment:
   • We need a pastor on our board, preferably one from the largest church in our city, state or country.
   • We have legal issues, so who knows an attorney that could be on our board?
   • What about the board chair over at First Community? He’s on six boards and his resume is stunning!
   • Yikes! Our board is too old, too male and too white. We need some diversity.

Memo to All Boards:
Old school board recruitment doesn’t work and never did.
When you recruit board members for position (without their passion), you rarely get loyalty, high commitment, generous giving, or spiritually discerning decisions.  Instead, you’ll frequently get unexcused absences, big egos, lack of unity and hallway power plays.

It doesn’t have to be that way—and it must not be that way.

Board guru Ram Charan writes, “With the right composition, a board can create value; with the wrong or inappropriate composition, it can easily destroy value.” So getting the right people on your board bus is a foundational priority.
How? Your organization has hundreds, if not thousands, of volunteers and highly committed donors. Many of them, if appropriately cultivated over a 12 to 36-month process, would be extraordinary board members.  So don’t settle for a glowing resume from someone you don’t know, who has little knowledge of you, and zero passion for your ministry.

Instead, take time and invest as much energy, due diligence, prayer and spiritual discernment as you would if you were recruiting a new CEO. “As the board goes, so goes the ministry.” For more help, check out the ECFA Governance Toolbox Series No. 1: Recruiting Board Members.

Questions: Who owns the year-round process of cultivating, recruiting, orienting and engaging board members? Is there a spiritual discernment process in place to guide your direction?

Sunday, February 23, 2014

The Train Wreck Waiting to Happen

“To tilt, perhaps by default, toward one of the three unhealthy board scenarios—and miss the extraordinary opportunity to leverage the ‘Governance as Leadership’ model.”

Richard P. Chait, William P. Ryan, and Barbara E. Taylor, co-authors of Governance as Leadership: Reframing the Work of Nonprofit Boards, write that there are three unhealthy governance models:

UNHEALTHY MODEL #1: GOVERNANCE BY FIAT.  In this scenario, trustees displace executives. Here the board does staff work.  Sometimes the staff is incompetent so the board jumps in. Often the board enjoys staff work.  Either way, it’s dysfunctional.

UNHEALTHY MODEL #2: GOVERNANCE BY DEFAULT. Here both the trustees and the nonprofit executives disengage.  No one has their eye on the governance ball—and the important work of governance is minimized.  Left undone, it’s a train wreck waiting to happen.

UNHEALTHY MODEL #3: LEADERSHIP AS GOVERNANCE. This might sound appropriate, but it’s cockeyed.  Here the nonprofit staff displace the trustees.  The CEO and/or senior team make decisions that should be in the governance arena.  This happens frequently with founder-led organizations and “good old boy” boards.  Often, the organization appears to be operating smoothly.  Internally, this dysfunction never ends well. Sooner or later, someone will pay.

So it is possible that your board is seeking to be God-honoring in your stewarding roles, but operating from an unhealthy model—quite likely a model that is not in sync with a Christ-centered foundation? 
While this book is not faith-based,
the big idea aligns beautifully with biblical principles.

TYPE III GOVERNANCE. This fourth scenario, the healthy one, the authors label “Type III Governance.”  Here the trustees and executives collaborate.  They both understand their appropriate roles, but unlike most boards, the staff affirms the board members when they upgrade to “generative thinking.” (My take: governance as leadership maximizes the spiritual gifts of board members per Romans 12, Ephesians 4 and 1 Corinthians 12.)

So what’s “generative thinking?”  The authors use a variety of definitions to explain this cognitive process of excelling boards: sense-making, reflective practice, framing organizations, personal knowledge, etc.  I liked “sensible foolishness” the best.

Generative thinking goes beyond “fiduciary governance” (Type I) and beyond “strategic governance” (Type II).  This “Type III” approach typically involves three steps:
   1) Noticing cues and clues: different people can take the same data and arrive at different meanings;
   2) Choosing and using frames: understanding the “fuzzy front end” of a product development process, for example; and
   3) Thinking retrospectively: the counter-intuitive high value of “dwelling on the past” to understand patterns that might impact the future.

“Generative thinking is essential to governing,” the authors point out. “As long as governing means what most people think it means—setting the goals and direction of an organization and holding management accountable for progress toward these goals—then generative thinking has to be essential to governing. 

"Generative thinking is where goal-setting and direction-setting originate. The contributions boards make to mission-setting, strategy-development, and problem solving certainly shape organizations.  But it is cues and frames, along with retrospective thinking, that enable the sense-making on which these other processes depend.”

Yikes!  Think about this final zinger from the authors: “And a closer examination of nonprofits suggests something else: Although generative work is essential to governing, boards do very little of it.”

Inspire one or more board members to read this book—and report on it at your next board meeting or retreat.

QUESTION: The authors comment, “in their ‘day jobs’ as managers, professionals, or leaders of organizations, trustees routinely rely on generative thinking, so much so they have no need to name it or analyze it. They just do it. But in the boardroom, trustees are at a double disadvantage.  Most boards do not routinely practice generative thinking.”  They add, “When it comes to generative governing, most trustees add too little, too late.” Do you agree?