QUESTION 4: Are We Well Prepared to Name Our Next CEO?

Emergency Succession: The Elephant in the Room?

Yikes! “Three quarters of board members aren’t prepared for CEO succession, and fewer than 1 in 4 have a written succession plan.”

That discomforting news is one of 12 highlights (including low lights) from ECFA’s Nonprofit Governance Survey Comprehensive Report: Unleashing Your Board’s Potential, by Warren Bird, Ph.D. (Check out the library of free ECFA research findings and download this 60-page report by clicking here.)

Even during this COVID-19 marathon—is it possible that your board might be looking for its next CEO? It’s certainly possible. Read on!

QUESTION 4 of 14: Are We Well Prepared to Name Our Next CEO?
Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)

Ram Charan reminds us that every board member “knows deep down that nothing is more important than having the right CEO at all times.” This fourth chapter in Owning Up is bursting with must-read sections. Here’s a taste:

• Succession planning is a long-term, on-going process, for healthy organizations. But it may take two to three years of diligent work and preparation when replacing the CEO.

• Start with strategy—not people. “When the succession decision is about a year away, the board should take another hard look at the external environment and the business challenges and translate them into specific criteria for the CEO job.”

• “Generalities such as ‘intelligent,’ ‘visionary,’ ‘strategic thinker,’ or ‘great with people’ will not be very helpful.” Instead, says Charan, the board must identify three to five “non-negotiable” characteristics. “Without them, a candidate cannot even be considered.”

• The perfect search is rare. “The test is not only whether the board can make the right decision, but also how quickly it can admit that it did not.” Yikes.

• The elephant in the room? “Too often, boards are reticent to address the elephant in the room: emergency succession.”

While Owning Up’s 14 questions address life (and elephants) in the corporate boardroom, Christ-centered boards will appreciate these bare knuckle reality checks. I’m encouraging every board chair to make Chapter 4 required reading for every board member.

Plus, enrich this critical competency with the four short videos and viewing guide in the ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions (“Every CEO is an Interim CEO”). Note, especially, these principles:
   • Principle 1: Avoid Buses and Boredom! (Emergency Succession)
   • Principle 2: Discern Your Board’s Succession Values and Beliefs
   • Principle 7: Trust God and Discern Direction! Wisdom on Ending Well

In the ECFAPress book, Stewards of a Sacred Trust: CEO Selection, Transition and Development for Boards of Christ-centered Organizations, David McKenna raises the stakes on CEO succession with this:

“Like the ripple effect of a stone tossed into a pond,
the CEO’s influence will move in waves through generations.
No decision of the board,
absolutely no decision, is more profound.”

BOARDROOM DISCUSSION: Do we have prayerful, discerning, competent, and succession-savvy board members in place—so we’re prepared for our next CEO succession, whenever that might come?

MORE RESOURCES: Check out these helpful ECFA resources:

• BLOG: Click here to read the guest blog by Reid Lehman from Lesson 9 in Lessons From the Nonprofit Boardroom, “Serve with Humility and Experience God’s Presence. One board chair creates a holy moment for his CEO Search Committee.” (Click here to read the chapter online.) Lehman notes that “board leadership is a ‘group sport.’” Read Reid's reason.

• TOOL: Download the ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions and view one or more of the short videos at your next board meeting or board retreat. For the color commentary on each of the 11 principles, click here for the index to the 11-part blog series.

QUESTION 3: Are We Prepared to Do Our Job Well When a Crisis Erupts?

The Board’s Role With Unknowable Unknowns

Wow! Question 3 is way too timely! In this 14-part series from the must-read governance book, Owning Up (read my review), Ram Charan says there are two kinds of crises:
   • Crisis #1: The Knowable Unknowns
   • Crisis #2: The Unknowable Unknowns

He elaborates on the these two types: “…those that are knowable, meaning they happen from time to time but at unpredictable intervals and with varying ferocity, and those that are unknowable, meaning no one has even imagined such an event.” 

QUESTION 3 of 14: Are We Prepared to Do Our Job Well When a Crisis Erupts?
Owning Up: The 14 Questions Every Board Member Needs to Ask (Order from Amazon)

Whether COVID-19 was predictable or not, Ram Charan says “Boards have to prepare for both the knowable unknowns and the unknowable ones in order to minimize disruption to the [organization], damage to the brand and [organization] reputation, and loss of hard cash.”

A plethora of experts and not-so-expert prognosticators are weighing in on Zoom webinars, white papers, and memes—and often (my opinion) giving inappropriate directions for the foggy journey ahead. The good news: CEOs and board members can pick their flavor-of-the-week expert and find agreement for their own opinions. The bad news: CEOs and board members can pick their flavor-of-the-week expert and find agreement for their own opinions.

Reminder: “In their hearts humans plan their course,
but the Lord establishes their steps.” (Proverbs 16:9, NIV)

Charan’s crisis wisdom is worth reading:

#1. Benchmark Crisis Practices. It’s never too late to get ready for the next crisis. For the knowable unknowns: “They should not be a complete surprise, and some expertise will exist somewhere to deal with them. Boards need to benchmark these practices as a preparedness measure.”

#2. Address Internally Inflicted Situations. Some crisis situations are, sadly, created by management (hasty hires, overly optimistic cash flow forecasts, revenue bucket imbalances, inadequate or no customer research, etc.). Boards can also stumble and create or exacerbate problems. “Every board needs to decide which categories are important enough to prepare for ahead of time.” How? See the next point.

#3. Establish a Crisis Committee. Charan writes that boards must ensure that management has “a core group that forms a crisis committee comprising the CEO, general counsel, CFO, and a public relations and communications officer.” He adds, “In each case, there must be a point person in charge and a game plan that can be deployed instantly.”

#4. Rehearse! Rehearse! Rehearse! It’s too late to “rehearse” for the front end of COVID-19. But it’s not too late to be prepared for the next knowable unknown crisis. Charan recommends that boards prepare “a list of advisors or experts available to the board 24/7 and keeping contact information current can save valuable time in the heat of the moment. Rehearsing a crisis can test how well the mechanisms and processes are working.”

The Board’s Role With Unknowable Unknowns

I urge your CEO and board chair to read chapter 3—even in the midst of the current unknowable unknown crisis. Charan advises, “Here the board can be an important check on management’s interpretation of events, because even the best CEOs can sometimes be too optimistic or have blind spots.”

As your board members pray daily (we hope) about Plan B or Plan C, heed these insights from the author:
• “The board should also help management imagine what the domino effect might be, projecting what other problems might arise as the one thing triggers something else.”
• “Waiting for management to make a move is a mistake. Management, after all, has never been tested under the conditions of an unknowable unknown, and the board cannot assume they know how to respond.” 

BOARD DISCUSSION: In chapter 3, Ram Charan cites a board that met six times in two months during a crisis. Is your board meeting at appropriate intervals during this COVID-19 unknowable unknown?

MORE RESOURCES: Check out these helpful ECFA resources:

• BLOG: Click here to read the guest blog by David Wills from Lesson 19 in Lessons From the Nonprofit Boardroom, “Never Throw Red Meat on the Board Table. Boards need advance preparation to fully address complex issues.” (Click here to read the chapter online.) Wills notes, “The currency of great boards is great discernment.”

• TOOL: The book, Owning Up, is featured in Tool #13, “Board Retreat Read-and-Reflect Worksheets,” from the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. Click here for the color commentary on Tool #13.

QUESTION 2: Are We Addressing the Risks That Could Send Our Organization Over the Cliff?

The Seemingly Improbable 100-Year Flood!

During this COVID-19 marathon, I’m encouraging board members to address 14 critical boardroom questions from the savvy wisdom of Ram Charan’s must-read governance book, Owning Up. (Click here to read my review.) The second chapter (just 13 pages) is so, so timely. Wow. 

Ram Charan urges boards to look at risk through five different lenses. He notes, “…keeping in mind that the seemingly improbable hundred-year flood might well occur during your board’s tenure.”

QUESTION 2 of 14: Are We Addressing the Risks That Could Send Our [Organization] Over the Cliff?
Owning Up: The 14 Questions Every Board Member Needs to Ask (Order from Amazon)

Examine risk through five lenses:

#1. The Financial Vulnerability Lens. “The board should watch cash flows—everybody knows cash is king—as an early warning signal of distress.” (Raise your hand if you agree that having more cash on hand would have better prepared you for this COVID-19 marathon.)

#2. The Strategy and Operations Lens. “Monitoring is not just about making the numbers, but also about talking through the risks.” The author adds, “If you have no appetite for risk, you shouldn’t be on a board; it will inhibit the CEO from making bold and necessary moves and potentially company-saving bets.” Yet he also warns that boards must watch both ends of this continuum: CEOs who tilt toward greater risk and CEOs who are risk-averse.

#3. The Political and Geopolitical Risk. Here, Charan recommends assembling advisory boards to ensure there is expertise where needed. If your ministry operates internationally—or depends on people or resources from another country—are you prepared for the what-ifs?

Do local, state, and national politicians understand the important work you do? Does someone on your team have relationships with these decision-makers? As Dan Heath writes in Upstream, “You don’t want to be exchanging business cards in the middle of an emergency.”

#4. The Reputation Lens. Ram Charan is prophetic! “In this age of transparency, an idea or rumor can spread instantly across the Internet like a virus.” He adds that some boards and organizations “have been blind to the factors that caused their reputations to fade, even though they had plenty of time to do something about it.” Do you have an action plan for addressing Internet rumors?

#5. The People and Culture Lens. The author warns, “Boards must also watch for a toxic culture that enables ethical lapses throughout the organization.” To check the temperature of your culture, Charan suggests boards follow the lead of General Electric and conduct periodic “pulse surveys.” ECFA, for example, participates in the “Certified Best Christian Workplace” process—and is one of many ministries that have earned that certification.

So how is your board assessing risk? Charan suggests you establish a “stand-alone risk committee, which would work with the audit committee.” And consider this: if you’re “climbing out of hot water, the board might even suggest that the CEO hire a chief risk officer.”

I urge your board to delegate their reading so at least one board member and one senior team member dives deep into this important book—and, especially, this important chapter. Then, set aside time at your next board meeting—or even between board meetings with a Zoom call—for special prayer and discernment, as you trust God on how best to prepare for the next crisis. It will come. 

BOARD DISCUSSION: Is “risk assessment” on your board’s agenda—at least once a year?

MORE RESOURCES: Check out these helpful ECFA resources:

• BLOG: Click here to read the guest blog by Danny de Armas from Lesson 35, “Is Your Board Color-Blind to Hazardous Conditions? What color is your boardroom flag?” in Lessons From the Nonprofit Boardroom. (Click here to read the chapter online.)
• TOOL: “The Board’s Annual Financial Management Audit: 20 True/False Statements the Board Must Address Annually (Tool #6),” from the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board.

QUESTION 1: Is Our Board Composition Right?

“A Board Full of Generalists
Is Not Good Enough Anymore”

This week while we’re still enduring the COVID-19 marathon, I’m launching a series of 14 pesky boardroom questions—over the next 14 blogs. I’m leaning on the savvy wisdom of Ram Charan’s helpful governance book, Owning Up. (Click here to read my review.) The first chapter (just 18 pages) is jam-packed with boardroom insights. He writes:

“The role of the board has unmistakably transitioned from passive governance to active leadership with a delicate balance of avoiding micromanaging. It’s leadership as a group, not leadership by an appointed person.” He adds, “With the right composition, a board can create value; with the wrong or inappropriate composition, it can easily destroy value.”

QUESTION 1 of 14: Is Our Board Composition Right?
Owning Up: The 14 Questions Every Board Member Needs to Ask (Order from Amazon)

Here are three takeaways:

• Plan for Board Succession. Address “the anticipated requirements of the board composition over five to ten years. Staggering the ages of directors on a board is important—that’s why a ten-year view is needed.”

• Recruit for Expertise (but don’t recruit micro-managers). Charan recommends using a skill assessment matrix “…because a board full of generalists is not good enough anymore.”

• Conduct Deep Reference Checks. “Standard reference checking is not enough. Governance committees must make the commitment to vigorously check a candidate’s references by talking to other people in the board’s own social and professional networks.”

The author asks board members to annually conduct their own reality check: “Are You Staying on Your Board for the Right Reasons?” Chapter 1 also notes the biggest red flag to avoid—a board nominee with a big ego. 

So is your Christ-centered board appropriately addressing these board composition issues? Urge your Governance Committee, or Executive Committee, to read this chapter and ask these questions:

1. Do we have a plan for board succession? Is there a spiritual discernment component to our board member recruitment process?
2. Is our board composition wide enough and diverse enough to address our needs five years from now? Is boardroom group-think common or uncommon? Do we hear from God about our board prospects—or just the loudest-talking board member or the largest donor?
3. Do we consistently go deep when checking references—including a board prospect’s pastor, small group leader, and/or other influential people in his or her life?

It’s been said that “there are no dysfunctional organizations—only dysfunctional boards.” Thus, creating and leveraging the right board composition is critical. God-honoring boards will give high priority to board succession best practices.

BOARD DISCUSSION: What ONE next step is the most critical for our board—this quarter?

MORE RESOURCES: Check out these helpful ECFA resources:
• VIDEO: ECFA Governance Toolbox Series No. 1 - Recruiting Board Members: Leveraging the 4 Phases of Board Recruitment: Cultivation, Recruitment, Orientation, and Engagement (online video, viewing guide, and facilitator guide)
• BLOG: “If You Need a Board Member, Recruit a Board Member,” by Bruce Johnson, in the 40-week series, Lessons From the Nonprofit Boardroom Blog
• TOOL: “The Pathway to the Board: Six Steps on the Pathway to Board Service,” from the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board

Pop Quiz: Top-5 Ways to Bless Your Ministry

“What Everyone Knows Is Usually Wrong” 

STOP! Before you read further, grab a blank piece of paper and a pen (it’s homeschool time!)…and answer this question: 

“During this COVID-19 crisis, what are five ways that I can leverage my time, my spiritual gifts, and my network—to make a unique impact as a board member?”
1.
2.
3.
4.
5.

Time’s up! Pens down!

Here’s my Top-5 list, plus a book recommendation for each suggestion:

#1. MEMO TO SELF: SHUT UP! Even though—like all board members—I have dozens of brilliants opinions and recommendations for everyone else, I would reel it back a bit and try to be a better listener on Zoom calls. Maybe I could tamp down the know-it-all gene, and—instead—bless other board members, our CEO, and senior team members. I’ve posted this on my office wall:

“You can be known as the person who helps articulate the critical issue or as the person who provides hasty answers to solve the wrong problem.
Which would you prefer? Exactly.”

Click here to read my review of The Advice Trap: Be Humble, Stay Curious & Change the Way You Lead Forever, by Michael Bungay Stanier.


#2. HELP OUR CEO DISCERN “THE ONE THING.” As a board member, I would call or email the CEO with this insight and offer to have a conversation about his or her “ONE Thing:”

"What's the ONE Thing you can do this week
such that by doing it
everything else would be easier or unnecessary?"

Click here to read my review of The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results, by Gary Keller with Jay Papasan.


#3. DON’T MAKE THE PROBLEM WORSE. As you experiment with new programs (online and other innovations), take a step back to ensure that you don’t create unintended consequences—like the “cobra effect” noted here:

“When we fail to anticipate second-order consequences, it’s an invitation to disaster, as the ‘cobra effect’ makes clear. The cobra effect occurs when an attempted solution to a problem makes the problem worse.” That happened in India, during the UK’s colonial rule. “A bounty on cobras was declared,” and citizens received cash for producing dead cobras. You guessed it—the entrepreneurs
began breeding more cobras. 

Click here to read my review of Upstream: The Quest to Solve Problems Before They Happen, by Dan Heath. 


#4. CONSULT OUTSIDE WISDOM. I would urge our board and CEO to slow down (even though these are urgent days) and not launch new initiatives or apply Band-Aid fixes to complex problems—without adequate due diligence. I’d give our CEO quick examples of hasty actions gone south—including several that I’ve observed in the last four weeks. My sense: many program and communication disasters could have been avoided—had the CEO and/or the board sought outside wisdom from an independent third party. (You likely have observed numerous knee-jerk reactions. “What were they thinking? Why didn’t they ask someone outside their inner circle? Yikes!”)

Peter Drucker: 

“What everyone knows is usually wrong.”

Click here to read my review of The Practical Drucker: Applying the Wisdom of the World’s Greatest Management Thinker, by William A. Cohen.


#5. DELEGATE! I’ve noticed in recent weeks that CEOs and board members have taken on heavy, heavy loads—doing way too much—and, in one sense, playing god, not leaning on God. 

“There is no virtue in doing more than our fair share of work,” writes J. Oswald Sanders in his oft-quoted classic, Spiritual Leadership. Referencing the delegation counsel from Jethro, Moses’ father-in-law, Sanders adds, “Moses could doubtless have done the task better than the 70 men whom he selected, but had he persisted in doing so, he would soon have been only a memory."

Click here to read my review of Spiritual Leadership: Principles of Excellence for Every Believer, by J. Oswald Sanders.


BOARD DISCUSSION: What’s the board’s “ONE Thing” this week—and who is best gifted to own this? Is our CEO trusting God—or playing god?

MORE RESOURCES: Read Lesson 9 in More Lessons From the Nonprofit Boardroom, “Just Do One Thing a Month. Make a specific ask of each board member each month.” Devlin Donaldson suggests how you can unleash your board members to experience much greater satisfaction and productivity! Click here.

Gloom, Boom, and Zoom

God Willing, the Post-COVID-19 Era Might Usher in an Unprecedented Response to the Gospel

Wow! All bloggers today (no matter the subject) are medical, financial, psychological, and pastoral experts. COVID-19 has unleashed the advice-giving genes in every LinkedIn and Facebook user. So…here is my three cents-worth:

#1. GLOOM. Even the newspaper comic strips have themed into the despair. (See “Pearls Before Swine” by Stephan Pastis for last Tuesday. Click here.) Some board members—one layer removed from the day-to-day action/survival plans—may inappropriately tilt toward gloom. Be aware!

But—when you are a student of your CEO’s, board chair’s, and board members’ “3 Powerful S’s” (click here for more on spiritual gifts, strengths, and social style), you’ll understand and balance their responses to crisis. For example, the way each of the four social styles act is different: 
   • Analyticals are cautious.
   • Drivers are decisive.
   • Amiables are slow.
   • Expressives are impulsive.

Your board needs deep discernment from all members—before moving in the wrong direction to address your unique crisis. And—remind the drivers on your board—that you may need to stop and lament. (Read N.T. Wright’s thoughts on lamenting in Time magazine. He writes, The mystery of the biblical story is that God also laments.”)

#2. BOOM. Possibly, God willing, the post-COVID-19 era might usher in an unprecedented response to the Gospel. Are your board, CEO, and senior team making plans—not for surviving, but thriving? Maybe:
   • Colleges and camps will become residential villages of revival.
   • Churches will re-invent themselves.
   • International outreach will be resourced with an outpouring of funds and volunteers.
   • Christian ministries will innovate down Holy Spirit-led paths.

Maybe, one more time, we should read The Prayer of Jabez.

#3. ZOOM. (Note: I’m not an online meeting expert.) While there are hundreds of articles and columns on how to facilitate online meetings with Zoom, Skype, and other portals—is anyone actually reading these articles? I don’t think so!

Four suggestions:
   • Your screen presence. If I can see the ceiling in your office or third bedroom, repeat after me: “Position the camera at EYE level.”
   • Meeting agenda. Please email the agenda at least two to seven days in advance. 
   • Should you postpone a decision? Hopefully, our business-by-bunker environment will end soon. But—caution! There are two enemies of sound board decisions—and one is to make major decisions online, and not in person. And if you must meet online, estimate the length of the meeting—and then double it.
   • Ask for feedback. Zoom meetings will unlikely meet the needs of all four social styles, but always (always!) ask for feedback. Every meeting can be improved. 

BOARD DISCUSSION: Around-the-Zoom-room: What are you feeling today? What are your insights about the future? What is God saying to you?

MORE RESOURCES: Read Lesson 29 in More Lessons From the Nonprofit Boardroom, “The Two Enemies of Sound Board Decisions. Avoid being pressed for time and making major decisions remotely.” Click here. 

How to Spend a Day in Prayer

The Ministry Grew—“Not by Methods or Principles But by Promises Given to Him From the Word”

Some of your board members may have more time—during this COVID-19 crisis—than they’ve ever had before. So consider planning a day of prayer: personal and/or corporate. Here are two resources:

#1. “Slow Down and Wait on God,” from Chapter 28 in Lessons From the Nonprofit Boardroom (2nd Edition). This chapter is based on The Navigator’s booklet by Lorne C. Sanny, “How to Spend a Day in Prayer.” Click here to read this chapter. Lorne Sanny writes:

I believe it was in these special times of prayer that God made known His ways and His plans to Moses (Psalm 103:7). He allowed Moses to look through a chink in the fence and gain special insights, while the rank-and-file Israelites saw only the acts of God as they unfolded day by day.

Once I remarked to Dawson Trotman, founder of The Navigators, “You impress me as one who feels he is a man of destiny, one destined to be used of God.”

“I don’t think that’s the case,” he replied, “but I know this. God has given me some promises that I know He will fulfill.” During earlier years Dawson spent countless protracted time alone with God, and out of these times the Navigator work grew—not by methods or principles but by promises given to him from the Word.

#2. Read Jerry White’s guest blog comments (click here) on the above chapter. Writing in Lessons From the Nonprofit Boardroom Blog, White notes:

I became much more reflective, thoughtful and prayerful through my 18 years of leading The Navigators—where I could not “make it happen,” but had to rely on God and others to do what I could not do. I began to see the consequences of action without deep prayer, counsel and reflection. “Seek first…” and “in everything by prayer and supplication...” have become my pattern as I have grown in my leadership and in my own maturity. What is more, key members of my board checked up on me regularly on how I was doing in my personal walk.  

BOARD DISCUSSION: How might our board devote itself (individually and corporately) to greater prayer and discernment? (Maybe a Zoom conference call-in—exclusively for a day of prayer—with “shifts” of board members and staff members hosting the 8-hour, 12-hour, or 24-hour call to prayer?) 

MORE RESOURCES: Reflect on Wes Willmer’s guest blog, “Guarding Your CEO’s Soul,” which notes that the “fourth-century Christian pastor and philosopher, Gregory of Nyssa, described the soul’s desires as a river, and at the end of the river is God. Yet channels in the river can divert us from our journey and eventually our desire-river is completely dried up before it reaches God. Board members—also—must model to CEOs that they, too, are on this journey toward God, our Only Hope!”

Click here to read Willmer’s color commentary on Lesson 4 in More Lessons From the Nonprofit Boardroom.