Dysfunctional Nonprofit Boards Can Ruin an Organization
These Recruiting Principles Offer a Solution
Interview with Jim Mueller
The complexities and challenges of sustaining a nonprofit far exceed those faced by similar-sized for-profit entities. Board members are called upon to be voices in their communities, to promote the importance of their cause, and to attract a band of true believers so that their nonprofits have the best opportunity to have the greatest impact for the most people. Having the wrong people end up on a nonprofit board can spell disaster for the organization. My message revolves around seven principles that nonprofits can use to recruit and sustain highly effective boards – and I aim to provide a roadmap for leaders to get there.
JAMES MUELLER is the president of James Mueller & Associates LLC (JMA), a national consulting firm that provides services in the areas of organizational development, governance, and philanthropy. His new book, Onboarding Champions: The Seven Recruiting Principles of Highly Effective Nonprofit Boards (February 23, 2021) is filled with intelligent and practical advice interwoven with a lifetime of stories about working with nonprofit boards.
Mueller’s work helping nonprofits advance their missions has earned him national recognition. He has worked with nonprofit board members ranging from the highest positions of success and prominence to local communities and neighborhoods, where good people with big hearts ensure the health and wellbeing of their nonprofits.
He has an undergraduate degree from Cornell University and spent the first ten years of his career at Cornell, followed by executive positions at Northwestern University, Advocate Healthcare, Lake Forest Graduate School of Management, and Goodwill Industries.
More information at https://jmuellerassociates.com/
Read the Interview
Hugh Ballou: Hello, everyone. This is Hugh Ballou. We’re back for another episode of The Nonprofit Exchange. *audio issue* We have a whole different slant on it with different information, stories, skills, tools to utilize. Our job is to help nonprofit leaders learn more about leadership and install good, sound business principles into this nonprofit business that we champion.
My guest today is going to be talking about, well, I will let him tell you. It has something to do with boards and dysfunction. I am going to call on Jim Mueller to tell people a little bit about who you are, your background, and why you are doing this work with boards.
Jim Mueller: Thank you very much, Hugh. I appreciate it, and I appreciate the opportunity to talk with your listeners. What stimulated coming to this point of the conversation was a book I just finished called Onboarding Champions: The Seven Recruiting Principles of Highly Effective Nonprofit Boards. It is the positive look at dysfunction.
Sadly, I have been working with boards since 1972, which is a little frightening to think back on. My first experience was getting called when I was a summer intern to talk with the board about something going on in the organization. I said, “Wow, these people have a lot of power.” I went off and finished college, went to grad school, came back, and started working at a nonprofit because I wanted to make a contribution. As I worked in that nonprofit, I saw again how the board members were so influential and maybe didn’t realize it. I saw how they were really good people and also brought their own personal perspective and may not always be informed on how to do the best job.
As I went through my career, I worked for Cornell University for 10 years and worked with different boards—alumni boards, club boards—in terms of recruiting for and developing those boards. I then went off to run a campaign and had to develop an advisory board and worked with them for the length of the campaign. From there, I went to Lake Forest Graduate School of Management, where I was Vice President of Enterprise Advancement. My job was board recruitment and development as part of that role at the business school. From then on, it’s always been in some way or another working with boards. When I started my consulting practice about 16 years ago, it became a clear focus of understanding how to make boards effective. It’s been a long journey, and I’ve learned a lot along the way.
Hugh: There is new stuff to learn every day. When we figure it out, it all changes, like the pandemic.
Jim: That’s right. It does.
Hugh: The pandemic has been a multiplier in both directions. This fictitious topic of dysfunctional boards. We like to think that boards are efficient and get things done. I have been working with nonprofits for 32 years as an external presence. I served megachurches for 40 years and had a different kind of experience, but a very similar experience, from inside. I have worked inside and outside of organizations. What you said about having well-meaning people who aren’t instructed on how to do what they are trying to do, why is that?
Jim: It goes right back to the start. Usually we recruit board members because they’re an arm’s length away; we know them, or they’re friendly. It’s not really a disciplined approach. It cuts both ways. Board CEOs have a skin in the game so to speak about the process of leadership and management. Boards, I have to be careful of being too critical because if there weren’t dysfunctional boards, I wouldn’t have work to do. I’m right in there. It’s the process of really starting by thinking about: What do we need in terms of governance? What is governance? How does it differ from management? What is the line between the two? How do we keep healthy oversight, which is the board’s role, without meddling in management? It’s teaching boards a full cross-section of responsibilities they have within governance.
Hugh: I served PCUSA churches, which have a session. It started out with the same framers of our Constitution to have a bicameral system of Presbyterians. You had the deacons and elders. Most of the churches have gone to a unicameral system. When I worked for the church and worked externally, very few of those boards understand how to be the board, how to be the session. I don’t find that very different in nonprofits. Is your specialty solely with nonprofit boards, or do you work with for-profit boards as well?
Jim: In terms of board governance, it’s nonprofit boards. They are a unique beast. They are entrusted with the public good, watching out for the public trust. It’s very different from a for-profit line, where the board is looking out for the shareholder, which is very different than looking out for the interests of the community. Nonprofit boards have a harder job, I think, because they have a larger legal responsibility in terms of ensuring the public trust that the organization is doing what it’s supposed to do in a way that’s effective for those it serves. It’s a bit different of a focus there.
Hugh: I’m going to give you some hard questions.
Jim: That’s good. I expect it.
Hugh: When you have a first conversation with a board that is a potential client, you know they’re dysfunctional. Do they know they’re dysfunctional? How do you have a conversation about functioning without hurting their feelings or ruining the relationship?
Jim: That is a hard question. It’s a good question. I have a confession to make first. I went to seminary; that’s where I went to graduate school. I also pastored a church for a short time. Talk about dysfunction. I found it really rife in that place because everybody brings a certain perspective on things, and they’re pretty sure they’re right.
When I encounter a board, there are limitations on what I can do. Are they receptive? I always say, “I wonder how elastic their imagination is, how well they see themselves.” I ask questions like, “What do you want to achieve? How do you see your role? What are your responsibilities? What difference do you want to make? What are your biggest challenges?” I create a series of questions that will help me understand where they are.
Then I lead them through a process of discovery. Many times, I will work with the three basics: values, vision, and mission. That really opens up the board to see themselves in a mirror in terms of who they are. My point with many boards is not to look in the mirror, but instead to look out the window. Are you having an impact on the community you serve? Or are you just trying to make yourself look better? We talk about vision in terms of how the community looks better because you exist. What do you want to achieve for them? What are the core values that call you into doing the work that you’re doing? What is the impact that you want to have? They start to discover where their shortcomings are through a good conversation and good questions.
Hugh: They know that stuff, but it takes somebody from outside to challenge and to nurture that conversation. I know that progress depends on self-awareness and acknowledging there is maybe not a problem to solve, but a river to cross or a process to install. Do you ever have boards that don’t admit dysfunction and don’t want to do anything about it?
Jim: Yes, I call that xenoskepticosis. That’s a term I made up for myself. That’s skeptical of anything that is foreign to how we see the world. That is the hardest disease to administer treatment to. It starts with trying to find out who on the board is open and receptive, who is knowledgeable, and how to begin to find cracks in that façade to find ways to pour in a little bit of nourishment, to see how the world might be different. It’s this exercise of asking good questions about what they hope to achieve and what the difference is between what they hope to achieve and what they are actually achieving. I try to help them see the reality of their situation and move from there.
Hugh: That’s an education in itself, isn’t it? Let’s go back to the beginning. We bear the brunt of the responsibility. We put people on a board who can fog a mirror.
Jim: I love that.
Hugh: They couldn’t think fast enough to give us a reason to say no, so they are on our board.
Jim: That’s beautiful.
Hugh: Then they don’t function, and we blame them.
Jim: That is so true.
Hugh: It never happened before; I just made that up.
Jim: That makes me laugh. That’s a good heart chuckle because it’s true. When I’m working with boards, I was going to call it “The Seven Recruiting Principles of Highly Effective Boards,” but I changed it to Onboarding Champions because I thought champions is about turning your mind into what makes excellence. How do we recruit for excellence? How do we find excellence? How do we find champions? It can be done. It takes a little discipline and self-understanding.
I always start with culture. What is your culture? Is it by default, or are you creating an intentional culture based on your core values? What are those? We work with that. How are you aligning with those core values?
I worked with one national board. They called me in because everything was a mess. One of the primary problems was how they treated one another in the board room. I interviewed them individually. They were all saying, “I feel discounted. I feel put down.” I put all that up on a board and asked, “What are your core values?” Everybody was completely quiet in the room and said, “I don’t think we need to talk about this.” They shifted gears when they saw that reflection because it showed them what they told me about who they were in their culture. It was amazing.
Hugh: How did you answer that?
Jim: I kept it in mind to watch, to see if they were going to align with it. They suddenly saw the reflection of who they were and how they were treating one another, and it didn’t align with who they wanted to be. They were all good people, but they were acting badly in that situation. There was a definite shift from then on. I worked with them for three years. That was a delightful shift in their approach.
Hugh: Stirring things up can get people’s interest and get them to think outside of the box, if they even think there is a box. We do inherit some dysfunction from corporate systems. Corporate systems can hide them because they have more money. It’s driven by power. Leadership in the nonprofit world is driven by influence. What we teach in SynerVision is when you are making an ask, a presentation for funding, that is pretty much the same spiel you are going to make to a potential board member. They are going to be a donor, but they are also donating their time and their talent. That’s the philanthropy play. If we can tell them, “Here’s a problem. Here’s why it’s important. Here’s what we’re doing,” then we have a chance for having a right fit. The culture fit.
I’m glad you are highlighting some key principles. We go from values to principles because principles are executable and values are static. Guiding principles are how we create a culture and make decisions together. On a board, people come and go. There is theoretically a rotation system, which is sometimes present and sometimes not. There is a freshness of new people. You get a board that is dysfunctional. By the way, “bored” does apply in certain circumstances; if they are bored, they are going to be dysfunctional. There is a correlation there. A single board makeup can really destroy a good organization in a very short period of time. What do we look out for? How does that pendulum start to swing?
Jim: That’s a good one. After culture, I talk about character. We have seen in the news lately how the character of many large donors in the nonprofit sector really was never checked out. I served on the Girl Scouts board, and I loved that experience. They really vetted us for who we were, what our competencies were, how we were going to make a contribution. They did reference checks and background checks. They had three interviews with us. I loved serving on that board because they really want to know who they’re getting, what that person is like when they come in the door, and how they are going to contribute.
We don’t usually do those things with boards. We don’t check character. That is what I think is the start of a problematic board. Someone’s ego gets a little too large and their intelligence and information a little too small. They will come in and start making the wrong decisions. I have some crazy examples in recent years of how that happened to two organizations in particular.
Hugh: Do tell.
Jim: I love gossip. One organization was a youth service organization. What they came up with is they suddenly had a cutback in government funding. I was executive director of Goodwill Industries in metropolitan Chicago in northern Illinois, so I know what that’s like. We had government contracts change on a dime, and we lost hundreds of thousands of dollars because we had to rebenchmark all of the benchmarks we already achieved because they changed them. This was a similar situation.
The CEO should have seen it coming more quickly when this came, but when it hit the board, the board was chaired by an individual who was there for his resume padding a little bit. He wanted to demonstrate that he knew how to lead, but he was from an executive tech company. He thought he knew everything about governance. What he didn’t understand is the continuity of the organization. He didn’t know how the organization worked, so he didn’t understand how the problem came about and how it could be resolved because he stopped listening to the CEO because he was embarrassed by what had happened. In the end, he fired the CEO and the Chief Development Officer. We did an internal study of the organization saying, “No, you have a competent CEO. This Is the problem. It did surprise you. Could have been done better. But she knows how to get out of this problem.” He just flipped over the report and said, “We’re not going to do that.” So I said, “Okay. We tried.” They told us to go away. They fired the CEO and the Chief Development Officers.
A few months later, I talked to one of their influential board members. I said, “Did you ever see our report?” She said, “No.” That doesn’t surprise me. That board’s a mess. I sent her the report instead. That was one of the more disastrous situations I have come across.
Hugh: it’s like a political minefield sometimes.
Jim: It can be.
Hugh: What’s the other example?
Jim: The other good example is governance crossing over into management. Another new young board chair, they did a careful search for the Deputy Director of the organization. They did some assessments and did a good job finding this person, but they didn’t realize she had a psychological disorder. She came into the organization and started blowing it up, but she was also really good at manipulating opinion. She went beyond the CEO to the board chair, and the board chair started siding with her and telling the CEO what to do about it. The CEO knew what to do. They called someone from outside to assess the situation who agreed with her. They called in a second person who agreed with her. But he then started siding with this new person and directed the CEO not to release this person from employment, that she couldn’t do that. Then it got into quite a battle. Lawyers got involved. The CEO did release this person. The board found out what the board chair had done without consulting the rest of the board. Half the board left, which was actually a good thing in this case. The board chair resigned. It took a year and a half for this executive director to get the board back on course and the mess cleaned up. That’s sort of stepping where you don’t belong because you don’t understand it situation.
Hugh: Those are disastrous results when it turns into a social gathering with political aspirations and egos battling for position. This is why I like the principles that we develop ourselves, that we make decisions for the good of the organization regardless of our own personal preference. I also find adopting some guidelines for how we function, if the board sets them up ourselves- I find that most people misunderstand consensus, which can be a powerful tool and a good addition to Roberts’ rules of order.
You’ve talked about governance. Everybody talks about that. Let’s explore this messing in the day-to-day operations because that happens a lot. I was pulled into a local nonprofit that was facing bankruptcy, and the board had to be hands-on because they had no staff except a bookkeeper and minor people, but no people to run it and no money to hire somebody. But we were able to move the ship and turn it around and get some money. Now they have a very competent staff. There was a bailout. Get some funding. Hands on and go to work. Of course, not everybody on the board was willing to do that, but it was enough to get it turned over. With my help, they were able to extract themselves from that and set up a reporting relationship. I want to explore that, too, the staff relationship with the board. But describe governance and why it’s important to understand what governance is.
Jim: Governance in its purest form is oversight. I like the model that came out of Harvard called Governance is Leadership, which talks about the three functions being: managing the curbs, what the rules are for the policies; managing the strategy, working with the CEO to figure out what your strategic presence and orientation is; and also cultivating innovation, which is poking around the edges to think about if we could do something differently or better. That space of visioning in addition to oversight, to work collaboratively with the CEO whose job is management, and to go from there. Those are the basic ground rules, but you don’t step into management operations, any of that.
Hugh: How do you define management?
Jim: In simple terms? The board is what; the CEO is how. The board says, “This is what needs to be done. Here is the overview of things. Now you tell us how to get it done.” I see the relationship between the board and the chair is what often gets so fuzzy. What I tell executive directors and organizational CEOs is you are not subordinate to the board. You are accountable to the board. The CEO is at that level with the board but responsible for management. It’s not the chair of the board oversees the CEO; it’s the board who holds the CEO accountable, can hire and fire. But the difference is that the CEO takes care of all management, hirings, employee development, program development, to achieve the outcomes set up by the board in terms of what the organization needs to do for its constituency.
Hugh: I’m not sure that that’s understood by most staff members who are CEOs or presidents or executive directors. All too often, they report to a bunch of bosses rather than reporting to the chair and then the board responds to the chair. What are some of the ways that goes sideways?
Jim: I just worked with a CEO who wrote a succession plan that basically gave the board oversight of management in the process. She and I had had several conversations about this. I X’d out about half of what she’d written and simplified it to a couple of precepts about what the board’s responsibility is, which is to ensure continuity and make sure things don’t blow up between now and the next person that they hire. Management needs to continue to be focused on how we run the operations of the organization to achieve good results efficiently.
Hugh: There is multiple levels. Dysfunction is a slap in the face, but there are levels of low functioning that lead you to dysfunction. There is a self-responsibility here. Knowing how to do the job. It starts at the beginning. How do we get people who fit the culture, understand their role and responsibility, and are committed to doing something? There is what I call the nodding board. They come home and nod during the meeting; they go home and nod at home.
Jim: The bobblehead board, I call that.
Hugh: How do you prevent that? How do you engage boards?
Jim: That’s a good question. I want every board member to tell the story passionately about their organization. I often tell storytelling workshops. I want to talk about crossing the threshold of commitment in a minute here.
I worked for a major hospital health system, and they were trying to develop their board. I’d had a few sessions with them. In this one, they were working on fundraising, the doctors’ role in that. I said, “Your most important role is to tell the story of your cause: how you transform and save lives.” I told the president of the foundation that I wanted to do storytelling. He said, “No, don’t do that.” He was afraid he’d be embarrassed by it. I said, “No, trust me on this one. We’re going to do this exercise.”
The exercise is based on a five-second moment. What moment with a child or a patient changed your life? What was that experience like? How are you different because of it? Now turn to the person next to you and tell them just one of those stories. The whole room lit up. I have done this a number of times. It’s a simple concept. At the end of the meeting, I asked, “What worked really well for you today?” “The storytelling exercise.” That works because it’s all about telling the story and how you’re excited and passionate about that and how you are making a difference in the world. Then you can cross the threshold of commitment so you are invested.
We want people who are invested. When we bring them in the door, they may only be interested. I often use the metaphor of how some board members are walking down the sidewalk and never come inside the gate. Some come through the gate and just play in the yard. Some might sit up on the porch and advise the CEO. But the real board members come in and sit at the table, committing to the good, the bad, and the ugly, and committing to solving it. It’s moving people through that threshold, which I often find that getting them to understand the story about the organization is the key.
Hugh: And the people to understand that story and share it with each other. I served Presbyterian churches. Presbyterians are not known for going out to evangelize. The joke is, “What happens when you cross a Jehovah’s Witness with a Presbyterian?” “Someone who knocks on the door and has nothing to say.” We did say that about board members. “What is it you do?” “I don’t know.” It doesn’t need to be something they recite by rote but helping them get their head around how to describe what is important about this.
Jim: That’s why I encourage mission moments at every board meeting. Start it out with the mission moment. A changed life, an affected person. You are starting to see these stories, so you feel it and get out of your head into your heart.
Hugh: Love it. *Sponsored by Wordsprint*
This book here, Onboarding Champions: The Essential Guidebook for Every Nonprofit Board Member and Executive, is this a textbook for nonprofit boards to learn what to do?
Jim: I asked a number of people to tell me what they saw. They said, “Your book is so accessible and practical. You read through it so easily.” I used a storytelling approach, so I just tell loads and loads of stories to show how these principles and concepts apply to real lived experience. It’s easy to read, but it’s seeped in good theory. Everything I talk about here has good rooting in great rationale and can be trusted. It’s that combination. In the end, I have a little workbook section for each of the principles. You can assess your board and talk about next steps. I wanted it to be something you can write in and use to make a difference today in your organization.
Hugh: Ah! You don’t have to read the whole book. You can get started right away.
Jim: You can pick up a chapter.
Hugh: I like books like that. Where can we get this book?
Jim: It’s on Amazon and Borders. We converted it into every e-reader imaginable. If you have an e-reader, you will be able to find it in your online store.
Hugh: The relationship of the staff head, whether we call them the CEO, the president, or the executive director, that relationship is a key relationship. I find that there are many people in that seat who are stressed out, and they feel everything the board dreams up, they need to do. One more thing. What about the other 97 things I am supposed to do? How does the person in the seat of running the organization interface and manage the board assumptions and requests in a good, healthy way?
Jim: I’m going to give a personal prop to someone in particular: my dear friend Diana Stanley who runs The Lord’s Place in Palm Beach County. She has a wonderful way she deals with it that is so innovative. What she is is pure, clean, and direct. She has this little line. She says to her board member, “Do you see that yellow line?” He says, “What yellow line?” She says, “Between you and me, there is a yellow line. Your side is governance. Mine is management. You’re sticking your toe across it right now. I just want to nudge your toe back into governance and know that I’m going to handle management. You can trust me to do it.” She watches out for it and calls people on it.
As I said a few minutes ago, many CEOs think they are subservient to the board. No, they’re accountable to the board. The board as a corporate unit gives oversight.
Hugh: That’s a major paradigm shift and a major understanding of process right there.
Jim: Good. I find so few understand it. They are driven. You get a new board chair every two years. You get a new board every year. Most of them are not trained well. If the CEO doesn’t intervene and figure out how to educate board members, it will continue a cycle that is difficult to manage.
Hugh: Could people read your book and make it a discussion point for board training?
Jim: Absolutely. The book is designed to be a board training element. To talk about that CEO process, for instance, I learned this from the Girl Scouts and developed it a bit further. It’s a wonderful process. I came into the organization, and there were a couple board members who didn’t like the CEO for some reason. It wasn’t rational, or so we could tell. What we did, and what I recommend, is we developed a CEO committee. Girl Scouts embraced this.
The board chair and the CEO pick three people they mutually respect and agree can work with the CEO. This committee works with the board to determine what we need done in what areas. Is it management, vision, fundraising? Where do we see achievement? The CEO will take that and put together a preliminary plan of action. Then they will meet with these four people to talk about what success looks like. I’ll figure out how to get there, but what does it look like? They have time to talk back and forth and investigate what support the CEO might need, what responsibility for the CEO’S success might the board have, particularly in fundraising. They work that out. Then the CEO presents that to the board, his/her plan for the year. Meet every two to three months. What challenges are popping up? What didn’t work out the way you thought? With the CEO, guide and coach, rather than give them a swat on the hand at the end of the year so it’s an engaged process. At the end of the year, the board has some accountability in that outcome because they had a part in its process throughout the year.
Hugh: Love it. We can now recommend your book as the textbook. The bottom line of this: I read a post today about Seth Godin, the differentiation between education and learning. It’s a learning process really. We don’t just read a book and think about it; we need to have a conversation. My unique position as a musical conductor is the integration of strategy into performance. That’s where a lot of projects go sideways. How do we learn from your book? Having discussion groups. Do you offer any online resources in addition to your book?
Jim: We are developing one. But I couldn’t agree more. Words don’t teach. That’s why I have practical exercises throughout the book to practice. At the end, I have this section and conclusion to do a self-evaluation. Ask the questions, and design next steps. You have to be engaged with the information in order to learn it. That’s perfect for it.
Hugh: I do some similar things. There is a value in somebody who is external coming in and asking the very same questions that the CEO has asked. I brought in 15 of the top conductors in the world when I was at a church in Florida to do a major concert with the choir and orchestra. They were quite the hit. They would come in front of my choir and say the same things that I had said before. The choir would go, “That’s a great idea.” I didn’t mind because people heard it. We come at it. It really shouldn’t be that way, but it’s why people go to marriage counselors because they can’t talk to each other.
Jim: Two things that you said. Just today, one of my clients said to me at the end of the conversation, “Not a knock at you, Jim, but because you’re an outsider, we talked about this better.”
My favorite anecdote though was a few years ago. The chair of the board of a very large Miami-based homeless services organization said to the CEO when he was going to hire me, “Where does he live?” He told them. He said, “That’s far enough away to be an expert.” That is perfect. He was a lawyer, so he understood those things.
Hugh: Out of town. Next county line. You mentioned the seven principles.
Jim: It’s similar to your approach. There are so many models that work. My advice is to pick one and stick with it because it will lead you down the right path if it’s a good model. My model is just one of the pathways.
I talk about starting with culture, figuring out your culture and making it intentional.
Then just check for character. I find that some nonprofits, especially if it’s a wealthy donor who might come to the board, don’t do due diligence. One of the nonprofits just found out that their major donor is going to be indicted on federal charges coming up very soon. You want to look behind the curtain. Character is critical. I recommend very careful character checking out, not just because someone might talk nice.
Competence is not just business acumen. Just because someone is a marketer doesn’t mean they are a good marketer and that they want to do marketing when they sit on your board. It’s an interview process to figure out if someone has the competence. Draw a chart. What competences do you need? Think about independent judgement. What I love about your show is humor. I always recommend the person’s humor. Do they have emotional, creative, or intellectual intelligence? Do they have those pieces? When you look at competencies, it’s these governance capabilities that you want to make sure the person has and brings to the board.
Connections is the next one. When I talk about connections, the first thing people think is connections to wealthy people. But it’s also about connections to the people you serve. Are you connected to them in the way you need to be connected to understand their needs? That is the public trust you’re serving. Are you connected to the people who can make a difference in your community? Are you connected to influential people? You are looking at the broad band of connections you need for your organization to be successful, all of whom need to have these characteristics and competencies.
Then I talk about composition. I do that at the heart of the book because I talk about social justice and talk a lot about why we fail to be diverse, inclusive, and equitable. I sent the chapter out to four Black executives who I know that transformed it. They showed me from their lens what I as a white guy didn’t see. That was extraordinary experience. There are so many excuses why boards aren’t diverse, but they are only excuses. You haven’t disciplined yourself to make a diverse board of competent people, not tokenism. That is the other trick. If you try to legislate this, you get tokenism instead of real governance capacity and diversity.
Then continuity is the example of the tech exec. Board members need to understand how the organization works. I use the metaphor of wiring. Do they know how things are wired? Do they know what circuits go to which place? There might be a short circuit; do they understand what the cause is because they know how the organization functions? Many board members don’t do that.
The final one is collaboration. I mean a collaborative mindset, not necessarily collaborating with other organizations. That is the seven.
Hugh: I like the C pattern. That is a very comprehensive list. You should develop a course around the seven Cs of success.
Jim: I’m working with someone right now to do that. They always take a little while.
Hugh: That’s part of your methodology. Writing a book is a journey. I have seven. It is a clarity of thought. How do we crystalize what we have done and put it in a form that other people can benefit from? We have a variety of people watching. Can I throw in some audience questions?
Hugh: Christina from Atlanta: “What is the correct approach to ask someone to build an MOU or partnership? Which term is best?” It’s a collaborative thing. How do we build an understanding with another entity or person, which the board should be on the ground floor of doing this, right?
Jim: Absolutely. I have been involved with a couple of those. It comes back to do you know the culture of the other organization? That makes or breaks the deal. How do you understand the culture? You have to ask how people make decisions. Culture is the unspoken rules about how people should think, behave, and act. It’s not always explicit. What are the assumptions that the other organization is working under? What do they want to achieve? How do they see working together? You have to do your due diligence.
I write a story of an experience I had years ago trying to create this kind of collaboration. It’s very difficult. I see them fail more often than they succeed. The board needs to ask really good questions, do due diligence, check out who is on the other board. What is the composition? How do they see governance? What do they expect explicitly between the organizations to achieve? It can be done, and I think it’s important, but it needs to be done right. I don’t know if I fully answered the question there.
Hugh: I think you opened up a topic we don’t think about. Sometimes we think it’s not polite to check into somebody’s background. This was a nice person, so why are we going to check them out? I moved to Lynchburg from a smaller town. In the same year, we had three nonprofits lose $750,000 because the person managing the purse strings, there was no background check and no safeguards on requesting checks, writing checks, and signing checks. There was no accountability system there. The board lacked responsibility in setting up a process for that. The boards ultimately are responsible, aren’t they?
Jim: Absolutely. In my mind, their core responsibility is to do due diligence because they’re responsible for oversight. This is on track and in line with the mission and achieving the purposes for which the organization has been established. That’s more than the CEO; that’s a governance job.
Hugh: It is a governance job. Do we write this into our bylaws? Or is it a process?
Jim: Interesting question. You’ve been doing this a while. To me, it falls in policy. Now that you have asked the question, I would think about that. Should boards put that in their bylaws, that this is a governance responsibility? I’m going to think about that.
Hugh: Bylaws are all over the place. We tend to pack too much into our documents, but there are some fundamental things to put in there. You have to make so many board meetings a year. We are having to have extenuated circumstances with the pandemic. People are stressed beyond what we have had before. We don’t look the other way, but we value the human rules. There is a standard that we adhere to. Part of the bylaws is how we function as an organization. That is something I just thought of.
I am trying to think of really hard questions to stump you. I haven’t succeeded.
Jim: You got close there.
Hugh: There are options. It’s not heavy-handed rulemaking; it’s standards of excellence, which you talked about early on. Speaking of standards of excellence, Jeffrey Fulgham is here, a retired CFRE, professional fundraiser, and one of our advisors on our advisory council at SynerVision. He’s become a dear friend. “Great content,” he says. “So many CEOs have dysfunctional boards and think it is an isolated situation. They don’t realize how many organizations have these problems. You’re letting them know this is prevalent and probably the rule rather than the exception.” That’s a sad statement but so true.
Jim: I know. That’s why I’m very busy. That’s all I can say. I’ve seen a few really good boards and have been invited to work with them. They ask, “How can we be better?” They ask me to sit in and think about that with them. Then we figure out a few things that are better. But it’s such a pleasure to sit in a boardroom when it’s working. Also, I mostly see the ones that are dysfunctional because that’s why I’m called in. There may be more out there that are functional, and I’ve seen a few. But I’ve seen a lot of dysfunctional boards, yes.
Hugh: I turn it the other way around when someone approaches me now. I work with a lot of nonprofits, so I can’t really be on boards because that sucks me into an area I don’t need to be in. I act as an advisor to boards. When there is one that tempts me, I ask three questions: What is our purpose? What is my role and responsibility? What will we accomplish together? So far, I have about 30 of those out with no answers. “I’ll get back to you.” If you can’t answer those, why should I bother to step up?
Jim: That’s a wonderful way to put it. I did a training session for graduates of a leadership course down here. I talked about how to interview for a board. Those are three of the key questions. What is my role? What are we going to accomplish together? What are you looking for?
Hugh: I’m going back to the prescribed questions I should have been asking.
Jim: Those are the ones I got ready for.
Hugh: We have the seven principles, which are outstanding. They could get those under their belt, and I was going to say master them, but we never master them. We start to learn what they are first. Then it’s a journey of discovery and installing those principles. I favor consensus. People confuse consensus and compromise when they are absolutely opposite. Win-win versus lose-lose. Consensus, everybody comes around. We get to where we can all say, “This is for the good of the organization regardless of my personal preference.” That is a powerful operational principle. But how do nonprofits make the pivot to get to productive and informed communication? In 32 years, that always comes up as a negative thing. You have to have a strategy to know what to communicate, but you also have to have relationships. So the question is how do nonprofits set an established and productive and informed board culture?
Jim: That’s a huge question. It taps into every piece of what the book talks about. I’ll try to take a stab at it at a more surface level. It’s making a commitment that you’re going to do it. That is the very first thing. We’re going to change the way this board functions. The CEO and the board chair are two key players in this decision. You have to recruit a couple more board members to say we’re going to do this. Once you do that, you start with what do we want our culture to be? What are our core values that shape what we are? Do we know our responsibilities of board members? Then you build from there across the other six principles that I talk about.
Hugh: Love it. This could be the book every board member should be required to read as part of their board member orientation. There are some nuances to different boards, but there are some fundamental consistencies across the board, so to speak. How can nonprofit leaders confront board members who serve at their own interest, such as resume padding? I’m on this board as a status thing; I don’t care about doing anything. I’m just listed. Or networking. Or those who are becoming dead weight or even disruptive rather than investing wholeheartedly in the cause of the nonprofit?
Jim: That falls to the board chair. It doesn’t happen often. That’s why I highly recommend term limits. You can get unproductive board members removed without the embarrassment. I took over the chair of a board when my daughter went to school for their foundation. When I got there, I found a typical situation of no sense of core values, no vision, no mission, no board development activities going on. Over the next few years, we were able to transform that board significantly. It takes ongoing and consistent attention to good practices. But I had to ask a couple of people to leave.
How I approached them is I called them up personally on the phone. “I noticed that you haven’t come to any meetings lately.” “Yeah, I haven’t.” “What did you hope to accomplish by being part of the board? We are growing and changing. I’m wondering whether it’s the right fit for you right now. We need board members who are present with us, who are fully engaged. If that’s not something that fits with your life right now, we fully understand that. But we’re at a place where we’re making great progress, and we really need all of our board members on board.” He resigned. But I gave him the option without embarrassing him, but to ask him some good questions about what his motives were, what was he hoping to achieve, and what our expectations were for board members. We were able to fill his seat with another board member we carefully chose. It’s a hard thing.
Hugh: People avoid conflict. They see that as a negative force. What happens is everybody else sees you as a bad leader because you’re not dealing with it. It really has a negative impact on the rest of the board.
Jim: It does.
Hugh: If people aren’t functioning and you look the other way, that does not energize other people. Actually I’ve had to do that sometimes. People are relieved because they know it’s not working, and they don’t know how to tell you. They think they’re letting you down, but they’re not functioning, so they are letting you down anyway. I learned from my studies of psychiatrist Murray Bowen that direct and straightforward conversation with conflict is important. You move toward it and stay calm. The way you presented it was very healthy.
Jeffrey said, “Many years ago, I left an organization primarily because the board wanted to govern and manage. I said you can’t do that. They insisted, so I insisted that I resign. This is not uncommon.”
Jim: No, it’s not. Even with some of the clients that I work with, trying to help them push back and find the line, I have had some good successes when boards understand they shouldn’t cross the line and are receptive. I’ve also had experiences where the board chair has left because they say I should be more engaged in making sure this organization is doing the right stuff. I congratulate this individual for resigning because maybe that is the only step that is going to bring some clarity around the process.
Hugh: Absolutely. It’s being straightforward with yourself. This is not going to work. The longer you stick with it, it’s not going to get better. There is a mismatch in process.
Here is the last question, as we only have one minute: What are some of the steps nonprofits can take to build more diverse and equitable boards? I love that word, “equity.”
Jim: First of all, it’s hard. The second thing is you have to recognize that you have a culture that you are comfortable with, but what does it look like for people from more diverse backgrounds or minority communities? Does it look appealing to them? We also have to recognize we have bias. We practice social categorization without even realizing it. In other words, he’s old, or he’s disabled, or she’s a feminist. Instead of seeing them for the contributions they can make, we judge people. It’s a process of breaking free from these biases and looking for competence.
When you look for competence, be ready to have the right conversation. There is a little distrust from those who are under-represented on the board. Do you just want me as a token? Are you actually going to listen to me? It’s honest clarity walking into the conversation. A friend of mine says, “Lean in. Be honest and straightforward. Know why you need this person to have a better board.”
Hugh: I went to a large organization and said we need people on here who are different because everyone on here looks like me. They didn’t like that because they didn’t think they looked like me, an ugly, old white guy. Jim, this has been fun and so useful. As we end this helpful interview, what thought or challenge do you want to leave people with?
Jim: Make a choice to discipline your practices to create a board that is really going to support your organization. Make a commitment to put in the effort and set aside some time to do it. It is transformative.
Hugh: Wise words. Jim Mueller, thank you for being our guest today.
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