January 26, 2013

Bad news board: CEO compensation and performance

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.

July 29, 2012

Boards, governance and all that stuff

Insights and observations

I’m home now – back from my annual July sojourn at Saint Mary’s University of MN. I teach in the Masters Program in Philanthropy and Development there. What a marvelous experience each year. Intense. Broad and deep conversations. Cage-rattling questions (CRQs).

Every year, I collect CRQs: those cage-rattling questions designed to stimulate meaningful conversation that produces learning and leads to change. It takes courage to ask CRQs. Thanks, Cohort 21, for these great questions generated through our governance course together:

1. What are the read flags that we need to raise / be aware of?

2. How far are we willing to go if it means dismantling / confronting those who are most powerful…in our organizations, in our communities?

3. We’ve thought of everything. Now what did we forget?

I also collect bumper stickers from my SMU colleagues. Those catchy little phrases. Those important insights communication in a small snippet. How about these?

1. Inaction is cover up. (We were talking about Penn State and Komen and so much more.)

2. Understand how much power you have and use it wisely.

Read more »

July 22, 2012

Some good board resources

Do check these out

A rather nice overview of governance. Thanks, Debra (Cohort 20) and Lilya (instructor) – Saint Mary’s University of Minnesota Masters Program in Philanthropy and Development. 

January 28, 2012

Fix your board!

Or make your governance stronger

“Fix your board” is my shock and awe approach. Scandals in the for-profit and nonprofit sectors make governments nervous. And nervous people do not-so-good stuff. Look at what the U.S. Congress was thinking about a few years ago, led by Senator Grassley. And now, there’s Representative Charles Boustany. He thinks of himself as a prominent watchdog of nonprofit organizations. He wants the IRS to be more aggressive and go after nonprofits.

I don’t agree with the ill-informed governmental approaches at state and federal levels. But I sure understand their frustration at poorly governed nonprofits.

Wake up! Fix yourselves. Quit being an embarrassment to the rest of us. Your poor governance makes watchdogs like Boustany make ill-advised decisions.

If your board is more amenable to self-examination, learning, and possible change – then take the “make governance stronger” approach. Talk about the health check-up. No need for shock and awe when well-meaning people believe in continuous quality improvement.

Whichever way works for your organization — shock and awe or health check-up — do it. Do it now. You’ll find lots of resources in the Free Download Library on this website. Click on Resources. See the pull down menu. Then visit the board development/governance section.

February 26, 2010

Understanding the limits of your role

A pet peeve, too

“When people are passionate enough to give of their time, money and loyalty, it’s very difficult for them not to expect a platform for input and the respect of the decision-makers.” Brilliant insight from Mary at SMU, where I teach each summer.

I’m thinking of parents serving on that independent school board, or members of the YMCA who also serve on the board. Any board member anywhere.

During screening and recruitment, did you clearly explain to all candidates their scope of responsibility and the limits of their authority? Did you explain to them what the board talks about (governance) and what is a management issue? Do you regularly remind board members of authority and limits – governance and management – when you present issues and facilitate conversation?

Read more »

July 5, 2009

Board members who just don’t get it

Working well with others

Too many board members forget (or never knew) that corporate governance is a collective activity.

That means you have to attend board meetings regularly participate in candid and strategic conversation, and play well with others.

Attend board meetings regularly…Hmm…What does that mean? Well it sure means more than 50% of the meetings! I’d say it means attending at least 75% of the meetings. I don’t care if you’re a big donor, Mr. Board Member. I don’t care if you’re the head of an important corporation, Ms. Board Member. If you’re absent a lot, you’re a lousy board member!

Participate in candid and strategic conversation…Hmm…What does that mean? Corporate governance is a collective activity and requires the verbal participation of board members during board meetings. In fact, board meetings are the only time that governance happens. So if you’re not in the room – and talking about the issues at hand – then you’re a lousy board member!

Of course, talking about the issues at hand requires that you read the advance material. And that you make notes on the advance material. And that you link the material to previous material and previous conversations. And that you bring the material to the meeting so you can reference it. Only with this preparation, can you participate in meaningful conversation. (By the way, preparation by board members requires delivery of critical information – translated into trends and implications. And this is the responsibility of staff.)

Play well with others…Hmm…What does that mean? Well it means you, Mr. Board Member, cannot be boss. Actually, Ms. Board Chair, you aren’t the boss either. There is no boss. Corporate governance is a collective activity. Everyone is equal. No single board member has any more authority than anyone else.

Playing well with others means you listen respectfully and you don’t try to convince everyone of your position. You listen and learn from others and others do the same with you. You don’t dominate and neither does anyone else. You don’t care if you’re chair of anything, you just want to add value.

I’m so tired of board members who don’t get it. Like Massachusetts Keith, a board chair who kept saying, “But what if I know I’m right?” You aren’t right, Keith. No one is right unless it’s a legal issue. You just happen to like your opinion better. But that doesn’t matter. You don’t have any more authority than any other board member. You better play well with others or the board should get rid of you!

March 28, 2009

Watch out for rogues

Has your board gone rogue? Or maybe one individual board member?

What’s a rogue?

I’m not talking about Johnny Depp’s roguish pirate. I’m not talking about the lovable rogue in movies.

I’m talking about a rogue elephant. Uncontrollable. Raging through the fields (or the board room), mowing down everything in its path.

You know what I mean. You’ve seen a rogue and the decimation he or she leaves behind.

In any board – regardless of size or type – there may be a rogue individual. Perhaps you’ve got a rogue board chair like Massachusetts Keith or Rhode Island Ralph. (Check out my previous blog about rogue board chairs.)

Maybe lots of people on your board caught the rogue virus. You feel like you’re caught in a stampede of rogue elephants.

So what does rogue look like? Well…Intruding in management and micromanaging. Ignoring boundaries and limitations of board authority. Disregarding meeting guidelines. Dominating conversation and drowning out the voices of others. Demanding your own way. Not holding yourself and others (and the board itself!) accountable. Cronyism.

This is not good. In fact, this is bad. Really bad. And the worse it gets – well, that’s a rogue; that’s rogue behavior.

How do you get rid of the rogues or disempower them? Find compatriots. Build a group to fight the rogues. Talk over them. Talk around them. Talk louder than them. Set rules and enforce them.

Rogues are not self-aware (or don’t care). Rogues need to be stopped by others. Rogues need to be censured, released, SHOT!

Someday, I’ll write a book about it.

P.S. Who is responsible for building an effective board? The staff, especially the executive director / CEO. Yes, indeed. Board members aren’t really accountable for this work because they don’t know the body of knowledge. Staff is supposed to – required to – know the body of knowledge. The executive director / CEO enables the board to do good governance – or not! See the concept of enabling in my book Strategic Fund Development.

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