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.

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?


• 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!


• 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!

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?


• 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.

Tuesday, June 9, 2020

QUESTION 7: How Can Our Board Get CEO Compensation Right?

Don’t Tempt Management to Do Dumb Things!

You know this scenario. You stepped out of the board meeting to take an urgent phone call. Upon your return, the board chair announces: “Congratulations! You’ve just been elected chair of the CEO Compensation Committee.” 

Ram Charan explains the angst. “Of all the topics in the boardroom, CEO compensation has the most potential to create tension in the board-management relationship.” 

QUESTION 7 of 14: How Can Our Board Get CEO Compensation Right? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)

Note! While this book—and especially Question 7—addresses for-profit governance issues, the savvy nonprofit board member will appreciate reading between the lines to capture a multitude of compensation wisdom that is highly relevant. True—nonprofit ministry board members are not eyeing volatile stock prices when setting CEO compensation. But they must still have a thoughtful rationale—a philosophy—for the compensation discussions and decisions. So…here are three lifelong learning options:

[  ] Option 1: Skip Question 7 in Owning Up and, instead, read Lesson 25 in More Lessons From the Nonprofit Boardroom, “Compensating the CEO—It’s About More Than Money.” Click here to read Lesson 25.

[  ] Option 2: Ask your CEO Compensation Committee to read Question 7 in Owning Up (and this blog).

[  ] Option 3: Inspire your full board to read both Lesson 25 and Question 7. (Congrats on being a lifelong learning board!)

Hopefully, your board is blessed with two or more board members who have an appropriate level of experience and expertise in setting CEO compensation in nonprofit ministries. But beware—there is no formula. One size doesn’t fit all. It’s complicated. It’s fraught with obstacles—both internal bungling and external unanticipated conditions (think COVID-19’s impact). As Ram Charan notes, “Business cycles change, and macro events like hurricanes or political turmoil happen.” (Note: he wrote this in 2009!)

Often, strongly-opinionated board members, with limited experience, make compensation judgments in a vacuum, or worse, based on their own company’s compensation practices—totally unrelated to appropriate comparability data. Charan again: “…boards need to start with a blank slate and fresh thinking.”

There are numerous compensation-setting factors to consider:

Did you bring in this CEO to tackle a turnaround? Business author Michael Watkins uses an acronym, “STARS,” to describe the four types of environments your CEO might be leading: Start-up, Turn-Around, Realignment, or Sustaining Success. Compensation approaches will vary widely—based on what your CEO inherited. (Read more.)

What’s your compensation philosophy? “Some of the objectives might also be nonfinancial in nature.” Does compensation include measurements for strategy, leadership development, leadership succession, and core values? When Dennis Bakke, author of Joy at Work, was CEO of the AES Corporation, the board evaluated him—partly—on how effectively their 40,000 employees were living their four shared values: to act with integrity, to be fair, to have fun, and to be socially responsible. (Read more in my chapter on the Culture Bucket.)

Will the right compensation, with incentives and bonuses, motivate your CEO in a nonprofit setting? Not so fast, says Clayton Christensen. In his bestseller, How Will You Measure Your Life, Christensen notes the Harvard Business Review article by Frederick Herzberg that discusses the “two-factor theory, or motivation theory—that turns the incentive theory on its head.” The two factors: hygiene and motivation. Compensation relates to the first factor. Christensen writes: “The opposite of job dissatisfaction isn’t job satisfaction, but rather an absence of job dissatisfaction.” (Read more.)

Are annual CEO goals clear—and achievable? Ram Charan recommends that boards “stress-test the goals against volatile external factors…” In the absence of S.M.A.R.T. goals, the annual performance review and compensation discussion tilts too much toward subjective factors—which is unfair to the CEO. And heed this warning from the author:

“Targets that are unrealistic or too far outside of management’s control
won’t convince the executive team to work harder;
they’ll convince management to do dumb things.”

Did I mention—this is another must-read chapter? 

BOARDROOM DISCUSSION: Ram Charan writes, “The purpose of a [compensation] philosophy is to clearly describe the board’s overall intent by stating in clear terms what the board will and will not do. The philosophy should be flexible enough to adapt to changes in the external environment and yet meet the test of consistency over time.” Are there any volunteers to write (or review) our board’s compensation philosophy—or should we wait until you step out of the room? 


• SURVEY: A recent ECFA survey measured the difference between how much help board members, board chairs, and CEOs needed on 27 different governance topics. “The difference was the greatest—not dramatic, but noticeable—on the question of annual CEO performance review with CEOs wishing for more help than their board chairs or members voiced.” 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, “Compensating the CEO—It’s About More Than Money,” in More Lessons From the Nonprofit Boardroom: Effectiveness, Excellence, Elephants! by Dan Busby and John Pearson.

Tuesday, June 2, 2020

QUESTION 6: How Can We Get the Information We Need to Govern Well?

“Boards Should Not Get All Their Information From Management Alone” 

Warning! Skip this chapter at your board’s own peril. I’ve read my fair share of governance books and articles, but I’ve never read such a comprehensive discussion on structuring the information flow between management and the board—all in just 12 pages!

And, once again, this is a timely book—with references to the financial crisis of 2008. Change the dates to 2020 and COVID-19, and the author’s wisdom and warnings are pertinent again. 

QUESTION 6 of 14: How Can We Get the Information We Need to Govern Well? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)

“The quality of the board’s output,” writes Ram Charan, “depends heavily on the information the board receives.” The author invokes architectural lingo to inspire boards and management to design the information flow—in other words, to collaborate proactively so the right information is available to the board at the right time. He adds:

“The right information architecture—the right kind of information presented in a way that enables the board to ask insightful, penetrating questions—lifts the focus in the boardroom.”

With the appropriate information, boards will “sort through, for example, the four usual causes for performance deviations:
   • shifts in the macro environment,
   • change in the consumer space,
   • shifts in the competitive pattern,
   • and the commission or omission of management actions.”

Try this at your next board meeting: Ask your board to identify your four common causes of “performance deviations.” 

Charan cautions: “Boards should not get all their information from management alone. They should be more active in seeking outside voices and hearing directly from employees.” I would add this caution: do this carefully with agreed-upon staff/board protocols. If executed clumsily, staff may blindside the CEO and/or a board member may ask inappropriate questions about the CEO. Surveys can help. An outside facilitator could also help your board create guardrails for these conversations.

And get this! The author urges boards and CEOs to pay attention to the “ambience” of a meeting. “Using flip charts instead of PowerPoint slides, for instance, creates an informal atmosphere conducive to brainstorming and discussion. Directors are more likely to get engaged, contribute spontaneously, and ask for clarification on the spot.” 

He adds, “That kind of engagement doesn’t often occur in a one-way presentation in a darkened room.”

So…think back to your last two or three board meetings in your Christ-centered organization. Did your board have the right and appropriate information at the right time? Was there alignment between your board reports (written and verbal) and the four usual causes for “performance deviations?”

Shifts in the macro environment: Did management keep the board assessed of trends in your ministry niche? (Examples: multi-site church campuses, online learning, theological trends, etc.)
Change in the consumer space: While you may be celebrating a five percent increase in giving year-to-date, what if other ministries are experiencing 20 percent increases? Why is this occurring?
Shifts in the competitive pattern: Are your ministry colleagues expanding their partnership/collaboration programs—or pulling back? What should your ministry do?
The commission or omission of management actions: Is your CEO delivering bad news (including omissions) or is your boardroom’s culture so risk-averse, such that program initiatives that flop are rarely discussed? 

One final thought: when the board is equipped with the right information at the right time—your prayer can be more focused, and we pray, your ministry will be more effective.

BOARDROOM DISCUSSION: What are our four usual causes for “performance deviations?” Are we discussing these causes at every board meeting? 

MORE RESOURCES: Check out these helpful ECFA resources:

SURVEY: According to a recent ECFA survey, “Boards want to monitor impact, but too often don’t track measurable goals to get there.” Per the survey, 79% of board members agree that “our board is very focused on measuring mission impact,” yet only 55% of board members “receive monthly or quarterly dashboard reports that identify agreed-upon metrics or measurements, outcomes, and impact for programs, products, and/or services.” Download the 60-page report, Unleashing Your Board’s Potential: Comprehensive Report from ECFA’s Nonprofit Governance Survey, by Warren Bird, Ph.D.

• TOOL: Looking for an exceptional communication tool? Check out “The 5/15 Monthly Report to the Board,” from the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. Click here to read the color commentary on Tool #10.