Last week, we discussed “How to Build a Competent Board.” In the final part of this series, we discuss “The Role of an Effective CEO in Nonprofit.”
The Role of an Effective CEO
The CEO is the most important role in the management of an organization. It is important the CEO of the organization is involved in every decision the board makes. Sound advice and guidance from the staff leader helps the board stay focused and moving in the correct direction. They are a vital member of the board team, but at the same time, the CEO is different. They handle different problems than the board member and have different responsibilities.
Because the board hires the CEO, the CEO must not only consider the board as one’s partner but a supervisor as well. Specifically, the CEO handles many important day-to-day responsibilities as well as the nuts-and-bolts administration of the organization’s operations.
There are four essential areas of responsibilities for a CEO:
- Establishing vision
- Maintaining relationship with the board and community
- Leading staff
- Controlling the business’ activities and finances
The CEO should establish a vision for their organization and set a clear direction and road map for the future. The organization should aim for excellence in everything it does to fulfill its mission and successfully attract members and donors. The CEO should set high standards for oneself and for the agency and should position the agency as the undisputed leader in providing outstanding service to your membership and to the community.
Maintaining a Relationship with the Board and Community
The effective CEO should have an outstanding relationship with the board and the community. An executive’s relationship with his board is probably one of the most difficult to manage. Often time’s executives get themselves into trouble when they do not keep the board members informed of organizational activities, progress and/or problems. Effective communication is key to being able to develop and sustain good working relationships with board members. Even when you communicate at your best, conflicts and problems may arise. Lastly, there needs to be a balance in the executive’s relationship with one’s board in terms of the board’s involvement. The CEO should work hard to find that middle ground to ensure the board member neither micromanages their work nor becomes disconnected or disengaged with the work of the agency.
There was a study done in 2005 by Mary Hiland titled, “The Board Chair-Executive Director Relationship: Dynamics that Create Value for Nonprofit Organizations,” with 16 board executives and board members. This study was done to see the relationship of these people and what made for a great working relationship. What the study found was trust is the number one thing that makes for a great working relationship because everything else builds off trust. If you cannot trust the person or people you are working with than you a destined to fail.
The idea that defined roles and responsibilities of executives and board members is a one size fits all. However, everyone knows that is not the case with an organization, because each organization is different in its own way. So, trying to have this master list of who does what does not really work. Each nonprofit need to have their own list. The study looked at the good to great ideas relating to the board and executive relationship. This model looked at types of interpersonal dynamics, levels of trust, what the pairs worked on together, and how all the above combined and linked together to form the idea of social capital creation in the organization.
With respect to community and public relations, the CEO should represent their organization in a most positive and professional manner, while actively promoting the organization to the public. The CEO should develop relationships with community businesses. As an example, partnering with local businesses and possibly implementing cross-marketing techniques will truly benefit both entities. One of my strengths was my ability to reach out and develop relationships with area businesses and corporations for the purpose of generating potential new revenue sources for my agency.
It has been my practice to develop win-win symbiotic relationships with the local merchants and suppliers. You can hit a home run with your vendors by determining how you can help increase their profitability and sales while also finding ways to increase their visibility and awareness and foot traffic into their stores.
“The CEO should position oneself as a leader in the community. Best practice dictates the executive leader gets involved and active in the community in which they live. Regularly participate and attend community and charity events. Show support for your colleagues. Be active and join your local Rotary club or local service organization. Be visible and join the right professional organizations and boards.” (Bernstein, 2010)
In one of the communities I was employed, I enthusiastically served on several community boards including a bank, a hospital and a convention and visitors bureau. In each occurrence, I felt I was able to contribute my knowledge and experiences to the agency and in return it also provided increased exposure and awareness for my nonprofit organization in the larger general community.
Other key personnel management roles for the CEO consist of hiring, firing and evaluating staff. The successful CEO recruits and identifies a terrific and dynamic staff team. I have found gifted staff members have that unique personality and ability to get along with others. I always maintained I could teach someone how to run a league, develop a budget or plan a program, but teaching someone to be nice was almost impossible, especially if that individual were not a nice person to begin with.
The successful leader fosters a sense of “ownership” in one’s agency with staff. It is recommended you develop a plan to equip staff with the tools and resources to be successful. To recruit, train and retain the best and brightest professionals, one must develop salary guidelines that are competitive. It has always been my belief that staff (professional, managerial, support or part-time) is oftentimes your best customers. When they are happy, they will let others know. Staff are not bashful in letting family, friends, and neighbors know what they think of your leadership skills and your ability or inability in running the show.
For many decades, management experts have developed and researched various theories and concepts on how best to motivate others. I have found the best way to motivate staff, encourage staff productivity and maintain high staff morale is by creating a safe atmosphere and motivating environment. This includes meeting and talking regularly with your staff.
Get up and be visible and accessible throughout your organization. Get to know staff, relate to them, and encourage them to find ways to better the organization. My philosophy is a plain one, hire the best individuals possible and trust them to do their job. Empower your staff to make decisions and then get out of their way.
Controlling the Business’ Activities and Finances
Part of the agency’s mission is to provide services and programs with the goal of the annual budget breaking even and/or generating a small profit. Developing and managing one’s finances is one of the most important skills needed for success as well as for your agency and personal survival. The board will approve the annual budget, but it is up to the CEO to make the daily decisions on how the money is spent.
Oftentimes when executives are fired it is usually for reasons surrounding the mismanagement of the agency’s finances. Most boards will give the CEO a mulligan if a budget misses the mark each year or maybe even for two years. But after that, boards are not very forgiving if a CEO cannot balance their annual budget and rightly so.
There are a good number of nonprofit organizations that struggle to meet their budgetary goals. Outside funding sources are constantly shrinking, so it is important to seek creative revenue streams to keep your agency afloat and moving forward in a positive manner.
The CEO’s Role in Facility Management
Facility management entails every aspect of making sure a building is operating efficiently in terms of safety, visibly appealing and clean, revenue production, tenant satisfaction and preventative maintenance. A facility director under the direction of the CEO is the person responsible for coordinating all the employees and entities involved in the facility to ensure they work on behalf of the facility and help meet its short and long-term goals and objectives.
The successful CEO will focus a considerable amount of their time and attention on providing a clean, well-organized, and safe facility for their events and patrons. The successful CEO will operate an effective facility that has an exceptional level of cleanliness, appropriate space, and equipment to accommodate contracted events efficiently and in a timely manner.
Members and guests will normally return if they have a safe and enjoyable experience in a well-managed and maintained facility. In addition, all attempts should be made to prevent safety violations. The cleanliness of a facility is a direct reflection on the CEO and on the emphasis management places on customer service.
In summary, the CEO’s job is most challenging. Their position is where the buck stops in dealing with and addressing problems that need solutions. The successful CEO must have an effective partnership with the board. This partnership must be developed over time through working together to address and resolve serious matters in an environment of mutual respect and with a dedication to mutual support.
The CEO must view the board as an important ally in accomplishing the agency’s mission and purpose. The board must develop confidence in the CEO’s ability to guide the agency in furtherance of its purpose. The CEO is charged with the responsibility to keep the board informed of staff performance, to advise them on important matters, and to do the necessary work to resolve problems or recommend alternative courses of action. The CEO is responsible for the day-to-day operations of the agency in execution of its purpose and in accordance with its mission and strategies.
All things considered, an effective partnership results from well-defined roles, mutual respect, and excellent communication. As always, it is easier to develop these elements during periods of relative calm. Working together, directors and CEOs should champion the board/CEO partnership. Directors should make sure the CEO has a clear understanding of the board’s expectations.
Keep the lines of communication wide open. Operate as though the partnership were made up of equals enjoying mutual respect. Through exercise of these principles, the partnership should develop into one that is balanced and effective, to the benefit of the agency, its members and the board and management team serving them.
References for this series include:
- Bernstein, G. (2010). A plan of action for your new job as CEO. The Hampton Roads Business Journal: Inside Business, 16 (31), 41.
- Ford, J. (2010). Financial oversight-why nonprofit boards need to review more than the operating budget. Retrieved from http://ezinearticles.com/?Financial-Oversight.
- Hiland, M. (2008). The Board Chair-Executive Director Relationship: Dynamics That Create Value for Nonprofit Organizations.
- McNamara, C. (2010). Overview of nonprofit planning. Retrieved from http://literacy.kent.edu/Oasis/grants/overviewprogplan.html.
- Otten, L. (2012). Balancing Act: The Board and Executive Director Relationship.
- Pidgeon, Walter P. Jr., (2004) The Not-for-Profit CEO: How to Attain and Retain the Corner Office, (p. 20) Wiley & Sons.