Tuesday, July 28, 2020

QUESTION 14: How Prepared Are We to Work With Activists?


The $500,000 Restricted Gift, the Hospital, and the Jury

Ram Charan’s final chapter in Owning Up addresses the challenging issues faced by for-profit public companies. You’ll be tempted to skip this chapter (since nonprofit ministries do not have shareholders). 

But—your ministry does have stakeholders—so don’t miss the wisdom on how to communicate with any “activist” or social media eruption.

Charan writes, “Bloggers search through the footnotes of SEC filings. Seventy-eight-year-old women with no corporate leadership experience file shareholder proxies and end up interviewed on business channels.” 

Warning, he says: “Your performance as a board will increasingly be scrutinized, as much as the [organization’s] performance.”

QUESTION 14 of 14: How Prepared Are We to Work With Activist Shareholders and Their Proxies? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)


Finally! We’re in the last chapter of this important book. (Watch for the index and summary in my next blog.) In this blog, I’m taking liberties with the for-profit topic—to address just one of many related topics for nonprofits. Let’s call them activist or dissatisfied donors.


In his powerful book, Trust: The Firm Foundation for Kingdom Fruitfulness, Dan Busby says that “We ignore perceptions at our peril.” His short chapter on “Perceptions” includes “Ten Major Issues Can Lead to Misperceptions.” (The list: compensation, fringe benefits, intellectual properties, family members paid by the ministry, related-party transactions, and five more.)

Is your board proactively discussing these 10 major issues—or will you be unprepared when a ministry issue (fake news or not) hits the fan and/or the internet? 

Busby quotes Harvey McKinnon:
“Donor loyalty is not about the donor being loyal to you; 
it is you being loyal to the donor.”

Being proactive means your board will have policies and practices that will give confidence to givers that restricted gifts will, in fact, be restricted for the specified use. In the absence of trust, “activist” stakeholders and donors can and will sound the alarm—often inappropriately.

Ram Charan’s chapter includes several examples of activists and he lists the affected companies, by name. Some handled the issues with wisdom—and a few didn’t. He gives “four pieces of advice” for boards when “activist investors come calling.” While no Scripture is cited, you’ll find Jesus’ principles in his recommendations.

Likewise, Busby includes an “activist” true story in Trust—and he adds the Scripture (2 Cor. 8:14-25) in the chapter, “Honoring Giver Intent.” He also shares the true story of a hospital in Oklahoma that received a $500,000 gift from Troyal G. Brooks in 2005. The giver’s intent was to honor his mother by naming a new facility after her. In 2008, the hospital reneged on the agreement and planned to use the funds for another project—so Brooks sued the hospital.

Busby writes, “…the agreement with the hospital was oral; therefore, the jury had to determine who was telling the truth. In 2012, a jury awarded Troyal the $500,000 gift back plus the maximum in punitive damages—$500,000.” He adds, “Troyal is better known as Troyal G. (Garth) Brooks. Ironically, the hospital is located on Garth Brooks Way.” Yikes!

Ram Charan writes, “Every shareholder matters.” Dan Busby would add, “Every giver matters—and trust is the firm foundation for Kingdom fruitfulness.” 

BOARDROOM DISCUSSION: Dan Busby quotes Max De Pree: “When things go awry, trust powers the generators until the problem is fixed.” Here’s an agenda item for your next meeting: “How Prepared Are We to Work With Activist or Dissatisfied Donors?”

CHECK OUT THESE HELPFUL ECFA RESOURCES

• READ: Lesson 22, “Whopper Mistakes Can Unravel Your Ministry,” in More Lessons From the Nonprofit Boardroom. (Click here to read the four-page chapter.) See especially “Whopper Mistake #3: Failure to provide accountability for restricted gifts.” Click here to read Kecia Klob’s color commentary, including this from Max De Pree: “The first responsibility of a leader is to define reality.”

• READ: Lesson 31, “Where Two or Three Are Gathered on Social Media…” in More Lessons From the Nonprofit Boardroom. While this lesson is focused on conflicts of interest, it’s a timely reminder that you’re just one click away from a social media firestorm. (Click here to read the four-page chapter.) 

Tuesday, July 21, 2020

QUESTION 13: How Do We Stop From Micromanaging?


The WORST Thing to Happen to a Board!

We all agree—board members should not micromanage the ministry. But think more deeply about this. Ram Charan writes:


“The worst thing to happen to a board is when the CEO and the management team lose respect for the board.”

Don’t skip this chapter—because at the root of lost respect is often a micromanaging board! 

QUESTION 13 of 14: How Do We Stop From Micromanaging? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)


“A common complaint among chief executives,” writes Charan, is that board members “get into the weeds, digging into operational details that have little strategic value.” The problem: one board member inappropriately weighs in on a tasty topic—others join in on the fun—“and for the rest of the meeting the discussion never lifts to a higher altitude.”


There are numerous solutions for mitigating micromanagers, but it takes a savvy board chair, a grace-giving CEO, and other board members with self-awareness and high EQ (read my review of Emotional Intelligence 2.0).

Charan delivers more than a dozen insights on addressing the micromanaging board member. I appreciated these four take-aways:

1. Pause the PowerPoint. Sometimes, management may contribute to the problem by “providing too many slides and unnecessary details.”

2. Ask Quality Questions. “Asking questions of an operating nature is not in itself micromanaging, as long as the questions lead to insights about issues like strategy, performance, major investment decisions, key personnel, the choice of goals, or risk assessment.” (I often recommend the book, The Coaching Habit, which lists seven types of questions, including “The AWE Question: And What Else?)

3. Hint With Humor. Ram Charan notes that not all board members are self-aware, so the board chair (or Lead Director on many for-profit boards) must step up to the plate. Example: When a board member “started badgering a company’s IT director about its systems, the board’s Lead Director stepped in and joked, ‘Hey (Joe), are you looking for a job in IT?’ The tone was collegial and humorous, but the director got the point.” (Click here to read how Rich Stearns addressed micromanaging board members at World Vision U.S.)

4. Monitor 12-Month Metrics. “It also helps when the board has agreed upon the twelve-month priorities, and is clear about the strategy and the milestones.” A dashboard “also helps board members stay on point.”

Boards expect CEOs to be excellent at delegation—but boards must also model a delegation culture. Healthy boards delegate to their CEOs. Unhealthy boards micromanage. “Delegation” is one of 30 short prayers in the little book by Richard Kriegbaum, Leadership Prayers. While every CEO should pray this prayer—this stunning and sobering prayer can also by prayed by board members:

“Help me to be clear about the distant goals and about who needs to do what to reach those goals. When I do this well, the spirit of the one to whom I delegate will respond with zeal. My own spirit will rejoice, and I will follow that person with confidence.

“By your grace, my leadership will either enhance or restrain the work of your Spirit in those who lead me, making them more effective or less effective. Those I chose to follow will have a profound impact on the results in the organization, and they will have a profound impact on me.”


Ram Charan writes: “The worst thing to happen to a board is when the CEO and the management team lose respect for the board.” Maybe the best thing to happen to a board is when the board selects the right CEO—and then trusts their CEO.

BOARDROOM DISCUSSION: Think back to the last time a board member was meandering into micromanagement mode. Did your board chair step up to the plate and address it appropriately? Are you ready for the next time it happens? 

CHECK OUT THESE HELPFUL ECFA RESOURCES

• READ: Lesson 20, “Apply for a Staff Position and You Can Deal With That Issue! Help board members not to cross the line into operational details,” in Lessons From the Nonprofit Boardroom. (Click here to read the four-page chapter.) In his color commentary on this lesson, Richard Stearns writes, “Your board likely comprises professionals at the top of their fields, so it’s natural that they’re curious and opinionated about details in their realm of expertise. But just because they can wade into operational minutiae doesn’t mean they should. That’s not what a board of directors is designed to do.” (Click here to read the blog.)

• TOOL: Need a dashboard template for tracking CEO annual goals? Check out “Tool #11: Monthly Dashboard Report” in ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. (Read more here.)

Tuesday, July 14, 2020

QUESTION 12: How Can Our Board Self-Evaluation Improve Our Functioning and Our Output?


“The Acid Test of Effective Corporate Governance”

A board member, clearly proud that he had invested 250 hours on board work the previous year, told Ram Charan, “We put in a lot of hard work.”

But Charan, wisely, pushed past the rhetoric and non-measurable metrics—and instead—threw him this zinger: “Let me ask you something. What would you say are the one or two things your board did that really made a difference for the [organization]?”

You guessed it. The board member “…took a long pause and looked up at the ceiling. He seemed lost in thought, like he was struggling to come up with a concrete answer. As I waited for him to respond, I realized that he probably had never thought about his board work in that way.”

QUESTION 12 of 14: How Can Our Board Self-Evaluation Improve Our Functioning and Our Output? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)


Board members “should not confuse hard work, as commendable as it is, with meaningful results,” writes Ram Charan. That insight is just on the first of 14 wisdom-packed pages in Chapter 12 on the critical need for boards to conduct self-evaluations.


Charan adds, “The board’s output—the quality of the decisions it makes and actions it takes—is the acid test of effective corporate governance.”

Don’t confuse inputs (meeting frequency, meeting length, etc.) with outputs. Boards should “explicitly state that the central purpose of their board self-evaluation process is to continuously improve their ability to govern effectively.”

Peter Drucker agrees: 
“Self-assessment can and should convert good intentions and knowledge into effective action—not next year but tomorrow morning.”

The Drucker quote is from the robust 30-page resource, “Tool #5: The Board’s Annual Self-Assessment Survey,” in ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. According to ECFA’s research (see page 32), 31% of board members said YES to this question: “In the last two years, have you had an outside person help your board look in the mirror to do self-assessment for how it could improve?”

Tool #5 gives you multiple options in three major sections:
• Section 1: Do-It-Yourself
• Section 2: Facilitated by a Consultant or Board Coach
• Section 3: Template: “Best Governance Practices” Survey

If you opt for the Do-It-Yourself approach, Tool #5 gives you seven options, including this free assessment from ECFA:


CLICK HERE to complete the NonprofitBoardScore™, a tool developed by ECFA. The online survey will give you instant feedback and allow you to re-take the evaluation over and over (perhaps every six months or at least annually). Email the link to everyone on your board—and encourage each board member to save and print the results for discussion (and action!) at your next board meeting. 

READY FOR CANDOR? If you have a healthy board—competent in Governance 101 practices—and you’re ready for a challenge, ask your Governance Committee (or Executive Committee) to consider peer evaluations at least once a year. Very common in for-profit governance, peer evaluations are very uncommon within nonprofit ministry boards. Read Ram Charan’s suggestions in Chapter 12 first—and then discern if your board is ready to go deeper.

According to the Harvard Business Review article, “What Makes Great Boards Great,” by Jeffrey A. Sonnenfeld, it is the soft side of board governance that distinguishes high quality boards from the rest of the governance rat race. He labels it a “virtuous cycle of respect, trust and candor”—but, he warns, even that can be broken at any point. For your first peer review, perhaps ask a board coach to help you set the guardrails.

To paraphrase Proverbs 9:7, “Teach a wise board member, and he or she will be the wiser; teach a good board member, and he or she will learn more.” 

BOARDROOM DISCUSSION: What do we want to learn from our next board self-evaluation? Ram Charan writes that board members “should not confuse hard work, as commendable as it is, with meaningful results.” What are the one or two things our board has done in the last six months that has really made a difference for the ministry?

CHECK OUT THESE HELPFUL ECFA RESOURCES

• READ: Lesson 1, “Wanted: Lifelong Learners. Would you trust a surgeon who stopped learning?” in Lessons From the Nonprofit Boardroom. (Click here to read the four-page chapter.) In his color commentary on this lesson, Ralph E. Enlow, Jr., writes, “I find that the fatal combination of passivity and agenda clutter conspires to crowd out efforts to walk the talk of continuous board development.” (Read the blog.)


• TOOL: With 30 pages and more than a dozen self-assessment options, check out “Tool #5: The Board’s Annual Self-Assessment Survey,” in ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. (Read more here.)

Tuesday, July 7, 2020

QUESTION 11: How Can Executive Sessions Help the Board Own Up?


Spoken Words and Unspoken Thoughts

Are you familiar with “Kim’s Rule of Committees?” It’s in the witty book by Arthur Bloch, Murphy’s Law Book Three: Wrong Reasons Why Things Go More!


“If an hour has been spent amending a sentence, 
someone will move to delete the paragraph.”

I’ve often shared my “Murphy’s Law” with CEOs (waiting anxiously outside the boardroom during an executive session): 


“There is no relationship between the actual length of an executive session and the substance of the governance work actually accomplished in that session.” 

QUESTION 11 of 14: How Can Executive Sessions Help the Board Own Up? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)



While Ram Charan calls the executive session “the single most important innovation in corporate governance to date,” this closed door meeting of the board—without the CEO or staff in the room—is a delicate dance.


And caution! If your board chair is inexperienced or inept at leading an executive session, prepare for the worst. Your organization would never thrust a staff member into a critical role without coaching or mentoring (or at the least—reading something!)—yet boards venture into executive sessions often inappropriately prepared.

So…here are two resources. First, read Chapter 11 in Owning Up and be forewarned: “…if executive sessions are not run well, they can undermine trust and clog the flow of information and ideas, which makes it harder for the board to do its job.” Charan weighs in on the best time for executive sessions (he prefers before a board meeting), why the CEO should be in the room at the beginning of the session, and how to “loop in” the CEO after the executive session. 

My guess—this might be the first time you’ve read 11 pages on effective executive sessions—the good, the bad, and the ugly.

Second, read Lesson 17, “Botched Executive Sessions Are Not Pretty,” in More Lessons From the Nonprofit Boardroom, by Dan Busby and yours truly. (Click here to read the six-page chapter.) We recommend seven principles:

PRINCIPLE 1: An executive session without the CEO should never include issues that are of a non-sensitive nature. 

PRINCIPLE 2: A board should always meet in executive session in at least two situations: (1) when considering the CEO’s periodic review, and (2) when reviewing the CEO’s compensation. 

PRINCIPLE 3: Board meetings should rarely be conducted unless the CEO is included in the meeting. 

PRINCIPLE 4: The CEO should generally be present at the beginning of an executive session. 

PRINCIPLE 5: Following an executive session, the gist of the discussion should be communicated to the CEO in a constructive manner. 

PRINCIPLE 6: During the executive session, not every comment made by every board member will necessarily be appropriate or substantive. 

PRINCIPLE 7: If feedback to the CEO is not provided right after the session, it should be conveyed within a day or two so that the discussion is fresh in the minds of board members sharing the report. 

When the board chair (and perhaps another board member joining him or her) communicates the important content of the executive session to the CEO, they should remember John Carver’s wisdom, “The board speaks with one voice, or not at all.” Under no circumstances should comments or feedback from an executive session be attributed to individual board members. Anonymity is of utmost importance.

In addition to these two resources, we pray that it comes naturally to your mind and heart to add a third resource—God’s Word. Perhaps you’ll begin your next executive session with Psalm 19:14 (TLB): “May my spoken words and unspoken thoughts be pleasing even to you, O Lord my Rock and my Redeemer.” 

BOARDROOM DISCUSSION: “Just as the board needs an agenda, an executive session needs an agenda.” What should be on the agenda for our next executive session? When should we meet—before or after the regular board meeting?

• READ: Lesson 17, “Botched Executive Sessions Are Not Pretty,” in More Lessons From the Nonprofit Boardroom, by Dan Busby and John Pearson. (Click here to read the six-page chapter.) Click here to read Philip Boom’s color commentary on this lesson.

Tuesday, June 30, 2020

QUESTION 10: How Do We Get the Most Value Out of Our Limited Time?


The Most Important Issues on the Agenda Come First

Ram Charan pushes back on the common boardroom practice of presenting financial reports and minor agenda items first—just to get them out of the way. The problem: the board’s mood and psychological energy level sags. “That’s why I suggest that the most important issues on the agenda come first,” Charan writes.

This is not unlike the coaching competency trumpeted in The Coaching Habit: “Cut the intro and ask the question!” Starting strong is powerful, the author writes. “No James Bond movie starts off slowly. Pow! Within ten seconds you’re into the action…and the heart is beating faster.”

The Power of Moments asks, “How do you refresh a meeting that’s grown rote?” Chip and Dan Heath respond: “Break the script.”

QUESTION 10 of 14: How Do We Get the Most Value Out of Our Limited Time? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)



It seems that by chapter 10 in most books, most authors are writing on fumes—just eking out the requisite word count. Not Ram Charan! He’s just warming up. This chapter is packed with practical boardroom wisdom:


ROUTINE VS. IMPACT. “In some cases, boards feel too much time is spent on routine items and resolutions, and not enough on the issues that have a significant impact on business—things like strategy, risk, and succession.”
5 MILLION DECISIONS? “Boards don’t make five million decisions over the course of the year; there are usually only a handful of issues and decisions that significantly impact the business.”
4 OR 5 PRIORITIES. “The CEO and the board’s leadership should identify those four or five, at most six, items that should constitute the bulk of the board’s time and energy in the coming year.” And “Every board should consider for its twelve-month priorities some kind of strategic dashboard…”


“If you have more than five goals,
you have none.”
Peter Drucker

PLAN B. “Discuss management’s plan B to address changing conditions.”

Your meeting time—and your board members’ time—is precious and always limited. So is it time to step back and restructure the meeting agenda? The length and frequency of your meetings? The location and setting? Time to ramp up the Kingdom expectations? Chapter 10 (just nine pages) will help you refresh your meeting. Three more ideas:

END-OF-MEETING DISTILLATION. “The purpose of the distillation is for the CEO to test the items he perceives to be at the center of the whole board’s deliberations, and that require follow through. The board can validate that the CEO has covered all the important bases.”
SOCIAL TIME. “…take care not to squeeze out unstructured time together.” Charan encourages adequate social time (pre-meeting and post-meeting meals, etc.) so board members know each other better—which also builds trust.
CEOs MUST COACH PRESENTERS. Direct reports to the CEO should be coached on effective boardroom presentations. Charan suggests a 50/50 time split between presentations and discussion.

See also the advice in 15 Minutes Including Q&A: A Plan to Save the World From Lousy Presentations. And…click here to read why Max De Pree warned, “The chairperson should not permit anyone to read to the board.”


Time is short and “a lot is expected of us,” whines a board member in chapter 10. “Deal with it!” responds Ram Charan. This jam-packed chapter will help boards maximize their limited time—and, for Christ-centered boards, it will also be a reminder to recruit board members who are already Kingdom stewards of their time.

P
roverbs 16:33 (The Message) cautions, “Make your motions and cast your votes, but God has the final say.”

BOARDROOM DISCUSSION: How do we get the most value out of our limited time? What should we add, enhance, change, or drop?

CHECK OUT THESE HELPFUL ECFA RESOURCES

• READ: The board at Warm Beach Camp and Conference Center schedules a “Heavy Lifting” segment in every meeting—to address “big rock” agenda items. Read “Decrease Staff Reporting and Increase Heavy Lifting. Consider the good, the bad, and the ugly.” (From: Lessons From the Nonprofit Boardroom. Click here to read Lesson 36.)

• TOOL: See how a “Heavy Lifting” segment—the best use of the board’s time—is incorporated into a quarterly board meeting. Read the blog here and order the book to download the meeting agenda template, “Tool #12, Quarterly Board Meeting Agenda and Recommendations,” in ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. 

Tuesday, June 23, 2020

QUESTION 9: Is Our Governance Committee Best of Breed?


Tell-tale Signs You’re No Longer a Respected Board Member

A recent ECFA survey reported that just 50% of board members agreed that “our board has policies in place—and the spiritual integrity required—to ask an under-performing board member to resign.” (Download the survey here.)

Ram Charan says that the Governance Committee must address the dysfunctional board member issue year-round, not just in the annual board self-evaluation survey.

QUESTION 9 of 14: Is Our Governance Committee Best of Breed? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)


“Many boards will face awkward involuntary transitions,” writes Ram Charan. He recommends that every board have a “best of breed” Governance Committee (three to five members) that will, among other tasks, address the problem of board members who are out-of-step with good governance practices and boardroom protocols.


He says you must spot “tell-tale signs” that board members are no longer wanted on the board—but ignoring these signs will “have a devastating effect when emergency situations arise.” Here are five of the 11 signs that Charan lists:
   • Board members who pontificate, but add no value—wasting everyone’s time.
   • "He is out of touch with contemporary happenings. Maybe he’s been retired too long.”
   • “She has too much to do. She can’t give the board enough time.”
   • “Her questions are too narrow and at too low a level. She’s no longer respected.”
   • “He always puts the CEO on the defensive.”

What should the board chair and/or Governance Committee do? Sometimes, a frank one-on-one conversation with a board member will raise the yellow flag—and get his or her attention. Sometimes you’ll ask for an immediate resignation. (If you don’t deal with the unruly board member, you risk losing good board members.) If you can hang in there—and minimize the damage—the Governance Committee may chose not to nominate the disruptive member to another three-year term.

My preference: address problems as they occur. Be frank. Be gracious. Be specific. Ask the Lord to guide the crucial conversation. Communicate the board’s agreed-upon high standards of boardroom practices during the board member recruitment phase. Emphasize your boardroom values again during the new board member orientation phase. And remember—if you want a healthy board, recruit healthy people.

As chapter nine articulates, there are numerous responsibilities of the Governance Committee—including board succession, establishing rules and procedures for selecting committee chairs, monitoring the health of committees (consider rotations over time), conducting the annual board self-assessment survey (and learning from it), and much more. 

The helpful resource, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, includes several tools relevant to the work of the Governance Committee, including:
   • Tool #1: The Pathway to the Board
   • Tool #2: Board Nominee Suggestion Form
   • Tool #3: Board Nominee Orientation: Table of Contents
   • Tool #5: The Board’s Annual Self-Assessment Survey
   • Tool #17: Board Policies Manual (BPM)
   • Tool #21: Board Member Annual Affirmation Statement

Click here to read the short blogs on the above tools.

The best boards expect the CEO to lead a senior team that embraces God-honoring teamwork, a healthy culture, and a rapid response to conflict resolution. The best boards—with the help of a “best of breed” Governance Committee—will expect nothing less in the boardroom. It’s a challenge—yes. But ignore boardroom dysfunction at your own peril. And when you do, you’ll likely experience the eventual crumbling of your organization’s health and effectiveness.

In 1 Chronicles 28, when David gave Solomon the blueprints to the temple, he urged: “Be strong and courageous and get to work. Don’t be frightened by the size of the task, for the Lord my God is with you; he will not forsake you.” Amen!

BOARDROOM DISCUSSION: Which 50% group are we in? Group 1: Our board has policies in place—and the spiritual integrity required—to ask an under-performing board member to resign. Group 2: No policies in place!

CHECK OUT THESE HELPFUL ECFA RESOURCES

• READ “Big Blessings Abound When Governance Faithfulness Flourishes” in More Lessons From the Nonprofit Boardroom. Click here to read Lesson 1.

• TOOL: With the reminder to “date” board prospects before proposing “marriage” (board service), “Tool #1: The Pathway to the Board,” lists six steps for the Governance Committee as they cultivate, recruit, orient, and engage board members. Download the template when you purchase the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. (Read more here.)

Tuesday, June 16, 2020

QUESTION 8: Why Do We Need a Lead Director Anyway?


A Nonexecutive Chair Might Help Your Board Prevent Sins of Omission and Sins of Commission!

Note! 
Question 8 recommends a trending approach in for-profit boardrooms, often when the CEO is also the company’s Chairman. For this reason (and other reasons), the author suggests that boards name a “Lead Director”—a board member who has the time and requisite temperament to enhance the work of the board and the relationships between the board and the CEO. While this is very rare in nonprofit organizations, the chapter is still worth the read.

QUESTION 8 of 14: Why Do We Need a Lead Director Anyway? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)


Ram Charan says that boards need effective leadership. “No group of people, be it an orchestra, a basketball team, or a project team, ever becomes high-performing without a clear leader, and boards are no exception.”

The author urges for-profit boards to consider appointing a Lead Director or nonexecutive chair. It’s “different from most other leadership positions,” he writes. “It’s subtle and respectful and based on trust instead of formal power. Exercised properly, it takes the board to higher ground, and thus the leader earns tremendous respect among her peers.”

But whether your nonprofit ministry board names a traditional board chair—or a Lead Director—the selection process for Christ-centered boards requires time, discernment, and due diligence. Heed David McKenna’s wisdom in his book, Call of the Chair: Leading the Board of the Christ-centered Ministry (read my review).

McKenna writes: “The chair for a Christ-centered ministry must be called of God as well as elected by the board. When the time comes for a board to elect a new chair, all business should stop while the members reflect in silence and ask that the Spirit of God might give them discernment in their selection.”

Then this: “In the induction of the chair that follows, there should be the question, ‘Has God called you to this leadership position?’

“The prayer that follows should seal that call with the sacredness of the moment. If done in a consecration service for the board, its officers, and its members, the significance of the chair is communicated throughout the organization.”

With that God-honoring leadership selection process in place, it’s then worth considering how Ram Charan’s thoughts might enrich your board’s effectiveness. He notes that a Lead Director must have the “temperament, personality, and skills to build positive board dynamics in the boardroom.” But he adds, “That person should have no greater influence on the board decisions than any other [board member].”

A Lead Director with the right skill sets (I would add, with the appropriate “3 Powerful S’s”—Strengths, Social Styles, and Spiritual Gifts) will be immeasurably more effective than the CEO when addressing the myriad of boardroom issues. All boards have “unwritten rules of the board’s social dynamics,” he says—and thus that unwritten protocol often exacerbates “sins of omission”—where the boards stands idle as the organization falters.

But—you might push back—can’t a traditional board chair (not the CEO) also be immensely effective? “Why do we need a Lead Director anyway?” Charan builds a very intelligent case why boardroom dynamics and relationships require a Lead Director with a superb skill set. (And let’s be honest—many of us have endured innumerable board meetings led by less-than-competent board chairs.) The author notes that a Lead Director—who is savvy to the social dynamics of the board—will also help steer the board away from “sins of commission.”

This chapter delivers a Lead Director job description—a narrative that focuses on three key areas:
Judging the Issues (intellectual honesty is a prerequisite)
Making Meetings More Productive (communicating with all board members in between meetings to fashion the right agenda; and to keep the discussion on track—with several helpful questions for prodding unfocused board members)
Building the CEO-Board Relationship (example: “He or she is the one who gives the CEO feedback following executive sessions and sometimes provides coaching to the CEO.” Plus: sometimes it will be the Lead Director who delivers the feedback to a board member who acted inappropriately in a board meeting.)

Two more helpful snippets: Charan believes it is critical that the Lead Director speak to every board member in between meetings so you don’t have “a two-tier board” which can lead to “power struggles between competing factions.” And because this position takes a large hunk of time, “a term of three years for a Lead Director seems about right.” 

BOARDROOM DISCUSSION: Is our current board chair job description appropriate—in light of the demands on the board during these challenging times? Should we consider researching the concept of a Lead Director—or another scenario that would help our board be more effective?

CHECK OUT THESE HELPFUL ECFA RESOURCES

• SURVEY: A recent ECFA survey noted that 52% of boards said only one person was considered when the board selected their current chair. Forty-six percent of boards said two or more candidates were considered. Download the 60-page report, Unleashing Your Board’s Potential: Comprehensive Report from ECFA’s Nonprofit Governance Survey, by Warren Bird, Ph.D.

• CHAPTER: Click here to read Lesson 25, “Align Board Member Strengths with Committee Assignments: Leverage the Three Powerful S’s,” from Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, by Dan Busby and John Pearson.