balancing governance binghamton 6 2011
TRANSCRIPT
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Community Focus w Statewide Impact w National Network
Balancing Good Governance & Management for Nonprofits
June 9, 2011 | Binghamton, NY
Presented by
Doug Sauer, CEO
www.nycon.org | 800.515.5012
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Key Learning Objectives
• Understanding ways to effectively balance the authority & responsibilities of the board & management
• Learn the keys to balancing proactive leadership with good management
• Gain awareness of ways to enhance mutually constructive & supportive communication between the board & executive leadership
• Become aware of best practices for executive evaluation & compensation
• Be prepared for managing staff leadership transition
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Basic Definitions
Governing “to exercise authority or control”
Managing “To bring about or succeed in accomplishing”
Leading “Coming in advance of others”
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“Management works in the system; leadership works on the system.”
Stephen R. Covey
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Nonprofit Leadership is
a Process that is…
• Defined by the mission, history, culture & services of the nonprofit
• A team experience where power & roles are distributed
• Influenced by position, personality, style, knowledge, & skills
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Ethical Nonprofit Leadership
• Actions are consistent with the nonprofit’s mission, values, promises & obligations
• Actions have Integrity: Not driven or influenced by personal interests, gain or inurement
• Adheres beyond the “letter” of legal & regulatory requirements to “the spirit of”
• Focuses on the question of what is the “right” or “correct” thing to do
• Documents decision-making processes & actions to demonstrate & record proper conduct
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“Management is doing things right;
leadership is doing the right
things.”
Peter Drucker
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Balancing Roles for Organizational Leadership
Managers
Vision
"Managers Who Lead;
Leaders Who Manage"
Leaders
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Building Your Leadership Team
• To harness the collective talent & energy of your team members, both board & staff, to accomplish your mission, vision, goals & objectives
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Leadership Starts with the Board
• Volunteer Leaders who advance the Mission in a Responsible Manner
• Duties of the Fiduciary–Care – Loyalty –Obedience
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The Board-Staff Leadership Team
• Board of Directors• Board Officers• Committee Chairs• Executive Director/CEO• Assistant/Deputy Director• Fiscal Officer• Top Division/Program Heads
Clearly define decision authority along withresponsibilities in bylaws, job descriptions & policies
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The Leadership Team…
• Sees & understands the big picture - external & internal
• Motivates - inspires trust & confidence in staff, board members, constituencies & stakeholders
• Recognizes own limitations; recruits & uses staff & board members accordingly
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The Leadership Team… (continued)
• Mobilizes & uses resources wisely
• Governs & manages well – holds self & others accountable
• Resolves crisis & embraces change
• Provides vision & strategic direction
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“Management is efficiency in climbing the ladder of success;
Leadership determines whether the
ladder is leaning against the right wall.”
Stephen Covey
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Major Governance-Management Areas
1. Board Management & Development
2. Human Resources
3. Finances/Fixed Assets
4. Resource Development
5. Stakeholder-Constituent Representation
6. Programs & Services
7. Strategic Directions & Planning
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Policy & Implementation Spheres
Policy-making
Implementation
Board of Directors
Area of Shared Responsibilities
Executive Director/CEO
Area of Shared Responsibilities
Staff
Operating
Policies
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Balancing Leading with Managing
Managing…– See the trees in the forest– Maintain systems– Control & tinkers– Manage crises– Seek efficiencies– Focus on procedures & personalities
Leading…– See the forest through the trees– Change systems– Shape & influence– Turn crises into opportunities– Seek investment– Focus on vision & concepts
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The ED/CEO
• At-will or contract employee
• Is accountable for all organizational performance & exercises authority as designated by the board
• Accomplishes expectations as established by board policies & directions
• ED’s performance is significantly related to organizational performance, at both the board & operational level
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Clearly Define ED/CEO’s Authority vis-à-vis the Board
• Define general & lasting parameters in bylaws
• Have updated, board approved job description or clearly defined contract
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State Key ED/CEO’s Job Responsibilities in the Bylaws
• Chief paid administrative officer• Administers day-to-day affairs (financial, personnel,
program, etc.) within policies established by board• Ensures compliant & ethical implementation of board
policies & directives & all applicable laws & contractual requirements
• Hires, supervises, evaluates, & terminates all staff • Inform, support & advise the board & its committees• Safeguards fiduciary obligations & Signatory
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Executive Limitations
• Constraints on executive authority which establish prudent & ethical boundaries. Within these boundaries lie the “acceptable” arena of executive activity & decisions– To not risk losses beyond those necessary in the
normal course of business or as otherwise determined by the board
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The Delicate Balance of the Board
Board of Directors
Board Committees
Executive Committee
Officers:SecretaryTreasurer
Vice PresidentPresident
Program and Support Staff
Managerial Staff
Fiscal Officer
Assistant Director
Executive Director/CEO
Critical Relationship
Center
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Core Elements to Positive Board-ED/CEO Relations
• Openness• Mutual understanding of & respect for
responsibilities, boundaries & limitations• Define & follow an accountability structure• Competence• Style “fit” – managerial, leader,
entrepreneurial, decision-making methods, personality, etc.
• Mutual trust & confidence – earned & tested
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Ways to Support the ED/CEO
• View as a mutually supportive partner• Convey sense that challenges are shared• State appreciation of achievements• Encourage professional growth• Recognize and respond to administrative
needs• Watchdog workload• Encourage earned time off• Evaluate regularly
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Tips for Evaluating the ED/CEO
• Conduct written evaluations at least annually• Design instrument that is comprehensive,
goal oriented & looks at past as well as future
• Consider including a written self-evaluation• Design process that involves the board’s leadership &
informs all board members– Avoid involving staff & one board member or officer doing
the evaluation– Assign committee in bylaws – Executive and/or
Compensation Committee
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Tips for Evaluating the ED/CEO (continued)
• Meet without the ED/CEO to prepare & anticipate sensitive and confidential matters
• Handle serious problems or disciplinary issues carefully….be risk management conscious
• Link compensation to the evaluation
• Allow limited ED/CEO feedback regarding the board’s functioning & how it relates to his or her performance
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Considerations for Determining Executive Compensation
• Salary vs. Benefits vs. Perks: “Total Compensation”– IRS 990 Key Employee Report; “Excess Compensation”
• Evaluation results with respect to individual & organizational performance
• Current & future needs & directions of the organization• Job requirements • Competitive labor market• Equity• IRS & state agency criteria • Funder or donor perception• Should be determined by full board action
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ED/CEO Succession Planning
• Goal is to maintain continuity with minimal disruption in an emergency, temporary or permanent transition
• Control the message to the various audiences
• Expect the unexpected!
• Maximize opportunities for positive change
• Create framework for search process; who is going to do what & how
• Consider an Interim Executive
• Then hire the right candidate
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Role of ED/CEO in Succession Planning
• ED/CEO should have plans for back-up when he or she is not available
• ED/CEO needs to think succession & back-up when key management staff turn-over occurs
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Key Points to Remember to Board-ED Relations
• To act in good faith & with the diligence, care, loyalty, & skill which reasonable persons would exercise under similar circumstances
• The board as a collective is the employer as a collective, not individual members
• The ED/CEO is the board’s key employee & partner• Both the board & ED/CEO provide leadership
– The board governs – The ED/CEO contributes to governance & is accountable to the board
for all management & staff functions – The interactions between the board & ED/CEO sets the organizational
climate
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Added Ideas, Comments, Questions?