Friday, January 25, 2013

Hallway Executive Sessions

This week my wife and I were talking about “Executive Sessions” at board meetings. Clients often ask, “Should we have an executive session (without the CEO in the room) at every board meeting, or only as needed?”

My standard answer: include time for an executive session in every board meeting. 

But—and this is critical—always, always, always invite the CEO back into the room for a verbal summary of the executive session discussion. Then allow time for the CEO to comment or correct inaccurate assumptions or facts that might have been presented unknowingly. This works if you’ve built a grace-based culture. (Not all executive sessions, of course, focus on what needs to be fixed. They can also be used to affirm a CEO’s leadership.)

All of us have stories of dysfunctional boards that have used executive sessions inappropriately (whining, complaining, venting—with rare truth-telling back to the CEO when all boards members are present). So some CEOs—still stinging from previous board experiences—have successfully vetoed the idea of regular executive sessions. Bad idea.

“CEOs need to recognize,” Joanne said in our discussion, “that there will always be executive sessions whether the CEO wants them or not:
   • formal sessions per the agenda,
   • and informal sessions in the hallway.”

I thought her insight was brilliant (and I even told her that!).  Unhealthy boards sometimes stuff conflict and uncomfortable conversations way, way down during board meetings. It’s the proverbial elephant in the room—and no one’s talking.  Until…the coffee break or adjournment…and then everyone talks plenty in the hallway.

Wise CEOs and board chairs create a healthy forum for honest and open communication between the CEO and board members—in the meeting.

After an executive session, the board chair should invite the CEO back into the boardroom and then summarize the board’s discussion—with opportunity for other board members to add any missing color commentary that the chair may have skipped.  The chair might even repeat the classic line from Governance Guru John Carver, “The board speaks with one voice, or not at all.”  (Including not at all in the hallways!)

But note! The executive session—as a stand-alone tool—is inadequate. Effective boards must also conduct annual board self-assessments, annual CEO assessments, and hold the CEO accountable for three to five Annual S.M.A.R.T. Goals, among many other things. 

Governance is complex and is not for the faint at heart! This executive session stuff is hard. It’s risky. It’s not done well in many circles—but it’s at the very heart of what Christ-centered governance must be.  

QUESTION: What is your board’s policy and protocol for executive sessions?

Friday, January 18, 2013

The Connection Chasm

An experienced senior leader with strong credentials (he loves Jesus, MBA, etc.), asked me recently, “How does one get invited to serve on a nonprofit ministry board?”

I know a dozen nonprofits that would crowd in line to snag this mid-40s board prospect.  Yet here was an eager and willing future board member with no immediate connection to a nonprofit ministry—other than a desire to serve. Apparently, he’s not on the radar of any local or national ministry that would likely benefit from his expertise and his heart.

This “Connection Chasm” is unfortunate, but there are solutions.

“What’s your passion?” I asked him.  I encouraged him to become an active supporter, cheerleader and volunteer of a ministry that grabbed both his heart and his spouse’s heart.

I told him that the best boards are looking for people who meet the “6 Ds” criteria:
   • Discerning Decision-Maker
   • Demonstrated Passion
   • Documented Team Player
   • Diligent and Faithful Participant/Volunteer
   • Doer (“walks the talk”)
   • Donor

We talked about the importance of the first five Ds and then the generous giving imperative per Matthew 6:21, “Where your treasure is, there your heart will be also.” (Note that I said “generous,” not wealthy.)

To define “generous giver” I suggested, “Look at your personal annual giving—and note which three ministries/local church are in your Top-3 each year. It’s likely that one of those ministries might provide you with a board service opportunity.”

In the ECFA Governance Toolbox Series No. 1: Recruiting Board Members, the short DVD and view-and-engage guides (one for each board member) discuss four steps: Cultivation, Recruitment, Orientation and Engagement. In the Cultivation section, there are seven self-assessment statements, including:
   • “We have a written ‘pathway to the board’ checklist that we follow which includes significant reference checks and due diligence.”

Disciplined attention to your Pathway to the Board Checklist will help bridge the “Connection Chasm” between your board’s needs and willing and available board prospects.

QUESTION: Does your board have a Pathway to the Board Checklist? How are you communicating board service opportunities to younger board members?

Saturday, January 12, 2013

Never Say Someone’s No for Them

I remember asking a CEO once, “Who are you thinking about for your next board chair?”

The God-honoring CEO told me that the Lord had been nudging him recently about asking a certain board member, Jeremy (not his real name), to take the helm.

“But after thinking about it,” the CEO shared, “there’s no way Jeremy would say yes. He would be perfect, but he’s too busy. He’d say no. So there’s no point in even asking him.”

That encounter (and dozens like it every year) prompted me to share Bill Hybels’ wisdom with the CEO. In his wonderful book, Axiom: Powerful Leadership Proverbs, Hybels writes:


“It’s an odd tendency I see in even the most discerning and faithful leaders: when they’re trying to add a great board member or an elder or a small group leader or other key leader, they ask God who would be the very best person on planet Earth to fill the position.”

He adds, “Upon receiving the answer, they proceed to pursue everyone but that individual. In almost every case, the ‘very best one’ is a fantastic leader who is already busy doing extraordinary work somewhere else. ‘That’ person might have to agree to a pay cut to join our team. ‘That’ person might have to relocate from some balmy utopia to the Midwest…and surely they won’t do all that just to come serve alongside us.”

Hybels concludes his two-page axiom (one of 76 axioms in the book), “…nothing is ever lost by leaving room for the surprising and supernatural emergence of a yes.”

QUESTION: Who is on your board prospect wish list that you have not yet asked for fear of a no?

Thursday, January 3, 2013

Invitation for Improvement

What word or phrase pops into your mind when someone mentions “annual audit?”

If we were at a board retreat together—and each board member shared a response—the around-the-room drill might sound like this:
   • Necessary evil
   • Boring
   • Important, but not strategic
   • Often late, but well done!
   • Three cheers for our CFO!
   • PTL! We’re still solvent.
   • Going concern = prayer concern

I’m not a finance person, so I tend to be in the camp that says “Let’s do the due diligence, of course, but quickly move to the next agenda item.”

So I must confess this about audits: I was severely reprimanded recently!

Let me explain. I currently serve as board chair for a credit union and a new federal requirement mandates that every board member complete six financial literacy courses—with passing grades! I invested 25 hours online and, somehow, squeaked into the “pass” column.

In the final course (finally!)—the reprimand jumped off my computer screen: “However, the audit is more than a tool for overseeing financial reporting.  It is an invitation for improvement. The information in the report helps identify your [organization’s] strengths and potential weaknesses in a systematic way. It provides the [finance committee], board of directors, and management with a rubric for measuring organizational performance from year to year.”

The audit—an invitation for improvement! When I read those words, suddenly this secular training tool became God’s words to me: “John, I want you to see all of your board work—including the audit—as My invitation for improvement.”

Drudgery turned to joy (almost!).  I was on the last leg of this arduous financial literacy marathon, but—oh my—the path became holy ground.  I will never look at an audit the same way again.

One of John Baillie’s poignant prayers reads, “O Thou who hast so graciously called me to be Thy servant, I would hold myself in readiness today for Thy least word of command. Give me the spirit, I pray Thee, to keep myself in continual training for the punctual fulfillment of Thy most holy will.”

QUESTION: With an eye on eternity, how will you inspire your board members to be looking for more “invitations for improvement?”