For Non Profits

The PeopleCap Playbook

Timely insights and actionable people strategies for leaders.

Good Governance Gets You Through a Crisis

Last week, I got a call from a non-profit in crisis. Trouble inside the organization spilled over into the board room when frustrated employees began calling board members to complain about the Executive Director. Because the Board Chair had not been evaluating the Executive Director annually, he was caught off guard by the sudden negative feedback and became very defensive.

As the issue heated up, the Board Chair, unequipped or unwilling to deal with it, abruptly resigned. Though the by-laws provided for a full complement of officers to carry on in the absence of the Chair, the board had not been abiding by those by-laws and did not have anyone in place to assume the role. When an emergency meeting was called, only a handful of members showed up, signaling a systemic lack of engagement.

And so, it was that the organization was left with a dysfunctional staff, a disgruntled Executive Director and no board leadership; in short – in an existential crisis. The original issue of addressing and helping to coach the ED’s poor performance was exacerbated by poor governance practices. What should have been a manageable wave quickly capsized the boat.

“No one knows who’s swimming without trunks until the tide goes out.” – Warren Buffet

If you practice good governance regularly, you won’t find yourself without shorts when the tide goes out.  Whether you lead a board, sit on a board or are considering joining a board, it’s important to get a handle on the governance practices. Below we offer our Good Governance Checklist. How does your organization fare? Do you have some work to do to strengthen your governance practices?

Good Governance Checklist

  • The board has up to date by-laws in place and every board member has a copy
  • The board has a full complement of officers as provided for in the by-laws
  • New board members are recruited based on strategy, skills and abilities by other board members (not solely by the ED)
  • Board members understand their commitment to the organization’s success both in prosperous and in challenging times
  • Board members have class years and term limits
  • The Board evaluates the Executive Director annually and sets forth clear expectations and goals
  • The Board holds an executive session at every board meeting without the ED whether there is a topic to discuss or not
  • There is a strategic plan (or goals) in place that is regularly reviewed at board meetings
  • There is a committee structure in place that includes the following: Finance, Governance and Development
  • Committees meet in between board meetings and report back their progress to the full board
  • Board member attendance and participation in meetings is strong
  • Board members do their homework by reading materials in advance and ask tough questions
  • The board conducts an annual board self-assessment to evaluate its performance
  • 100% of board members are donors to the organization

In the scenario above, regular evaluation of the CEO, a full complement of officers, and board engagement would have strengthened the board and kept the organization out of trouble. The board failed in their commitment to ensure the success of the organization. Good governance practices make all the difference.