A Cautionary Tale

Tom and Fran were both members of the board of a non-profit organization. They, along with other board members, were concerned with striking the right balance between their responsibility to the organization's stakeholders for results with their responsibility to be loyal to their organization's executive director. Unfortunately, Tom and Fran found this difficult to do and often ended up in conflict with each other.

One day, they had a particularly heated discussion about how best to serve the interests of the organization's stakeholders. Tom argued that their board of directors needed to be more aggressive in pursuing the board-defined goals and performance targets while Fran insisted on being more mindful of the potential consequences of their board decisions on the executive director. The argument quickly escalated and they both decided to resign from the board.

However, after some time had passed, they both began to see the situation from each other's perspective and they realized that their resignations had been rash. They decided to rejoin the board and work together, along with the board chair and the other board members to find ways to balance their governance responsibilities.

Tom and Fran's story is a cautionary tale about the importance of balancing board loyalty for the executive director with the responsibility to ensure the organization produces targeted results and meaningful outcomes.

When boards are too loyal to their executive directors, they can end up making decisions that are not in the best interests of the organization and its stakeholders. However, if they are too focused on results, they may lose sight of their loyalty to their executive directors and make decisions that could jeopardize that important team relationship.

Boards must find a balance between these two competing requirements.

Non-Profit Board Responsibility

Non-profit organizations must achieve measurable benefits to satisfy their funders, key stakeholders, and clientele. The boards in charge of governing and guiding the organization are expected to ensure the organization achieves specific outcomes, at the very least. To put it another way, boards and their board members are obligated to be loyal to those they serve by ensuring adequate and appropriate results.

The question then becomes, how can a board balance its loyalty to its executive director while also requiring him or her to produce targeted results?

The answer is not simple and there is no one-size-fits-all solution. What is required is a careful analysis of each situation, with the understanding that different factors will come into play in different instances.

However, the following six principles can be applied in most cases.

6 Basic Principles

Principle # 1:

The board must be clear about what results are expected and why they are important. This means being clear about the organization's mission and goals and how they relate to the specific outcomes expected and required. It also means being clear about the time frame in which results are to be achieved.

Principle # 2:

The board must effectively communicate with its executive director its expectations for results and the values through which the organization will operate in its pursuit of those results. Communication must include how results will be measured and the frequency in which they will be measured.

Principle # 3:

The board must create an environment that is conducive to achieving its desired results. In addition to clearly communicating expectations, the board is required to provide regular feedback to its executive director and to offer support when needed.

Principle # 4:

The board must ensure that there is a system in place to measure progress towards the defined and expected outcomes. This system should be designed to provide accurate and timely information about whether or not the organization is on track to achieve its performance targets and goals.

Principle # 5:

This accountability must be built into the performance evaluation process and should include regular Executive Director progress reports against targets and goals. Effective boards are more interested in reports from their executive director that report on outcomes rather than outputs.

Principle # 6:

At the end of the day, it is important for the board to always keep the best interests of the organization, its stakeholder community, and its clients in mind. There will be times when tough decisions need to be made.

The Rest of the Story

When Tom and Fran returned to the board and agreed to collaborate with other board members to achieve their objectives, they used these six principles. As a consequence, they were able to enhance their relationship with the executive director while also holding him accountable for outcomes. And, more significantly, they were able to do so without sacrificing their commitment to the organization or its stakeholders.

Call to Action

At your next board meeting or retreat, find an opportunity as a board to consider and discuss the following questions.

1. What should your priority as a non-profit board leader be?
   • The executive director?
   • The results of the organization?
   • Both equally?
2. How should the board balance its loyalty to the executive director with its responsibility to ensure targeted results are achieved?
3. If you don't feel like the executive director is meeting your needs, what steps do you take to get back on track?
4. When does it make sense to replace an executive director?
5. As a leader of your non-profit organization, what are your biggest concerns?

We hope you found this blog post helpful. If you have any questions or would like to learn more about how we can help your organization achieve its goals, please contact me.  We would be happy to chat with you about your specific needs and how we might be able to help.

Thanks for reading!

Your Friend,
Jon Close