Editor’s Note: This is a two-part article on the challenges of taking the organizational reigns from a charismatic founding director and supporting it to reach an improved level of performance. Part one previously introduced the situation and addressed making sense of the financials. Part two now adds to that the issues of organizational structure and the challenges of governance and leadership.
Objective #2 – Review the Governance and Organizational Structure for Efficiency
The Federation was comprised of thirteen non-profit corporations. The largest of these was the metropolitan regional entity. There were 11 other regional organizations and one statewide umbrella organization. Each corporation had a separate governing board of between 5 and 36 directors. In addition, there were chapters, assemblies, committees, and affiliated or associated organizations with voice and vote in the organization. Some of the regional entities employed staff; senior volunteers managed others. The organizations caucused in regional entities annually and then came together for a statewide gathering to determine legislative agendas and elect officers. The two largest entities, the metro and state organizations shared both offices and staff. However, as distinct legal entities, the bookkeeping, insurance, human resource policies, tax filing, audits and programming were managed, reported and held separate.
In a squabble over public policy engagement tactics, three of the larger regions withdrew from the FOC during its second decade and continued to operate independently. The board did not want to see this scenario played out again, yet the financial implications of keeping nine corporations viable, insured and legally compliant with state, federal and tax regulations was costing the organization some $70,000 more each year than would be required for one organization.
This was not a new concern for the FOC. Two major foundations had provided over $125,000 in the previous three years for expenses associated with reorganization and restructuring that did little to improve the situation. Aside from studying the condition, nothing demonstrable was evident for the expenditure. And, now there was no money to restructure and some accounting for accomplishment needed to be made to these foundations or there would likely be no further support from them.
Recommendation # 2 – Clarify and Simplify the Structure for Efficiency and Understanding
Much of the energy originally dedicated to education and changing public policy was now subverted to managing the myriad intra-organizational relationships of the FOC. The monthly schedule showed 24 committee, board or special interest meetings with another 13 held “as needed or quarterly.” The structure of the organization needed to be internally manageable and externally understandable to stakeholders, funders and membership.
In this case, that meant eliminating the redundancy of effort involved in nine organizations. Several of the regional entities had already lost their nonprofit status due to failure to file required documentation with the state. Simplification required one board of directors, one insurance policy, one set of by-laws and personnel policies, and one employing entity. Given the personal investment within each organization, this would not be easy.
A new organizational structure and staffing pattern was introduced that clarified both governance and internal reporting relationships. Bylaws were revised and clarified and a committee structure that was responsive to regional concerns developed.
The political morass for this endeavor was significant. While a reorganization committee was already in place little had been accomplished. As an outsider, I carried no political weight. I needed help to begin some actual movement toward positive reorganization. That help came in the form of a handful of key staff and senior leaders from across the state that also recognized the impossibility of the structure. Meetings and discussions took place at committee meetings, regional gatherings and every other available venue. By drawing the line back to the bleak financial picture and necessity to simplify structure and clarify lines of responsibility, we managed to convince a plurality of the membership that consolidation was necessary for survival. After more than 9 months of effort, the FOC membership approved the dissolution of nine regional entities and the reinvigoration of the state organization with a new set of by-laws and structure.
Objective #3 – Determine Governance and Staffing Requirements Needed to Accomplish the Mission
Ideals and ideologies mold personalities and personalities create organizations in their likeness. The founding director was raised and educated in a religious denomination that lived inclusiveness, collegial voice and direct democratic vote. It was important for him that this fledgling, grassroots bedded, politically driven organization hear the voice of every senior constituent that wished to be heard. The prevailing chant of the membership was that grassroots means every person has an opinion on every issue and all bear equal weight.
The director recruited board and committee members from the membership ranks where this stated attitude prevailed. There was little thought given to leadership expectations or individual capability prior to seating in a position of authority. Board meetings appeared to be attended more for coffee, donuts and human connection than the challenge of governance and leadership for a nonprofit organization designed to influence governmental policy.
This attitude was echoed by the staff. Staff felt that everyone, at all management levels, needed to be involved in all programmatic decision making. Complicating this was that some staff had formerly been senior volunteers.
In many organizations of the social sector, staff members sign on for the mission as well as the reimbursement. As such, when there is a gap in personnel or organizational capacity to fulfill on its mission, people will generally rise to the occasion and fill the void.
In the situation of the FOC, all of these were true. Job responsibilities were clouded. Because of the multiple organizations involved, many staff had dual reporting relationships and cross-organizational responsibilities. One organizational chart showed one staff member assigned 64% to one entity and 36% to another. What proved challenging from an accounting perspective was impossible for leadership and employee and volunteer supervision.
As a result of less than appropriate mission clarification and questionable personnel practices and supervision, many staff resorted to fulfilling their own mission and developing their own programmatic enclave. Bitter disputes had arisen over funding and even ownership of supplies, computers, office equipment as well as program responsibility and job assignments.
Recommendation # 3 – Get the Right People in the Right Seats on the Bus Mission
It is critical to have committed, strategic leaders during a time of transition. Most people that follow a founder will have a leadership and governance group already in place and initially need to work with that group. It behooves the new director to have poignant, honest and courageous conversations with each board member about their duties of care, loyalty and obedience to the lawrelative to the organization itself. It is also helpful to provide an easy way for members that have allegiance primarily to the founder to recuse themselves. Offer sincere recognition for those faithful former leaders and let them go.
Then, start strategically recruiting new and enthused governors and leaders. Look to those whose voice had previously been muffled. Search amongst the stakeholder base for program volunteers or interested parties for diversity of thought and community connections not previously engaged. Implement a plan for creating diversity and capability with in the board and committee structure.
Train the new leadership in techniques and processes of good governance. Provide curriculum and educational opportunities to help them gravitate to their new stature and position. Give them the tools to apply best practices and positively reward good behaviors and hold them up to the membership’s scrutiny. Expect them to support the organization itself with their time, talent and treasure.
The staff also needs to be educated in new and appropriate standard operating procedures and bring a positive attitude to the endeavor. The FOC was fortunate to have capable and thoughtful leaders in several key staff members. Their support, the stories of the past and the humor they were able to muster proved most beneficial and uplifting as we struggled together to keep the boat afloat through the turbulent waters of transition.
The process of following a founding director is arduous and extremely challenging. Where the organization is floundering as a result of financial or structural issues, the complexity of that following is increased significantly. It is a daunting task if attempted alone.
Find and elicit support for the process. Look inside to key people that can see past both the fable and the foibles of the founder. Discover sidelined stakeholders and bring them back on board. Engage professional help where needed. Be honest with donors and those in positions of influence or authority that the task will not be easy or accomplished quickly.
Finally, find time to laugh, live and learn from the process. The best is yet to come!