LESSON 25 – Compensating the CEO—It’s About More than Money

Welcome to More Lessons From the Nonprofit Boardroom Blog, a 40-week journey through the new book, More Lessons From the Nonprofit Boardroom, by Dan Busby and John Pearson. Each Wednesday, we're featuring a guest writer’s favorite snippet from the week's topic. Tom Okarma is our guest blogger this week for the second of four lessons in "Part 7: Boardroom Best Practices.” And during this COVID-19 era, the role of the board becomes even more critical. We pray that your board will have God-honoring wisdom as you spiritually discern next steps.

LESSON 25 OF 40: Compensating the CEO—It’s About More than Money
Getting the compensation-setting process right must be a priority.

THE BIG IDEA FROM THE BOOK: In Lesson 25, the authors remind us that to fairly review and set a CEO’s compensation, a board should also periodically review the CEO’s performance. That is the best way a board can reasonably set a fair compensation for a CEO. 

The authors also suggest obtaining an external compensation survey so boards can work with comparable and current data when setting compensation.

It is good practice to set up a board compensation committee to confidentially conduct a compensation review. This provides the board with needed information to set compensation once the performance review is completed.

MY FAVORITE INSIGHTS from Lesson 25, pages 135-139:
• “Since performance reviews and compensation reviews go hand in hand, it is past time for a board to step up to its responsibilities.”
• “When CEO compensation is given an appropriate priority, a ministry board has demonstrated leadership in a significant element of governance.”
• “CEOs…will deeply appreciate boards that address compensation-setting with integrity and thoroughness.” 

MY COLOR COMMENTARY:
Since one’s compensation can be structured in several ways, fairness and consistency require the board to carefully review the entire compensation package, including salary and any benefits.

An honest and transparent discussion with the CEO about the linkage between one’s compensation package and their past performance helps everyone understand the composition and amounts of total compensation. 

THIS WEEK’S QUOTES & COMMENTARY BY TOM OKARMA:

TOM OKARMA is an author, board coach, and leadership consultant. As a top-rated nonprofit leadership author, keynote speaker and consultant in strategic planning, board development, and board governance, his devotion to helping nonprofits, combined with over 30+ years of business experience, make him a dramatic force for change, helping nonprofits increase their impact. Tom is the author of FROM THE INSIDE OUT: Leading Where it Matters Most: The How-to Guide to Leading Nonprofits for Impact, and Break Through the ICK FACTORS of Nonprofit Leadership: Discover Your Organization's True Potential.

TO DO TODAY: 
• Establish a board committee to prepare and conduct a performance review of your CEO this year.
• Obtain a compensation survey reflecting current compensation levels in your community.
• Visit the ECFA Knowledge Center and read and share the short chapter, Lesson 25, “Compensating the CEO—It’s About More than Money.”

NEXT WEDNESDAY: On July 1, 2020, watch for the commentary by David Ingerson on Lesson 26, “Big Rocks, Pebbles, and Sand. Ministry boards have a natural gravitational pull toward issues that should be reserved for the staff.”

ORDER THE BOOK TODAY!

BULK ORDERS: Click here. For more resources and to download the book's Table of Contents, visit the book's webpage.

LESSON 24 – Should Most Standing Committees Stand Down?

Welcome to More Lessons From the Nonprofit Boardroom Blog, a 40-week journey through the new book, More Lessons From the Nonprofit Boardroom, by Dan Busby and John Pearson. Each Wednesday, we're featuring a guest writer’s favorite snippet from the week's topic. Rebekah Burch Basinger is our guest blogger this week for the first of four lessons in "Part 7: Boardroom Best Practices.” And during this COVID-19 era, the role of the board becomes even more critical. We pray that your board will have God-honoring wisdom as you spiritually discern next steps.

LESSON 24 OF 40: Should Most Standing Committees Stand Down? 
How many standing committees are needed for effective governance?

THE BIG IDEA FROM THE BOOK: You can assume that the standing committees of your board were created with the intent of enhancing governance effectiveness. However, times change and so too does the board’s work. In Lesson 24, the authors caution that the committee structure used by the board should be flexible and meet the changing needs of the ministry. That’s why boards are encouraged to regularly assess how standing committees are functioning and then to weed out those that are no longer relevant.

Except for the committee or two that are mandated (an audit committee, for example), inclusion in the ministry’s bylaws or board handbook shouldn’t be read as a promise of eternal life. Most committees must regularly prove their worth to governance effectiveness, or stand down.    

MY FAVORITE INSIGHTS from Lesson 24, pages 130-134: 
• “A good rule of thumb is the fewer standing committees, the better. Only use a committee if it adds value.” 
• “Committees should not take on a life of their own, nor should they overshadow the board itself.”
• “Keep in mind that committees are meant to be tools boards use to get their work done. The right tool for today may not be the right tool for tomorrow.”

MY COLOR COMMENTARY:
In concept, standing committees seem a great way to focus board members’ time and attention on issues of greatest importance to advancing a ministry’s mission. The divide and conquer approach that committees provide to managing the responsibilities of the board is handy and efficient. In reality, however, board committees are too often the doorway to micromanagement, second guessing, and deep dives into administrative minutia. This happens most often when board committees mimic administrative functions (which is most of the time). 

Absent a governance-focused reason for being, standing committees can be more trouble than help. But give board committees a clearly stated, up-to-date, governance-centered purpose and the results are remarkable. Agreement about the why of their work keeps standing committees steady on their governance feet. 

THIS WEEK’S QUOTES & COMMENTARY BY REBEKAH BURCH BASINGER:

REBEKAH BURCH BASINGER is an independent consultant for board development and fundraising who works mostly with faith-based nonprofits and ministry organizations. Over the years, her consulting practice has been enriched by service on the boards of numerous organizations, beginning with her children’s daycare center, extending to MAP (Medical Assistance Programs) International, ECFA (Evangelical Council for Financial Accountability), MOPS (Mothers of Preschoolers) International, and currently, Lancaster Theological Seminary. She and her husband, Randall, live in Dillsburg, Pa., and are the parents of two adult sons and grandparents of seven exceptional grandchildren.

TO DO TODAY: 
• SURVEY board members to determine satisfaction levels with committee work.
• REVIEW charges to the standing committees for relevancy, clarity, and accountability.
• VISIT the ECFA Knowledge Center to read and then share the short chapter, Lesson 24, “Should Most Standing Committees Stand Down?”  

  

NEXT WEDNESDAY: On June 24, 2020, watch for the commentary by Tom Okarma on Lesson 25, “Compensating the CEO—It’s About More Than Money. Getting the compensation-setting process right must be a priority.”

ORDER THE BOOK TODAY!

BULK ORDERS: Click here. For more resources and to download the book's Table of Contents, visit the book's webpage.

LESSON 23 - The Bully in the Boardroom

Welcome to More Lessons From the Nonprofit Boardroom Blog, a 40-week journey through the new book, More Lessons From the Nonprofit Boardroom, by Dan Busby and John Pearson. Each Wednesday, we're featuring a guest writer’s favorite snippet from the week's topic. Nate Parks is our guest blogger this week for the fourth of four lessons in "Part 6: Boardroom Time-Wasters, Troublemakers, and Truth-tellers.” And during this COVID-19 era, the role of the board becomes even more critical. We pray that your board will have God-honoring wisdom as you spiritually discern next steps.

LESSON 23 OF 40: The Bully in the Boardroom
The board chair, the CEO, and other board members must neutralize the board bully. 

THE BIG IDEA FROM THE BOOK: In Lesson 23, the authors note that a board bully manipulates, pressures, blames, and coerces people to follow his or her ideas or agenda. These bullies wreak havoc and create dissension which derails the board’s missional focus. 

Once a bully is identified in the boardroom we need to support and empower the chair to take courageous and gracious action to help the bully exit the boardroom efficiently and effectively. 

MY FAVORITE INSIGHTS from Lesson 23, pages 125-128: 
• Fundamentally, bullying is a spiritual issue.
• Keeping the phrase “created in the image of God” in the back of the mind is a must.
• Use a spiritually and strategically designed process to choose and recruit people for key leadership positions.  

MY COLOR COMMENTARY:
Identifying the bully in the boardroom is typically not a board’s basic problem. The most astute boards identify bullies—in advance—through a formal application and interview process. The goal is clear—to make sure the board has a well-thought-out onboarding process that is well executed to weed out the bullies and protect the board. This is the best anti-bullying structure to have in place. 

The problem intensifies if the bully has already found his or her seat on the board and identified the alliances and power structures in the boardroom. There is no doubt that the bully will locate and assimilate these alliances and power structures for personal advantage and agendas.

In the most difficult cases, the bully will achieve the chairperson’s role—which has the potential of destroying not only the board, but the mission itself. The goal is to create a board culture that exposes these kinds of agendas quickly and deals with them effectively. The question I would ask is this: What specific value of your board culture protects the mission from personal agendas? 

Your board has a bigger problem if the CEO is the bully. The CEO has an extraordinary amount of influence over the board. Depending on your bylaws, your CEO may be an ex-officio board member which matters little when the CEO is operating unimpeded. It is imperative that the board institute and activate an annual CEO evaluation process. In my experience, this is one of the most neglected duties of board governance.

The goal is to put in place and practice a solid evaluation process that effectively identifies the duties, roles, and responsibilities of the CEO and the manner in which they should be lived out. Effective evaluation is the best way to mitigate bullying by the CEO both inside and outside of the boardroom.   

THIS WEEK’S QUOTES & COMMENTARY BY NATE PARKS:

NATE PARKS is the President/CEO at Berea Ministries in New England. He is known for his creativity and unique perspective in seeking solutions for organizations. In addition to holding a master’s degree in business, Nate is a national speaker and consultant, always challenging people to look beyond their personal or organizational boundaries for maximum impact.  

TO DO TODAY: 
• Identify the bullies in the room and praise God if you can’t find them.
• Make concerted and grace-filled efforts to remediate the bully situation in your boardroom.
• Visit the ECFA Knowledge Center and read and share the short chapter, Lesson 23, “The Bully in the Boardroom.”

NEXT WEDNESDAY: On June 17, 2020, watch for the commentary by Rebekah Basinger on Lesson 24, “Should Most Standing Committees Stand Down? How many standing committees are needed for effective governance?”

ORDER THE BOOK TODAY!

BULK ORDERS: Click here. For more resources and to download the book's Table of Contents, visit the book's webpage.

LESSON 22 – Whopper Mistakes Can Unravel Your Ministry

Welcome to More Lessons From the Nonprofit Boardroom Blog, a 40-week journey through the new book, More Lessons From the Nonprofit Boardroom, by Dan Busby and John Pearson. Each Wednesday, we're featuring a guest writer’s favorite snippet from the week's topic. Kecia Klob is our guest blogger this week for the third of four lessons in "Part 6: Boardroom Time-Wasters, Troublemakers, and Truth-tellers.” And during this COVID-19 crisis, the role of the board becomes even more critical. We pray that your board will have God-honoring wisdom as you spiritually discern next steps.

LESSON 22 OF 40: Whopper Mistakes Can Unravel Your Ministry
If stupidity got us into this mess, then why can’t it get us out? 

THE BIG IDEA FROM THE BOOK: In Lesson 22, the authors urge boards to be actively aware of what the CEO is doing within the ministry, particularly when it comes to the budget and funding. Oversight of the CEO is crucial (and must include financial accountability) and cannot be taken lightly—no matter how much you like the CEO, or how well he/she appears to be performing within the ministry.  

MY FAVORITE INSIGHTS from Lesson 22, pages 120-124:
• “Too often a ministry slowly and imperceptibly unravels for several years before the board wakes up to the reality.” 
• “The first responsibility of a leader is to define reality.” (Max De Pree)
• “When a ministry becomes unraveled, it is not time for rash action. It is time to step back and review how it happened, determine corrective steps, and move ahead—all with the help of the Almighty.” 

MY COLOR COMMENTARY:
What can a board do to prevent the financial unraveling of its ministry without its knowledge?

The authors suggest four ongoing, foundational commitments needed by the board to avoid a potentially devastating financial crisis in a ministry:
1) Conduct annual CEO reviews without fail. 
2) Assess revenue projections regularly in preparation for financial fluctuations. 
3) In a financial crisis, immediately reduce expenses and begin addressing sustainability. 
4) Do not sacrifice the integrity of your ministry by using restricted funds illegally to solve a financial crisis. 

The authors also point out that three of the biggest mistakes a board can make which will lead to financial instability in a ministry are: failure to diligently oversee its finances, failure to require the CEO to balance the budget, and failure to hold the CEO accountable for keeping restricted funds restricted!

In my own work on a nonprofit board I have seen there is great wisdom in the advice of the authors regarding financial accountability. It’s not always enjoyable (as a board) to be the boss of the CEO, but our responsibility is first and foremost the sustainability of the ministry and ensuring the mission is carried out effectively. So, while support of the CEO is important, it cannot be done blindly and without accountability.  

THIS WEEK’S QUOTES & COMMENTARY BY KECIA KLOB:

KECIA KLOB is Board Chair of the Women’s Health and Wellness Clinic of Walton (in Georgia). She has a master’s degree in Nonprofit Management which she obtained solely for the purpose of bettering herself for service in nonprofit work. She has served passionately on the board for four years and feels privileged to serve with others who love life and want to give unborn children a chance at life and help bring healing to their families. 

TO DO TODAY: 
• Assess: Are there any areas where our board has neglected to hold our CEO accountable?
• Assess: Is our board fully engaged in budget oversight?
• Visit the ECFA Knowledge Center and read and share the short chapter, Lesson 22, “Whopper Mistakes Can Unravel Your Ministry.”

NEXT WEDNESDAY: On June 10, 2020, watch for the commentary by Nate Parks on Lesson 23, “The Bully in the Boardroom. The board chair, the CEO, and other board members must neutralize the board bully.”

ORDER THE BOOK TODAY!

BULK ORDERS: Click here. For more resources and to download the book's Table of Contents, visit the book's webpage.