Nonprofit Crises: An Assessment Process to Help Restore an Organization’s Footing
Over the past few years, foundations and nonprofit boards have called upon consultants such as me to address leadership crises with increasing frequency. While the issues appeared simple on the surface, they proved to be quite complex and involved formal and informal relationships, structures, systems, policies and practices.
This article describes my approach to helping boards address these moments of “crisis.” I begin with a review of four of the crises I have been called upon to address. Next, I present the process I have used to understand the situation and develop recommendations. Finally, I will examine the common findings and lessons learned that I believe can serve funders and nonprofits.
Examples of Nonprofit Leadership Crises
Executive directors serve as the bridge between the board of directors and administrative staff, transforming policy and strategy into action. If an organization has not implemented its policies or strategies successfully and fails to advance its mission, boards are likely to hold the executive responsible. Especially when the board has not been a party to developing the policy or strategy, it is the executive who is often blamed.
At an organization serving individuals with disabilities and at a charter school, I assessed situations where longstanding executive directors no longer demonstrated the ability to lead the organization. In both cases, staff called on the board for help, which resulted in requests for my assistance. Both organizations had grown considerably during the tenure of each executive director. However, neither was able to develop the formalized structures and systems needed in larger and more complex organizations.
In each case, following a thorough assessment, I gave two recommendations: Replace the executive director with someone capable of leading the organization into the next phase of its growth, and strengthen the board. In one case, the board did not want to replace the executive director but agreed to adopt our recommendation to establish “sink or swim” standards of performance for him. After a short period, and a board assessment that revealed a failure to comply with the standards, the executive was replaced. In the other case, the executive director had provided signs that retirement was around the corner and this process provided the means for making a transition.
A second set of crises presents organizations with more ambiguous situations. In the case of a food rescue organization and a child care council the boards were unhappy with the executive directors’ lack of communication, unclear production, and inadequate fundraising. My internal assessments each raised the question of the organizations’ needs outgrowing the abilities of the executive directors. In both cases, I set up performance standards. Ultimately, one executive director failed to meet those standards and was replaced; the other executive met the standards and established a new relationship with the board.
The Leadership/Management Assessment Process
Many boards have a hard time identifying problems with the executive director. This situation is particularly pronounced in organizations where the executive director is the founder or a long-term staff member. In some organizations, the executive director is an entrenched figure who has selected and possibly even mentored some or all of the board members. For obvious reasons this type of dynamic can cloud a board’s perspective of executive director performance. Furthermore, when the board becomes aware of performance shortcomings, it is in an awkward position to address them. It is often easier for a trained outsider to assess the executive director’s role in scenarios where organizations have run into trouble.
Over the course of these engagements, I developed a multi-stage Leadership/Management Assessment Process. These stages are:
Determine the nature of the problem. Conduct interviews with staff, board, clients and funders to address validity, nature and extent of the identified problem and role of systems and structures:
a. What are the policies, procedures, structures?
b. To what extent are these structures relational (informal) or institutional (formal)?
c. what stage is the organization in its development?
d. What’s not working: program, management, finance, governance?
e. Who’s responsible?
a. Identify solutions to the problem. If the primary problem is with the executive, can the problem be fixed? There are typically three answers to this question:
1. Yes. Then, reinforce and address internal challenges.
2. Unclear. Then, set up “sink or swim” performance standards.
3. No. Then, replace the executive director.
The findings from Stage Two determine the actions for Stage Three.
a. Implement solutions.
b. Intervene with organizational development.
c. Assist in setting up a performance evaluation system.
d. Assist the board in recruitment and selection of a new executive.
Stage Three – Implementation of solutions
Each of the three answers in Stage Two requires a different implementation plan.
a. If the answer is “Yes” (i.e., the executive plays a major role but is not singularly responsible for identified dysfunctions), redevelop formal systems and structures, including planning and evaluation processes and communications, to support the board, executive and staff in addressing issues.
b. If the answer is “Maybe” (i.e., it’s highly possible the executive is primarily responsible for the problems, but the board is uncomfortable making a decision to replace the executive) develop “sink or swim” standards against which executive performance can be measured and future staffing decisions made.
c. If the answer is “No” (i.e., all signs indicate that the organization would continue to fail if the executive remains) replace staff as necessary (usually at least the executive director) and maybe also rebuild the board.
Findings and Lessons Learned
Executives play a critical role in translating board policy into organizational action. As organizations grow and develop the demands on the executive shift. Most commonly, the leadership traits, such as vision, charisma and energy, required to start an organization need to be balanced with increased management skill, formalized structures, systems and cultures as the organization grows and develops. At the same time, boards must “step” up and change their roles to be more effective partners with the executive also implementing processes, planning and oversight activities.
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