Nonprofit Board and CEO Relationship: The Trust Issue
Ever wonder why things don’t feel quite right between the board and CEO? In this article I describe four “classic” situations that can help a nonprofit board recognize and better understand the dynamics and relationship between itself and the organization’s CEO. Understanding the relationship can be helpful in identifying any sources of tension, the first step in addressing them.
There are four elements common to these situations:
- Relationship, represented by trust—the belief that what is promised will be delivered
- Division of responsibility
- Communication; and
Scenario One: The Subservient Chief Executive
We’ll start with a common scenario: the board is fully in charge and the CEO “serves” the board. The board believes it understands every aspect of the organization and leans toward micromanaging. The chief executive, however, doesn’t like the work environment (too top down, no controls for the CEO), and is actively considering resigning.
Let’s consider the four elements:
- Trust: the board doesn’t really trust the CEO. The relationship is primarily transactional.
- Responsibility: the board retains primary responsibility for all activity.
- Communication: the board is directive.
- Interaction: the board micromanages, making the CEO generally cautious on a good day, and miserable on most.
Scenario Two: The Invisible Yellow Line
In her new book published by CharityChannel Press, The Invisible Yellow Line: Clarifying Nonprofit Board and Staff Roles, Jean Block shows the dangers of the failure to have clear lines of responsibility between board and staff. She’s right. In this far-too-common scenario, when the board and chief executive don’t have clarity about who does what, the potential for conflict is high. Each party strives to ensure—often taking the task on personally—that whatever needs to be done gets done. As a result, there is frustration, and many operational and governance functions fail to be accomplished.
This scenario is characteristic of a board that has once fulfilled the staff role but now has competent staff to do that, yet can’t let go. Changing roles can be challenging for a board, but the consequences for staff are predictable and turnover equally predictable.
Let’s look at the four elements:
- Trust: the board and CEO are more guarded – neither trusting nor untrusting. The relationship is primarily transactional but there are relationship-building efforts.
- Responsibility: it’s not always clear who is responsible for what.
- Communication: communication is haphazard at best.
- Interaction: the board and CEO are informal and do whatever the other permits.
Scenario Three: The Chief Executive Usurps the Board’s Role
In this scenario, the life and future of the organization are soundly in the hands of the CEO, especially in nonprofits founded by the CEO. Unfortunately, this is the preferred operating model for many nonprofits. Though there can be benefits to an overpowering chief executive, the risks may be as large. When there is a high level of ownership by the CEO, every task is attended to and, likely, very effectively. On the other hand, the lack of a strong role for the board can result in the absence of shared ownership and lack of information. These limitations reduce the board’s ability to fulfill its fiduciary responsibilities and, more immediately, reduces even the enthusiasm and desire to serve.
Considering the four elements:
- Trust: the board is more of a figurehead while the CEO leads.
- Responsibility: the CEO is responsible for every aspect of the organization.
- Communication: communication between the two parties is for information purposes only.
- Interaction: the relationship between the CEO and board is polite.
I should mention that in his hard-hitting two-part article Gut Check: Should You Resign from the Board? CharityChannel CEO Stephen Nill advises board members who find themselves in this scenario to either correct this governance imbalance, or resign from the board.
Scenario Four: Well-defined Board and Chief Executive Roles
In this healthy scenario, the chief executive and board have clearly defined roles and responsibilities. There is confidence and assurance that all organizational needs will be addressed and neither party will be unduly burdened. Both parties can celebrate organizational accomplishments! Both parties are also driven to ensure that whatever it takes to ensure success (e.g. fundraising) will be accomplished.
Certainly, the ability to define and maintain clear roles and responsibilities occurs in the mature stage of development.
Considering the four elements:
- Trust: the board and CEO have confidence and trust in each other. They both expect follow-through on every commitment, and receive it.
- Responsibility: the board and CEO have allocated and follow agreed-upon duties.
- Communication: communication is open and direct, sometimes formal but with room for informal, ensuring informational exchange and results.
- Interaction: board and CEO are positive, supportive, and focused on growth and outcomes.
So, I have described four “classic” scenarios. Recognizing which of these scenarios is in play is the first step for a nonprofit board in identifying and better understanding the dynamics and relationship between itself and its chief executive. Understanding what is currently being experienced can be helpful in problem solving, setting the governance and operations goals for a strategic and/or annual plan, and identifying and correcting the sources of relationship tensions.
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