January 26, 2013

A colleague told me about this bad news board: The CEO is paid several million dollars to run a huge nonprofit institution. This is not, necessarily, excessive compensation. But the board – the full board – is accountable for talking about and finalizing the compensation. This board doesn’t do that.

The board doesn’t participate in the CEO’s performance appraisal either. The board doesn’t review the results of the performance appraisal to decide if it agrees.

And, it gets worse! The CEO’s performance appraisal and compensation are not connected to service quality, client satisfaction, or adherence to industry standards. (I wonder what CEO performance is based on?!)

Sadly, I’m not particularly surprised at this report. I see far too many dysfunctional boards. Even the boards of big institutions – like hospitals and higher education – sometimes seem clueless about governance.

Or, maybe these supposedly highly sophisticated boards with all those powerful and important people think that compensation and performance are  the job of the board chair or the executive committee. And rogue board chairs and rogue executive committees are all too willing to comply. (I’m on a worldwide mission to destroy all executive committees – and to fire rogue board chairs!)

I wonder what the IRS would think about this. I wonder what donors would think about this.

Review the job description of the board in the Free Download Library on my website. See the sample CEO performance appraisal process in the Free Download Library on my website.

About Simone Joyaux

A consultant specializing in fund development, strategic planning, and board development, Simone P. Joyaux works with all types and sizes of nonprofits, speaks at conferences worldwide, and teaches in the graduate program for philanthropy at Saint Mary’s University, MN. Her books, Keep Your Donors and Strategic Fund Development, are standards in the field.

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