This document discusses balancing governance and management for nonprofits. It provides definitions for governing, managing and leading, and emphasizes that nonprofit leadership is a collaborative team process. It outlines key responsibilities for boards of directors and executive directors/CEOs, and stresses the importance of clearly defining their respective decision-making authorities. The document offers tips for boards to support executive directors, conduct annual performance evaluations, determine appropriate compensation, and plan for executive succession. Throughout, it emphasizes the need for mutual trust and understanding between boards and executive leadership.

1. Balancing Good Governance & Management for Nonprofits June 9, 2011 | Binghamton, NY Presented by Doug Sauer, CEO www.nycon.org | 800.515.5012

2. Key Learning Objectives Understanding ways to effectively balance the authority & responsibilities of the board & management Learn the keys to balancing proactive leadership with good management Gain awareness of ways to enhance mutually constructive & supportive communication between the board & executive leadership Become aware of best practices for executive evaluation & compensation Be prepared for managing staff leadership transition

3. Basic Definitions Governing  “to exercise authority or control” Managing  “To bring about or succeed in accomplishing” Leading  “Coming in advance of others”

4. “Management works in the system; leadership works on the system.”Stephen R. Covey

5. Nonprofit Leadership is a Process that is… Defined by the mission, history, culture & services of the nonprofit A team experience where power & roles are distributed Influenced by position, personality, style, knowledge, & skills

6. Ethical Nonprofit Leadership Actions are consistent with the nonprofit’s mission, values, promises & obligations Actions have Integrity: Not driven or influenced by personal interests, gain or inurement Adheres beyond the “letter” of legal & regulatory requirements to “the spirit of” Focuses on the question of what is the “right” or “correct” thing to do Documents decision-making processes & actions to demonstrate & record proper conduct

7. “Management is doing things right; leadership is doing the right things.”Peter Drucker

8. Balancing Roles for Organizational Leadership "Managers Who Lead; Leaders Who Manage" Managers Leaders Vision

9. Building Your Leadership Team To harness the collective talent & energy of your team members, both board & staff, to accomplish your mission, vision, goals & objectives

10. Leadership Starts with the Board Volunteer Leaders who advance the Mission in a Responsible Manner Duties of the Fiduciary Care Loyalty Obedience

11. The Board-Staff Leadership Team Board of Directors Board Officers Committee Chairs Executive Director/CEO Assistant/Deputy Director Fiscal Officer Top Division/Program Heads Clearly define decision authority along with responsibilities in bylaws, job descriptions & policies

12. The Leadership Team… Sees & understands the big picture - external & internal Motivates - inspires trust & confidence in staff, board members, constituencies & stakeholders Recognizes own limitations; recruits & uses staff & board members accordingly

13. The Leadership Team… (continued) Mobilizes & uses resources wisely Governs & manages well – holds self & others accountable Resolves crisis & embraces change Provides vision & strategic direction

14. “Management is efficiency in climbing the ladder of success; Leadership determines whether the ladder is leaning against the right wall.” Stephen Covey

15. Major Governance-Management Areas Board Management & Development Human Resources Finances/Fixed Assets Resource Development Stakeholder-Constituent Representation Programs & Services Strategic Directions & Planning

16. Policy & Implementation Spheres Board of Directors Policy-making Area of Shared Responsibilities Executive Director/CEO Operating Policies Area of Shared Responsibilities Staff Implementation

18. Maintain systems

19. Control & tinkers

20. Manage crises

21. Seek efficiencies

23. Change systems

24. Shape & influence

25. Turn crises into opportunities

26. Seek investment

28. The ED/CEO At-will or contract employee Is accountable for all organizational performance & exercises authority as designated by the board Accomplishes expectations as established by board policies & directions ED’s performance is significantly related to organizational performance, at both the board & operational level

29. Clearly Define ED/CEO’s Authority vis-à-vis the Board Define general & lasting parameters in bylaws Have updated, board approved job description or clearly defined contract

30. State Key ED/CEO’s Job Responsibilities in the Bylaws Chief paid administrative officer Administers day-to-day affairs (financial, personnel, program, etc.) within policies established by board Ensures compliant & ethical implementation of board policies & directives & all applicable laws & contractual requirements Hires, supervises, evaluates, & terminates all staff Inform, support & advise the board & its committees Safeguards fiduciary obligations & Signatory

31. Executive Limitations Constraints on executive authority which establish prudent & ethical boundaries. Within these boundaries lie the “acceptable” arena of executive activity & decisions To not risk losses beyond those necessary in the normal course of business or as otherwise determined by the board

32. The Delicate Balance of the Board Board of Directors Board Committees Executive Committee Officers: Secretary Treasurer Vice President President Critical Relationship Center Executive Director/CEO Assistant Director Fiscal Officer Managerial Staff Program and Support Staff

34. Openness

35. Mutual understanding of & respect for responsibilities, boundaries & limitations

36. Define & follow an accountability structure

37. Competence

39. Tips for Evaluating the ED/CEO Conduct written evaluations at least annually Design instrument that is comprehensive, goal oriented & looks at past as well as future Consider including a written self-evaluation Design process that involves the board’s leadership & informs all board members Avoid involving staff & one board member or officer doing the evaluation Assign committee in bylaws – Executive and/or Compensation Committee

40. Tips for Evaluating the ED/CEO (continued) Meet without the ED/CEO to prepare & anticipate sensitive and confidential matters Handle serious problems or disciplinary issues carefully….be risk management conscious Link compensation to the evaluation Allow limited ED/CEO feedback regarding the board’s functioning & how it relates to his or her performance

42. IRS 990 Key Employee Report; “Excess Compensation”

43. Evaluation results with respect to individual & organizational performance

44. Current & future needs & directions of the organization

45. Job requirements

46. Competitive labor market

47. Equity

48. IRS & state agency criteria

49. Funder or donor perception

51. Control the message to the various audiences

52. Expect the unexpected!

53. Maximize opportunities for positive change

54. Create framework for search process; who is going to do what & how

55. Consider an Interim Executive

57. Key Points to Remember to Board-ED Relations To act in good faith & with the diligence, care, loyalty, & skill which reasonable persons would exercise under similar circumstances The board as a collective is the employer as a collective, not individual members The ED/CEO is the board’s key employee & partner Both the board & ED/CEO provide leadership The board governs The ED/CEO contributes to governance & is accountable to the board for all management & staff functions The interactions between the board & ED/CEO sets the organizational climate

58. Added Ideas, Comments, Questions?