You can tell a lot about the level of a nonprofit CEO’s leadership by what he or she says, or not, at a board meeting. I firmly believe that a social enterprise or nonprofit rises or falls with its leadership. With good, strong and consistent leadership, virtually anything can be accomplished.

I have two examples of incredibly poor leadership by an executive, which have been implicitly supported by the board. One large $30 million local nonprofit hired a CEO who had worked himself up through the ranks and had been with the organization for a number of decades. Another was a national institution, which had revenue exceeding $60 million that hired a CEO with no prior executive experience.

In both cases, the board members had been with each organization for years and were not looking to rock the boat, so to speak. However, each entity was in the midst of challenging times. In the case of the first nonprofit, there was great need to expand and diversify funding. In the second example, the organization was hemorrhaging money and was depleting its reserve accounts. Both organizations needed a CEO with vision and great leadership skills.

workingtogetherInstead, the CEO of each organization created an environment, which lacked leadership and led to a mass exodus of staff members. Board meetings became dysfunctional because each CEO would barely speak or set the tone because there was a complete lack of vision and expertise. Instead, in each case, the CEO tried to obfuscate by having the senior staff members present – and defend – any recommendations that were being made within their respective departments.

The silence of the chief executives was deafening as boards began to recognize that they had made a poor decision, and instead of addressing the issue head-on, moved toward dysfunction. Each board began to micro-manage these large organizations and get involved in the day-to-day operation of the business. Since there were some loyalties to each CEO and there was a resistance to admit a mistake by the boards, each board began to voice pointed challenges of expertise and skill to senior management professionals instead of looking at the CEOs’ own short-comings.

Finally, in each case, the CEO was quietly asked to leave, but not after there was a considerable amount of damage done to the organizations. Senior staff at both nonprofits turned over nearly in full, taking with them needed experience and institutional knowledge. Staff at more junior levels also turned over in unprecedented rates. Courageous board members who decided to speak out about the so-called elephant in the room, in each case the CEO who was in over his or her head, resigned from the boards because each board as a whole did not want to deal with the error they had made and instead preferred to avert what they thought would be a “crisis”, which only eventually brought a greater crisis.

In each case, this did not have to happen and the boards were fully responsible for the adverse effects that harmed these organizations with staff turnover, dysfunction and decreased income.

These are extreme examples of the old way of thinking around nonprofit institutions. With the incredible pace of the business environment, I believe we will fortunately see fewer cases like these in the future because, frankly, no one has time to deal with these levels of dysfunction and transparency is so incredibly important in this day and age.

However, if you happen to serve on a board and you are seeing your current CEO as someone who remains too silent, it is your obligation to speak up. There is one very important lesson that can serve other boards well, and that is that in both instances there were occasions where executive coaching was mentioned. These organizations declined it because they did not really want to face the error of their ways, but more than likely executive coaching may have helped lessen the level of pain that was inflicted. It may not have been sufficient to educate and inform each CEO on how to be a good leader, but it may have helped.

The other lesson is that board members do have to act as a unit, but they are also individuals and they should never allow “groupthink” to occur, where the desire for harmony and conformity actually creates a damaging situation. Today’s board members need to be agile, transparent, open and flexible. They need to deal with challenges, even those of their own making, head-on. That is their absolute responsibility.

In one of the cases described in this article, the damage was so great that the future viability of the organization remains in doubt.

 

© 2015 Wayne Elsey and Not Your Father’s Charity. All Rights Reserved.