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A Nonprofit CEO’s Nightmare: The Micro-Managing Board

Posted by Robert B. Acton on Mar 28, 2019 12:02:00 PM

Micromanaging: Puppeteer image - puppet on strings on blue background - ominousThere are two primary (and polar opposite) ways that nonprofit boards drive their chief executives nuts: disengagement and micro-management.

A disengaged board is one that is asleep at the wheel. It is likely falling short of the legal obligations of board service, a net drag on the organization, and doing a disservice to the community that its organization was formed to serve. 

A micro-managing board, on the other hand, has the opposite problem. It’s not that it is too engaged, rather, it is engaged on the wrong things. 

When a board micromanages, it is the chief executive who is most negatively impacted. Talented leaders in their own right, CEOs become strapped and strained in executing the mission when a board takes more than it gives, but also when it gives too much of the wrong thing. 

However, finding the balance is not just the board’s responsibility. Often times, chief executives themselves foster an environment that leads to a culture of what I call board “mis-engagement” (not to be confused with disengagement). 

To avoid this, it is important for a chief executive to ascertain the issues and decisions that should be addressed by the board versus those that are appropriate for autonomous management action. Getting these judgement calls right is one of the fine arts of nonprofit leadership.

A Chief Executive’s Guide to Properly Engaging the Board

  1. Read the bylaws. Often times this foundational guiding document will articulate specific issues and circumstances when the board must be involved. The bylaws might, for example, require a board decision for a contractual obligation or expenditure over $10,000. Chief executives must carefully follow the framework set out in the bylaws.
  1. Take the temperature of the board as a collective. How engaged in discussion and decision making does it expect to be? I’ve seen boards that run the full gamut. Know yours. Keep in mind that, in general, boards will engage on the matters you put in front of them and will stay out of the things you don’t. Choose wisely the items that you surface for the board.
  1. Right size expectations with board leadership. Chief executives should have a discussion early on with the board chair around what constitutes a board-level decision versus a management-level decision. Ultimately, both parties should agree that judgement calls will have to be made by the chief executive on a daily basis. With this understanding in mind, the board chair should support the chief executive and provide assurance: “I’ve got your back.”

Finally, I proffer below a few principles for chief executives to apply when deciding whether to surface a matter with the board:

  • Permanence: The longer the decision’s implications will stay with the organization, the more likely it is the matter should be raised with your board. Take, for example, a 20-year lease of new office space.
  • Directional: The more closely related the decision is to the strategic direction of the organization, the more likely it is the matter should be raised with your board. Remember, shaping strategy is a central board responsibility. Chief executives must not go it alone.
  • Controversial: The more contentious the decision is with one or more stakeholder groups, the more likely it is the matter should be raised with your board. A board will have the chief executive’s back when it has participated in the deliberations and final decision.
  • Positional: If the matter is one that will have the imprimatur of the organization on it for the world to see, you should engage your board. The organization I serve as a board member established a special board committee to consider formal policy positions before making them public. Taking an organizational position on a particular matter may or may not be controversial, but should nonetheless be informed by the board.
  • Essential: The board owns the mission, vision, and values of the organization. A chief executive must not fiddle with these core essentials of the organization without full board involvement.
  • Financial: The board establishes an annual budget to provide management with the autonomy needed to make day-to-day financial decisions. The board tracks outcomes against budget regularly over the course of the year, of course, but when a significant departure from budget is anticipated, the board needs to be involved.

By design, the board of directors and the chief executive of a nonprofit share leadership of the organization. The space between governance and management is often gray. How do you think each entity should understand their respective leadership roles?  I’d love to hear your thoughts.

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