Goldilocks and the three board members: Part 1
I suspect we all remember the story of “Goldilocks and the Three Bears“. This porridge is too hot! This porridge is too cold! This porridge is just right! I’ve recently stumbled upon a very similar version of this story involving non-profit executive directors and board volunteers around the related concepts of annual performance plans and year-end evaluations. For the next three days, I thought it would be fun to look at each of the bowls of porridge and talk about the pros or cons.
Today’s bowl of porridge deals with when board volunteers shirk their fiduciary responsibilities and fail to evaluate their executive director.
I have run into a number of friends recently who confided in me that they haven’t been evaluated. In some cases, they haven’t been evaluated in a number of years. Of course, in many of these cases, it has become an issue because it is a tough time to be at the helm of a non-profit organization. As criticisms increase and board volunteers try to ratchet up accountability, up pops the ugly revelation:
“Ooooops, if things have been getting so bad, why haven’t you felt the need to evaluate me. We might have been able to make some course corrections if you had taken your fiduciary responsibilities seriously before we got to this point.”
The other side of this coin, of course, deals with the executive director’s annual performance plan (e.g. chart of work). In my experience, when executive directors aren’t getting evaluated, they typically don’t have a very well-defined performance plan with measurable metrics. This management tool is developed and handed to the executive director 12-months prior to their review. This way they know exactly what they need to do to succeed and how to proactively affect their year-end evaluation.
Again, in my experience, boards end up passing on the year-end evaluation because they didn’t do a good job of developing a performance plan, and now they don’t feel like there is anything concrete to measure their employee against. So, they end up taking a pass.
And the vicious circle continues until the non-profit organization skids into the ditch and fingers start getting pointed.
While it is easy to throw board members under the bus, I also want to hold my executive director friends accountable, too. Good non-profit professionals know how to support a board and keep them from falling down on the job. I’ve seen many non-profit CEOs pencil draft their own performance plans and year-end reviews and hold their board’s hand through these processes.
All of this also ties into fundraising and resource development. Rest assured that when fingers start getting pointed, donors ask tough questions and judgements get passed. Remember, the executive director is probably the face of your non-profit organization and many of your donors have likely fallen in love with this person.
I’ve seen it too many times. The organization fractures, accusations get made, donors ask tough questions, and everyone comes out looking bad. In the final analysis, public trust gets violated and donors put their checkbooks away until things get cleared up.
There is one cautionary word that I need to toss out there to board members about this very cold bowl of porridge. I know many of you think you don’t have any personal liability that comes with sitting on a non-profit board of directors because your agency purchased Directors and Officers Insurance. However, it is not outside of the realm of possibility that your D & O insurance company will not cover you in an employment related lawsuit if you failed to complete annual performance reviews of your executive director. It is foreseeable that the insurance company will say “there was a lack of a good faith effort” on the part of the board, and then you will be personally on the hook.
So, get off the couch and take that cold bowl of porridge to the microwave oven and warm it up before it is too late! For those of you who might be looking for a resource guide, click here for a great manual from The Enterprise Foundation. Tomorrow, we’re going to look at that next bowl of porridge which is way too hot. So please stay tuned.
Does your board of directors struggle with evaluating its executive director? If so, what strategies are you using to bridge this gap?
Please use the comment box below and share your thoughts. We can all learn from each other.
Here’s to your health!
Founder & President, The Healthy Non-Profit LLC
Posted on December 5, 2011, in Board development, Fundraising, resource development and tagged board of directors, fiduciary responsibilities, fundraising, human resources, nonprofit, philanthropy, resource development, stewardship, transparency. Bookmark the permalink. 4 Comments.
Erik – thanks for bringing up this critical topic! As I meet and work with Boards of Directors across my region, I’ve had the very unsettling realization that Board Members do not understand their legal responsibilities or the personal liability exposure they have when they fail to carry out those responsibilities! In 100% of the boards I’ve met with, the vast majority of the members of the board do not have an understanding of this. Thanks for highlighting the significance!
Thanks, Nancy! I agree … the personal liability thing is what worries me the most. A good friend of mine once got tagged by the IRS because she was the Board President for a NFP that went out of business but still owed payroll taxes. This board leadership thing isn’t all fun and giggles — it is serious! Good luck in helping the organizations you serve understand this.
Pingback: Goldilocks and the three board members: Part 2 « Donor Dreams Blog
Pingback: Goldilocks and the three board members: Part 3 « Donor Dreams Blog