Impending Deterioration

“The first responsibility of a leader is to define reality,” is the arresting beginning of a short, quotable piece of wisdom from Max De Pree, the former CEO of Herman Miller, Inc.  (Google his string of memorable quotations and you'll have a short course in servant leadership.)

De Pree balanced that rare combination of God-honoring wisdom with business savvy. The board chair of a seminary, he was also named to Fortune magazine’s National Business Hall of Fame.

In his classic book, Leadership Is an Art (read my review), he writes that a financial analyst once asked him, “What is one of the most difficult things that you personally need to work on?”  De Pree’s answer: “The interception of entropy.”

He added, “One of the important things leaders need to learn is to recognize the signals of impending deterioration.”  He kept a list and observed that leaders, especially in large organizations, fail to see the signs of entropy, including: 1) a tendency toward superficiality; 2) no longer having time for celebration and ritual; 3) a growing feeling that rewards and goals are the same thing; 4) when people stop telling tribal stories or cannot understand them; and 5) when problem-makers outnumber problem-solvers.  His list was longer—but you get the idea.

De Pree’s thoughts on entropy are refreshingly unique in our leadership literature. I wonder if he was also thinking about boards when he wrote that chapter?

I mentioned this idea to a ministry CEO recently after he observed this condition in his boardroom. While he didn't quote De Pree or mention “entropy,” his comments could have been a sidebar in De Pree’s book.

I'm paraphrasing here but this CEO, a keen observer of his board culture, bullet-pointed the symptoms expressed by his board members:
   --“We're busy. Do we really need a board retreat to talk about the strategic plan?”
   --“Isn’t this good enough for nonprofit work?”
   --“We’re all successful business people. Why do we need board training?”

This CEO’s closing comment was poignant as he painted the picture. “To move my board to the next level of effectiveness,” he sighed, "will take a mighty shove!"

De Pree’s full quotation is worth memorizing. “The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant.”

I affirmed my CEO friend for reaching Phase One in his quest for a more effective and God-honoring board—defining reality.

QUESTION: What is your board’s reality? Entropy or excellence?

Two Tools for Improving Communication

In the last blog, we noted the ECFA 2012 Governance Survey conducted in August 2012, where board chairs shared the “single greatest need” of their ministries. Today, we’ll zero in on one theme mentioned frequently in the 625 responses from board members.
 
One board member wrote, “To be more informed between meetings. The board chair meets weekly with the CEO but does not communicate with board members.”

Here are two tools to address the communication challenge:

Tool #1: Reader or Listener?
Determine the communication style for each board member (and the CEO). Ask each board member whether he or she would prefer receiving information in written form or in audio form.  Readers comprehend more when information is delivered in written form. Listeners comprehend more when the communication is in audio form.

While segmenting board member communication preferences into these two categories may sound challenging, think what it could do if communication improved dramatically!
 
Written board reports will bless your readers. Audio reports (a simple audio recording of the material read by the CEO, then sent via email) will bless the listeners. Many of the telephone conference call services also offer recording options so your CEO can record a monthly “CEO Update” and then email the link to all the board members. You may prefer to also add video to your audio.

Tool #2: CEO’s 5/15 Monthly Report to the Board
I encourage CEOs to email or mail a monthly CEO Report to board members. Some boards prefer a report twice a month. Pat Clements, the president of Church Extension Plan, introduced me to the concept of the “5/15” report. It’s brilliant!

Using a standard monthly report template (which the executive assistant or VP prepares for the CEO), the CEO can then edit the report and add a story or ministry highlight—all in about 15 minutes.  The written report (with an attached audio file) can be emailed monthly and the board member will have a succinct, but informative CEO Update that can be read in just five minutes—hence the “5/15” report: 15 minutes to write and 5 minutes to read!

QUESTION: Has your board agreed on the template and standing topics that your CEO should report on each month (and the report frequency)?  If you have never talked about it, add this topic to the agenda for the next meeting—and perhaps bring a sample of your own customized “5/15” board report.

Board Chairs: Our Single Greatest Need

 

In the ECFA 2012 Governance Survey (with nearly 1,600 responses), CEOs, board members and board chairs shared the “single greatest need” of their ministries. Almost 200 board chairs answered the question (60 skipped it) and the responses were diverse. While other multiple-choice questions identified "fundraising" as the top need, “strategic” was a common theme in this question for board chairs. Here is a sampling of what they said:

The "Single Greatest Need" of Board Chairs:

• “Alignment of mission, vision and values.”
• “Getting results from committees in between board meetings."
• “Better utilizing all board members; playing to their strengths.”
• “Managing the appropriate level of communications to the board between meetings.”
• “Comprehending the implications of financial statements.”
• “Knowing the highest priorities for comprehensive governance and knowing we have completed our responsibilities with appropriate time, energy and resources.”
• “Keeping God's role primary and our thoughts and plans within God's plans.”
• “Rallying and encouraging our board members to attract donors.”
• “To recruit new international and female members.”
• “Motivating board members to move toward policy governance and strategic planning.  We are actively working on this.”

• “Staying focused on strategic goals and accountability.”
• “Independence from CEO.”
• “Succession planning.”
• “Maximizing the effectiveness of each board member.”
• “Patience.”
• “Keep heart right and dedication of time for the ministry.”
• “[Understanding] how other ministries effectively balance the board members' strengths with the need to be strategic and not tactical.”
• “For the staff, excluding the CEO, to view the board as a vital part of the ministry.”
• “Getting the CEO to be strategic.”
• “Getting the board to make difficult decision.”
• “Clarity of strategy.”

• “Wisdom to know how to keep the Board involved.”
• “Being strategic. Being discerning of God's will.”
• “Thinking outside of the box, but within the Spirit's intentions.”
• “Generous board members.”
• “A successor.”
• “Understanding best practices in governance.”
• “To hear and obey the voice of God.”
• “More experience and better understanding of governance.”
• “Help for nonperforming board members.”
• “Discernment in evaluating opportunities that come to us for expanding our mission.”

• “Online board training.”
• “How do I know I'm effective in my role as chair?”
• “Getting the CEO to pace himself.”
• “Time to hear from God.”
• “Knowing how I can best support and encourage the CEO.”
• “Developing the board and organization to continue vital ministry in the generation beyond the founder, who is in process of disengaging from the organization.”
• “Balancing ‘walking in faith’ with conservative fiduciary responsibility.”
• “Adapting ends policies and strategy to a changing environment.”
• “$”
• “To know what I should be most focused on other than simply running the meetings.”

QUESTION: At your next board meeting, ask each person (including the CEO) to write out and then share their answer to the question, “What is our board’s single greatest need?” Extra credit: What would your board chair say?

Keeping Up With the Joneses

 

The board member had a contagious smile and his positivity quotient was sky high. He was more engaged than most. My first impression: quality person.
At a coffee break near the end of a board training weekend, he buttonholed me before I could put the requisite Hazelnut-flavored creamer in my coffee.
 
“John, you’ve worked with lots of boards. So how good are we? I think we do our governance work well. But how do we compare with other nonprofit ministry boards of our scope and size?”

Like the suburban rat race family, it was important that his board, in governance terms, was keeping up with the Joneses. It’s a natural question—but it’s the wrong question.

A better question would address what David McKenna labels “the sacred trust” of board service.

Here are some questions I encourage boards to confront:
   • Are we stewarding our board roles as a “sacred trust” from God?
   • Are we spiritually discerning God’s direction for our ministry?
   • Are we holding each other accountable for Kingdom results?
   • Are we assessing the effectiveness and performance of every board member?
   • Are we supporting and evaluating our CEO’s performance against agreed-upon and spiritually discerned Annual S.M.A.R.T. Goals?

When I finally got my coffee creamer, I did answer his question.  “Actually, your board is doing many things well. My gut: you are in the top 10-20 percent of nonprofit boards. But—let me add this. You will be pleasantly surprised, even shocked, at how much, much better you could be with the addition of some strategic next steps in your governance work.  And those next steps will have a dramatic and God-honoring impact on your work and your relationships."

QUESTION: How about your board? How much better—how much more God-honoring—could you be if you focused not on the Joneses, but on God’s unique call for your important ministry?

More Huckster Than Holy?

 

The executive summary of the ECFA 2012 Governance Survey, completed by almost 1,600 CEOs, board chairs and board members of ECFA Accredited organizations will be released in the next few weeks.  The differences between the three groups are very, very interesting.

Cameron Doolittle, president and CEO of Jill’s House, Vienna, Va., has collaborated with ECFA on the survey analysis.  He titled one finding, “Get money. Then what? Chairs, board members, and CEOs disagree.”

The survey question: “Of the organizational areas listed below, what are the Top-5 areas that need the greatest improvement in your ministry?”  There were 10 options, including: Fundraising, Finance & Accounting, Human Resources, Governance, Programs, Products & Services, Team Building, Meeting “Customer Needs,” Marketing & Public Relations, Strategic Planning, and Achieving Mission Results.

No surprise—all three groups ranked “Fundraising” as their greatest need. But then what? Here are the second highest ranked needs:
   --355 CEOs said: Marketing & Public Relations
   --255 Board Chairs voted for: Achieving Mission Results
   --971 Board Members checked: Strategic Planning

We’ll talk about this in future blogs, but let’s go back to the greatest need—fundraising. Why might that be? Here’s my list of possibilities:

1. Fundraising is everyone’s greatest need because with more money we can reach and serve more people for Christ.

2. But maybe, fundraising was rated Number One Need because we’re driven to do too much—way, way beyond God’s direction. He’s intentionally not blessing our work because it’s OUR work.

3. Or, we’re abusing our givers, or treating givers and non-givers alike, or maybe our appeals are more huckster than holy.

4. Perhaps the fundraising revenue is right-sized, but our expenses are super-sized.

5. It’s possible that we don’t have the right development team in place. Too old school. Too hip. Maybe we’ve inappropriately replaced shoe leather with social media. Or we have twice as many planning meetings as we have prayer meetings.

6. How about this gut check? Board members—that group that should have the highest passion and commitment for the ministry—are not 100 percent all in as generous givers (and I don’t mean “wealthy” givers). And so their circle of influence is weak or non-existent.

I could go on and I’m sure you can add to this list. It would be a good topic for your board meeting or prayer meeting. Ask your board members to rate all 10 areas.

QUESTION: Is fundraising the greatest need in your organization? If so, what might you learn by digging deeper into this subject?

3-Point Talk: Right, Wrong or Inappropriate

 

Ram Charan’s helpful book for corporate boards, Owning Up: The 14 Questions Every Board Member Needs to Ask (read my review), is packed with wisdom and caution for nonprofit ministry boards too.  He writes:

“With the right composition, a board can create value; with the wrong or inappropriate composition, it can easily destroy value.”

The decision to invite a new member onto the board will likely be one of the Top-5 (or certainly one of the Top-10) decisions you’ll make in any one year. We should be sobered by Charan’s statement. So how do you spiritually discern God’s voice about new board members?

Use his comments as a three-point outline for a spiritual insight segment at your next board meeting.

#1. With the RIGHT composition, a board can create value. It’s not just having individual board members who are stellar—it’s having the right composition of board members. We don’t want clones, we want chemistry. We want the grandeur of the Body of Christ in all of its richness and gifts (Romans 12, 1 Corinthians 12, Ephesians 4, etc.) to be at play on our boards. Highly competent look-alikes need not apply.

#2. With the WRONG composition, a board can easily destroy value. I consulted with an organization whose board members were almost entirely from one industry. Ditto many of their donors. They were God-honoring and highly committed to the cause. When that industry’s segment fell on hard times, the organization was forced to merge with another ministry.

#3. With an INAPPROPRIATE composition, a board can easily destroy value. This is more subtle. It might be spiritual or theological (too narrow, too liberal, or too denominational). It might be age or gender-focused (too white, too old, or even too young or too hip). It might be a governance-savvy issue (too many board novices, too fixed on one board model, too “Policy Governance®-oriented,” or not enough experience with the policy function of boards).

Whew! This board stuff is hard work!  Certainly, none of us want to serve on a board where, under our stewardship, we destroyed value and Kingdom impact was diminished. So remember 1 Corinthians 4:2, “Now it is required that those who have been given a trust must prove faithful.”

For more help, order the ECFA Governance Toolbox Series No. 1: Recruiting Board Members.

QUESTION: What are we doing year-round to ensure that we are recruiting the “right composition” of men and women onto our board?

The Cousin Eddie Syndrome

Have you ever been on a board when a well-meaning, but inexperienced board member pipes up, “My neighbor knows a guy who knows a guy who has a Cousin Eddie. Eddie would be perfect for our board!”

You blink—and presto! Cousin Eddie is on your board. He’s not the right fit. He’s out of sync with your board’s culture. He’s not a generous giver. His Christian character has serious flaws. At best, he’s a warm body.

Now there’s help for the Cousin Eddie Syndrome! The ECFA Governance Toolbox Series No. 1: Recruiting Board Members is now available. Order here from ECFA.
The Recruiting Board Members toolbox includes:
   --1 DVD (13 minutes—perfect for a board meeting)
   --12 Board Member Read-and-Engage Viewing Guides (20 pages)
   --1 Facilitator Guide (4 pages)

The helpful Facilitator Guide offers three discussion options (short, medium or for a board retreat) and points you to additional resources online.

More topics are coming. ECFA’s goal is to have a robust series of strategic toolkits on the shelf so board chairs and CEOs can readily address board issues with a short video and a focused discussion.

Many boards have a governance life-long learning segment at each meeting. At each meeting of the board I serve on, we include a “Ten Minutes for Governance” hot topic or governance book review. It’s stimulating. None of us is as smart as all of us. We are constantly reminded of our kingdom priorities as stewards of God’s work.

You might wonder: Do Christ-centered boards recruit their members differently than secular boards? They should!  The toolkit addresses the critical role of spiritual discernment and prayer in the board recruitment process. 

 QUESTION: How does your board avoid the Cousin Eddie Syndrome—and when is the last time you’ve reviewed board recruitment best practices?