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.)

TOOL 11 – Monthly Dashboard Report

What Are Your CEO’s Top-5 Goals This Year?

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

Michael Hyatt’s book on goals, Your Best Year Ever, cautions about sloppy goal-setting:

“Goals poorly formulated
are goals easily forgotten.”

Gary Keller, author of The ONE Thing, notes: “Individuals who wrote their goals and sent progress reports to friends were 76.7 percent more likely to achieve them.”


So…when it comes to goal-setting in your ministry, does your CEO embrace “S.M.A.R.T.” goals—and what accountability is in place for reporting progress on goals? This tool will help!

TOOL #11: MONTHLY DASHBOARD REPORT
Use this tool to update the board and senior team on the CEO’s Top-5 Annual S.M.A.R.T. Goals. (Send updates at least monthly.)

Tool #11 in the new resource, ECFA Tools and Templates for Effective Board Governance, is one of three tools in Part 3, “Reporting to the Board,” in this jam-packed 271-page resource. The tool also helps answer the question for board members, “What should we be praying about?”

Imagine the impact and clarity about CEO priorities—if on the 15th of every month, your CEO emailed a one-page progress report to the board with color-coded updates on the board-approved “Top-5 S.M.A.R.T. Goals for the CEO.”
   • Green (On Target!)
   • Yellow (Caution!)
   • Red (Alert!)

S.M.A.R.T. Goals are:
   • Specific
   • Measurable
   • Achievable
   • Realistic
   • Time-related

We’ve all grimaced in boardrooms over many “Not-So-SMART Goals,” such as:
1) Plan the best annual meeting event on the planet!
2) Increase the number of donors giving $5 billion or more.
3) Conduct a client satisfaction survey by Sept. 30, 2020.
4) Launch the XYZ Program as soon as possible in numerous cities.
5) To raise $50,000, ask every donor to give an extra $10 this month.

Tool #11, “Monthly Dashboard Report,” includes color commentary, a convicting true story by Peter Drucker, examples of S.M.A.R.T. goals, a one-page color-coded template, six questions (and quotes) for the board on goal-setting, and two factoids on CEO goals from a recent ECFA governance survey.

Order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: Ruth Haley Barton has the audacity to write, “Just because something is strategic does not necessarily mean it is God’s will for us right now.” Have we used a spiritual discernment process to discern our goals for the year?

MORE RESOURCES: David Schmidt weighs in on “Don’t Stretch Credulity With BHAGs and Stretch Goals,” and notes this: “Always—we must test motives and drivers when setting goals. Pride and fear can easily disguise themselves as bold leadership.” Click here to read Schmidt’s guest blog on chapter 37 in Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, by Dan Busby and John Pearson.

TOOL 5 – The Board’s Annual Self-Assessment Survey

Look in the Mirror!

Peter Drucker wrote, “Self-assessment is the first action requirement of leadership: the constant resharpening, constant refocusing, never really being satisfied.”

Do boards really take this wisdom seriously? According to a recent ECFA governance survey, board members were asked: “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?” 
   • Good news: 31% said yes!
   • Bad news: 69% did NOT say yes.

There’s a plethora of possibilities in this week’s tool to help your board look in the mirror—to ensure you are constantly improving in God-honoring governance. 

TOOL #5: THE BOARD’S ANNUAL SELF-ASSESSMENT SURVEY
Select the board’s self-assessment survey option that best fits your board’s culture and your board’s aspirations for continual improvement.

Tool #5 in the new resource, ECFA Tools and Templates for Effective Board Governance, includes 30 robust pages of survey templates—for all shapes, sizes, and opinions of board members.

The big idea: every board (even the “best” boards) can improve, but if you don’t look in the mirror at least once a year, you’ll easily perpetuate boardroom routines that may no longer be effective.

This resource includes an introduction, “Why Assess?,” and three sections:
   #1. Do-It-Yourself (with seven add-water-and-stir evaluation options)
   #2. Assessments Facilitated by a Consultant or Board Coach
   #3. An assessment template: “Best Governance Practices” Survey

For a quick dip into the self-assessment pool, consider ECFA’s new board self-assessment, NonprofitBoardScore™. This free online survey delivers immediate feedback and is designed for board members to complete multiple times (perhaps every six months) to measure improvement. (Church board members can self-assess using ChurchBoardScore™.)

D-I-Y Option 5 (page 40) features a quick one-page 20-point board member self-assessment that asks board members to evaluate the board on a five-point scale from “Strongly Disagree (1)” to “Strongly Agree (5).” Questions include:
   • Our board ensures that the ministry has an active strategic planning process in place.
   • Our board annually affirms and “owns” the ministry strategy.
   • We expect every board member to be an annual giver.
   • Our board has policies—and the spiritual integrity required—to ask an underperforming board member to resign.
   • Our board approves the CEO’s annual measurable goals that align with the strategy.

The survey also lists the average scores of 1,754 board members who completed the ECFA survey in 2019—so you can compare your ratings with other board members.


Why look in the self-assessment mirror? Peter Drucker adds, “Self-assessment can and should convert good intentions and knowledge into effective action—not next year but tomorrow morning.”

Order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: What committee or board member is tasked with conducting the board’s annual self-assessment?

MORE RESOURCES: Share this one-question discussion starter at your next meeting: “You’re driving away from a typical board meeting and you say, ‘That was a great board meeting today!’ Tell me, what happened at the board meeting to provoke that response?” Read more in “Ask the Gold Standard Question,” Lesson 2, in Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, by Dan Busby and John Pearson. Read Tim McDermott’s color commentary by clicking here.

TOOL 3 – Board Nominee Orientation: Table of Contents

Don’t Swallow the Board Myth!

“Recruit board members for their passion, not their position. Don’t swallow the board myth that says you need a CPA, an attorney and a fundraiser on your board. People in those positions might make great volunteers, but less-than-loyal, uncommitted board members are the last thing your organization needs.” (From: Chapter 14, “The Board Bucket,” in Mastering the Management Buckets, by John Pearson)

So how do you ensure that you have the right board candidates in your prospect pipeline who also understand your history, your culture, your strategic plan—and the dozens of other topics and issues that nominees should understand before they join the board? This tool will help! 

TOOL #3: BOARD NOMINEE ORIENTATION: TABLE OF CONTENTS
Inspire Qualified Board Prospects to Consider Board Service—by Giving Them a Comprehensive Overview of Your Governance Documents

Tool #3 in the new resource, ECFA Tools and Templates for Effective Board Governance, builds on the first two tools—“Tool #1: The Pathway to the Board,” and “Tool #2: Board Nominee Suggestion Form.”

This 31-tab table of contents can be created in a three-ring binder (for old school board prospects), or created in a password-protected online version. It includes seven sections:
   • Introductory Materials
   • Board of Directors (bylaws, Board Policies Manual, recent board meeting agendas, etc.)
   • Finance, Budget, IRS, ECFA Reports
   • Strategic Plan and Metrics 
   • Team Members (organizational chart, senior team mini-bios, StrengthsFinder assessments, etc.)
   • Development (three-year goals and the fundraising role of board members)
   • Programs and Services (a “menu” of programs—and the annual evaluation process)

What Does Our Primary Customer Value? In the strategic plan section, many boards include their answers to Peter Drucker’s “Five Questions Every Nonprofit Organization Must Answer.” The questions:
   1. What is our mission?
   2. Who is our customer?
   3. What does our customer value?
   4. What are our results?
   5. What is our plan?

Many Nominating Committees will keep an updated version of the Board Nominee Orientation Materials (a three-ring binder or an online version) and use it as part of the “dating” process with a serious board prospect. 

But caution! Your prospects will likely be diverse. Using the social style language—are they analytical, driving, amiable, or expressive? So customize your one-on-one conversations according to your prospects’ social styles (not yours!):
   • Analyticals appreciate facts and information.
   • Driving styles prefer bullet points and executive summaries (don’t mention 31 tabs!).
   • Amiables are inspired by relationships and stories.
   • Expressives absolutely love four-color documents and Big Visions about the future! (And, if there’s a microphone in their future—they are blessed!)

For more on social styles—and how to communicate effectively with each style/board prospect, you’ll enjoy reading How to Deal With Annoying People: What to Do When You Can’t Avoid Them, by Bob Phillips and Kimberly Alyn.

You can order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: In the four phases of board recruitment—Cultivation, Recruitment, Orientation, and Engagement—where are we the most effective and where are we the least effective? What’s our next step? 

MORE RESOURCES: Download the short video, the facilitator guide, and the viewing guide for “Recruiting Board Members - Leveraging the 4 Phases of Board Recruitment: Cultivation, Recruitment, Orientation and Engagement,” the first of four resources in the ECFA Governance Toolbox Series. Click here.

Are Your Board Members “Listeners” or “Readers”?

If there’s one common whine from CEOs, it’s this: “My board members don’t read the reports I email them.”

Yet some board members also whine: “We don’t hear much from our CEO in between board meetings. He (or she) doesn’t call and we rarely have lunch together. (We posted this discussion several years ago, but it's time for another reminder.)

Here’s help from Peter Drucker (1909 - 2005), the father of modern management. Drucker noted that people are either readers or listeners. And…ditto board members!

In the classic Harvard Business Review article, “Managing Your Boss,” by John J. Gabarro and John P. Kotter, the authors discuss the boss/subordinate relationship—but the insights are equally valuable for board members, board chairs, and CEOs.

They write, “Subordinates can adjust their styles in response to their bosses’ preferred method for receiving information. Peter Drucker divides bosses into ‘listeners’ and ‘readers.’ Some bosses 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 boss is a listener, you brief him or her in person, then follow it up with a memo. If your boss is a reader, you cover important items or proposals in a memo or report, then discuss them.”

So ask each board member—“What’s your preferred method of receiving information? Written report or verbal report?”

I can hear the moans now from CEOs: “You expect me to give verbal reports to half my board if that’s their preferred style of receiving information?”

Calm down. There are options. But the big idea here is that emailing pages and pages of written reports to board members who are “listeners” will not be effective. And phoning or Zoom calling board members with verbal reports will be ineffective if they are “readers.”

With the wide ranges of digital options today, there are solutions. Some CEOs will record a verbal report and email an audio file to the “listeners,” along with the traditional written report. Others will host (and record) a conference call as a nod to the “listeners” on the board. 

Perhaps graciousness and respect means tilting towards what works for board members, not what’s convenient for CEO reporting (or what’s convenient for the CEO’s executive assistant).

In last month's blog about the four social styles, we were reminded about this context for Christ-centered governance from Psalm 139:14, "I praise you because I am fearfully and wonderfully made..."

Reminder! Our Creator fashioned the minds and learning styles of our board members. One size doesn’t fit all—and we praise Him for that! So what will you do—moving forward—to bless both the “readers” and the “listeners” on your board?

AND ONE MORE QUESTION: What’s your CEO’s preferred method of receiving information? Is he/she a “listener” or a “reader?”

INSPIRE YOUR BOARD! Inspire your board members to enrich their governance competencies at the ECFA Excellence in Governance Forums (eight cities, Fall 2019). 

Best Board Books #10: Good Governance for Nonprofits

Peter Drucker preached “tool competence.” He wrote, “Although I don't know a single for-profit business that is as well managed as a few of the nonprofits, the great majority of the nonprofits can be graded a ‘C’ at best. Not for lack of effort; most of them work very hard. But for lack of focus, and for lack of tool competence.”  

Book #10: 
Good Governance for Nonprofits: Developing Principles and Policies for an Effective Board, by Fredric L. Laughlin and Robert C. Andringa (Order from Amazon)

More than any other tool or template, I have recommended the Board Policies Manual (BPM) template to hundreds of nonprofit organizations and churches. Fred Laughlin and Bob Andringa teamed up to produce this brilliant tool, the BPM. The who, what, where, when, why, and how—are all explained in their concise, but thorough, color commentary, Good Governance for Nonprofits.

The book describes the efficacy of compiling the twists and turns of board policies (some that conflict with others) into one thoughtful 15- to 20-page document that is designed to be revised at any board meeting throughout the year.

As Dan Busby and I note in Lessons From the Nonprofit Boardroom: “While many organizations have unwritten policies covering a wide range of topics, they’re often filed away incoherently in the archives and no one can find them when needed. ‘Here’s a fun job for a new board member,’ they say. ‘Please dig through 20 years of board minutes. Bring a flashlight and emergency provisions!’”

There’s a huge upside to a BPM, as Bob Andringa writes in “Do Unwritten Board Policies Really Exist?” (read the blog here). “For every hour spent on creating and maintaining a Board Policies Manual, at least three hours of board and committee meetings will be saved before too long. It’s a ‘living document,’ always reflecting the latest wisdom of the board.”

No question—this book (which gives access to the online template) is a must-have tool on your governance bookshelf.

BOARD DISCUSSION: According to Policy Governance Guru John Carver, “Governing by policy means governing out of policy in the sense that no board activity takes place without reference to policies. Most resolutions in board meetings will be motions to amend the policy structure in some way. Consequently, policy development is not an occasional board chore but its chief occupation.” Would your board agree?

MORE RESOURCES: Check out the “40 Blogs. 40 Wednesdays.” color commentaries on Lessons From the Nonprofit Boardroom, by Dan Busby and John Pearson, including Lesson 4, “Do Unwritten Board Policies Really Exist?”

Succession Planning: “Do I Still Have Fire in My Belly?”

Note: This is the eighth of 11 blogs featuring practical wisdom from the new ECFA Governance Toolbox Series No. 4: Succession Planning. Free to ECFA members, you can download the resource and video by clicking here.

Principle No. 8 - Plan for Plan A: Your CEO Retires

News Flash! Your CEO will retire someday, as will the senior leaders reporting to the CEO. Healthy boards and healthy CEOs address these facts of life well in advance. Effective boards take time for prayer, discernment, and considering God-honoring options. The toolbox resources for “Plan for Plan A” include helpful questions so boards and CEOs can address the elephant in the room. 

Example:
• “We have clear expectations and written annual goals (with annual performance reviews) for our CEO to prevent ‘coasting’ into retirement.”
• “Our CEO already has a healthy and balanced life outside of work so retirement will not be a shock to the system.”

Even if your current CEO is relatively young, effective boards help CEOs plan for their inevitable retirement. David McKenna counsels, "Succession begins before we assume a position of leadership, not when we get ready to leave it.”

In the next two blogs, we’ll discuss Plan B—your CEO resigns, and Plan C—your CEO is terminated. Given three choices, Plan A is a joy to address!

When should a CEO retire or resign? McKenna says “timing is everything” when discerning when to leave a ministry. CEOs should ask themselves, “Do I still have fire in my belly for the future of this organization?”

In The Leader’s Legacy, McKenna notes three questions from Peter Drucker:
   • What needs to be done?
   • Can I do it?
   • Do I want to do it?

Download the Facilitator Guide and inspire a board member to address this common elephant in the room at your next board meeting. Remember: every CEO is an Interim CEO. 

BOARD DISCUSSION: One retirement option for your CEO might be to launch a second part-time career (consulting, teaching, writing, etc.). Would our board be open to our CEO beginning what Bob Buford, author of Halftime, labeled “low-cost probes” into a new venture while still employed here?

DOWNLOAD: ECFA Governance Toolbox Series No. 4: Succession Planning – 11 Principles for Successful Successions: “Every CEO is an Interim CEO.” The toolbox includes 
   • Read-and-Engage Viewing Guide (20 pages) – photocopy for board members
   • Facilitator Guide (10 pages)
   • 4 short videos (4-5 minutes each)
   • Additional resources and succession planning tools

MORE RESOURCES: Follow the “40 Blogs. 40 Wednesdays.” color commentaries on Lessons From the Nonprofit Boardroom. Click here.

Battle-ready Boards

In my last blog, I mentioned my running list of what I call “board member temptations.”  Here’s another one:

BOARD MEMBER TEMPTATION: 

“To confuse the three hats of a board member:
governance, volunteer and participant.”

Here are four snapshots of recent conversations:

1) A well-meaning board member prodded others at a board meeting, “But if we’re not volunteering in numerous areas of this ministry—how will we know if our ministry is doing a good job or not?”

2) A board chair whined to me that board members are bringing their “volunteer hat” concerns directly to the board meeting—and not addressing those items through the appropriate staff channels. “Those issues have no place on our board’s agenda,” he said.

3) A CEO grimaced that the board had established a task force to research a topic that is unrelated to the board’s agreed-upon policy governance operating model.

4) Another CEO shared that his board members are hopelessly divided on the governance role of the board. Three board members micro-manage, yet the other board members apparently don’t have the character or the courage to address this dysfunction. (The CEO is seeking to “pastor” them out of this hole, but he will likely hit a dead-end and resign.)

THE SOLUTION? Sooner or later, every board must define roles and responsibilities—for the board, the board chair and the CEO. Some boards are proactive and document their operating philosophy in advance—before trouble hits the fan. 

Other boards, sadly, wait for the crisis before clarifying board roles—but that’s a terrible time to do your best governance work. Peter Drucker said,

“Fortunately or unfortunately,
the one predictable thing in any organization
is the crisis.
That always comes.”  

He added that the job of the leader is to build an organization that is “battle-ready.”

The Christ-centered board knows that a board’s operating style is rooted in its theology, its philosophy and the God-given past experiences of every board member around the table. The confusion over board hats (the governance hat, the volunteer hat, and the participant hat) will only get worse if you ignore the signs (like the four snapshots above).

There’s help!  Order the ECFA Governance Toolbox Series No. 2: Balancing Board Roles (The 3 Hats) and view the 12-minute DVD at your next board meeting. Give the Read-and-Engage Viewing Guide to each board member and leverage the ideas in the Facilitator Guide.  Then pray and discern how your board will specifically eliminate the confusion between the three hats.

QUESTION: When a new board member prospect is interviewing three current board members about your board’s operating style, would all three agree on how you balance the three hats: Governance, Volunteer, and Participant?