Board Chair Best Practices #3: Pick Up the Check!

This month I began a blog series on board chair best practices. Click here to read Board Chair Best Practice #1 and Best Practice #2. 

Here’s Board Chair Best Practice #3: 

#3. Clarify Fuzzy Roles With a Prime Responsibility Chart

This week, a colleague shared a comment he heard from a board chair of an outstanding national ministry. When asked what the board chair’s job description entailed, this person joked:

“I can’t remember all my duties—but certainly one of them
is to pick up the check every time I have lunch with our CEO!”

I’ve never seen “pick up the check” on board chair job descriptions—but maybe we should add it! Here’s a tool, however, that will add clarity to the board’s work: “The Prime Responsibility Chart” (click here to download). Leveraging this one-page template has been a critical best practice in my board toolkit for over 30 years. 

A board member, Bill Benke, introduced it to me when he served on the board at Camp Sambica in Bellevue, Wash. Benke used a version of this chart when he was a strategic business analysis executive with The Boeing Company. The chart is simple and straightforward and can (and often should) be revised at any board meeting—based on policy decisions, cash flow, economic environment, and experience level of the CEO and senior team.

Most boards assign decision-making functions to various individuals and/or committees, including:
   • Board of Directors (example: hire and fire the CEO)
   • Executive Committee (minor decisions between board meetings)
   • Board Chair (appoint committees)
   • Board Treasurer (create finance committee agendas)
   • Finance Committee (recommend an auditor)
   • CEO (hire and fire direct reports, etc.)

The most important principle: only one person (or committee, etc.) has “Prime Responsibility” for a task or responsibility. Download the template to see how levels of responsibility can be assigned—based on board policy—using just three designations:
   • P = Prime Responsibility
   • A = Assistant Responsibility
   • AP = Approval Required

One board chair best practice is to ensure that roles and responsibilities are crystal clear between the board and the CEO, and between the board and its committees. This chart will help you eliminate all fuzzy roles!

Why is this so important? 

Proverbs 24:10 (The Message) reads, “If you fall to pieces in a crisis, there wasn’t much to you in the first place.” Don’t wait for the crisis (board/CEO conflict over fuzzy policy) to clarify board roles. As board chair, make clarity one of your top priorities—and eliminate conflict and friction before it happens.

POP QUIZ: At your next meeting, give the board a pop quiz with three questions on roles and responsibilities—and see if you have appropriate clarity.

Board Chair Best Practices #2: Become a Student of Your CEO

Last week I began a blog series on board chair best practices. Click here to read Best Practice #1: Ensure that there is 100 percent board participation in the CEO’s annual performance review. 

Here’s Board Chair Best Practice #2: 

#2. Become of a student of your CEO and inspire your CEO to become a student of you.

Almost fifty percent of the time in my workshops and consulting, I have hallway conversations with really smart people who say something like, “I just don’t get my CEO (or board chair). We’re rarely on the same page. I’ve chaired other boards—and my relationship with the CEO was almost perfect! Help!”

So I go down the well-worn path: “How many hours have you invested in studying and understanding your CEO this year?”

“Is your CEO a reader or a listener? What are your CEO’s Top-5 strengths on the Gallup StrengthsFinder assessment? What is your CEO’s social style (driver, analytical, amiable or expressive)?  (Watch the 3-minute video on social styles.) Do you know your CEO’s spiritual gifts (leadership, mercy, teaching, etc.)—and, if so, are you leveraging them—or expecting them to exercise strengths and spiritual gifts that God hasn’t given them?”

I explain that every CEO must be a student of their board chair—and every board chair must be a student of their boss. That’s why I urge them to study two resources:

• Read the Harvard Business Review classic article, “Managing Your Boss,” by John J. Gabarro and John P. Kotter. While written for employees, the principles are easily transferable between CEOs and board chairs. You both must own and navigate the relationship—not in a manipulative way—but in a mutual respect way.

• Writing a “memo about me” is a terrific exercise for both the board chair and the CEO, suggested by leadership guru Marshall Goldsmith in his convicting book, What Got You Here Won’t Get You There: Discover the 20 Workplace Habits You Need to Break. Chapter 12, “Special Challenges for People in Charge,” encourages leaders to write a memo, “How to Handle Me.” If written with humility and transparency, it’s a brilliant, brilliant tool that would smooth out much boardroom conflict.

What would happen if you applied the “managing your boss” wisdom from Gabarro and Kotter to board chair/CEO relationships?

“At a minimum, you need to appreciate your [CEO’s] goals and pressures, his or her strengths and weaknesses. What are your [CEO’s] organizational and personal objectives, and what are his or her pressures, especially from [the board and others]? What are your [CEO’s] long suits and blind spots? What is the preferred style of working? Does your [CEO] like to get information through memos, formal meetings, or phone calls? Does he or she thrive on conflict or try to minimize it? Without this information, a [board chair] is flying blind when dealing with the [CEO], and unnecessary conflicts, misunderstandings, and problems are inevitable.”

In addition to a 12-point checklist the article addresses that critical question: “Is my [board chair/CEO] a reader or a listener?”

“Peter Drucker divides [CEOs] into ‘listeners’ and ‘readers.' Some…like to get information in report form so they can read and study it. Others work better with information and reports presented in person so they can ask questions. As Drucker points out, the implications are obvious. If your [CEO] is a listener, you brief him or her in person, then follow it up with a memo. If your [CEO] is a reader, you cover important items or proposals in a memo or report, then discuss them.”

Obviously…all of the above is just as critical for CEOs as they become students of the revolving person in the board chair. (More on that down the road!)

QUESTION TO BOARD CHAIRS: How many hours have you invested this year in becoming a student of your CEO’s learning style, strengths and spiritual gifts? And how will you help your CEO to understand your style and strengths?

Board Chair Best Practices #1: CEO Annual Reviews

I’ve heard this refrain numerous times—and it’s true: “As the board goes, so goes the organization. And the board will be no more effective than its chair.”

Here’s my Board Chair Best Practice #1 (stay tuned for more):

#1. Ensure that there is 100 percent board participation in the CEO’s annual performance review. Since the board chair is not the CEO’s boss, never-ever-ever should the board chair conduct the CEO’s annual review as a Lone Ranger.  

The best boards agree with the CEO—in advance—on the format and setting for the CEO’s annual review and the protocol for how the CEO responds with next steps, following the review. 

My opinion: 50 percent of the annual review should be based on agreed-upon annual measurable goals, set at the beginning of the year. (Peter Drucker said, “If you have more than five goals, you have none.”) 

The other 50 percent: focus on biblical qualities, including character, leadership, vision, passion, and other critical characteristics per your ministry’s culture, DNA, and mission.

Some organizations conduct a 360 review (the board, the CEO’s direct reports, and the CEO’s own self-assessment). Others develop metrics to discern if the core values of the ministry are being lived out, and if so, to what degree.

As a reminder, though, heed this wisdom from Ten Basic Responsibilities of Nonprofit Boards (Second Edition), by Richard T. Ingram, regarding CEO performance reviews: 

“In the end, although we may not be able to precisely define what outstanding leadership is, we know it when we see it! Let’s admit that this very subjective process is more art than science, more human than anything else. We can and should use various objective measures or strategic indicators of the organization’s progress on its financial condition, for example, as part of the assessment process—but whether a leader stays or goes so often hangs on much more subtle factors.”

And, as I’ve often quoted in this blog, here again is Ram Charan’s insight from Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan

“There is nothing more important for a CEO than having the right strategy
and right choice of goals, and for the board, the right strategy
is second only to having the right CEO.”

He also notes, “With the right composition, a board can create value; with the wrong or inappropriate composition, it can easily destroy value.” So while you’re conducting the annual performance review of your CEO, be sure you schedule the board’s annual self-assessment process.

As the board goes, so goes the organization. Great boards are intentional about spiritually discerning God’s direction and how they will steward all the resources of the ministry—including their CEO’s leadership and tenure. Many times, however, it’s the board chair that must lead and put the CEO’s annual review on the front burner (sorry—bad metaphor!).

QUESTION: Is your board creating value or destroying value when it conducts your CEO’s annual performance review? (If you’re not conducting an annual review—you’re not adding value, and you’re missing an opportunity to grow your leadership.)