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Asking More Commentary: Perspectives from Mendoza College of Business

Commentary Post - Thomas Harvey

Boardroom Advice: Applying Assessment and Development

October 20, 2011

Nonprofit boards typically are comprised of many successful leaders from for-profit or related entities. This isn’t surprising since these individuals often are best suited to help organizations leverage wealth and community connections.

What is somewhat surprising, however, is that although high levels of efficiencies and accomplishment are considered trademarks of for-profit business, many for-profit leaders do not bring a culture of strategic planning and structured accountability with them when they join a nonprofit board.

Since the for-profit and nonprofit sectors have distinct cultures, this may be understandable. Nevertheless, this issue deserves scrutiny in order to draw upon the strengths of both cultures and maximize organizations’ contributions to their communities.

Opportunity for Improvement

Lester Salamon, author of The State of Nonprofit America, paints a rather dark picture of the quality of many nonprofit boards. A modest study by the University of Notre Dame’s Nonprofit Professional Development unit of the Mendoza College of Business supports Salamon’s assessment (see “Data Supports Need for Strengthening Development, Education of Nonprofit Boards” sidebar).

In light of these trends, this article is an invitation for trustees to develop policies of self-assessment for the whole board and for all individual trustees.

Trustees routinely support assessment and professional development activities within their organizations.

They are accustomed to assessing the functioning of programs and finances through specific reviews, operational audits, CEO evaluations, regular budget reports, and formal program evaluations. They also support staff development through policies that encourage conference attendance, membership in associations like the Alliance for Children and Families, personal enrichment programs, and good supervision.

However, nonprofit boards too seldom apply these evaluative and developmental activities to themselves, whether in assessing the quality of their group decision making, or with respect to their individual deportment, contribution, and participation.

Group Board Assessment

Board assessment begins, as all assessments must, with a statement of expectations and goals. These should be spelled out in the board’s procedural manual, which outlines the overall responsibilities of the board, and in a job description statement, which details what’s expected of individual directors. Boards should assess and review the key functions described in these documents on an annual basis.

What follows is a list of common priority roles and responsibilities, along with key questions designed to guide the interrogative process:

·         embody and enact trusteeship of civic purpose (Do we add value?);

·         articulate the organization’s vision, mission, values, and goals (Are we aligned in the enterprise’s purpose?);

·         make and oversee policy (Do we make and execute good decisions?);

·         select and evaluate the CEO (Do we support the development of leadership and management for the organization?);

·         assure financial wellness and integrity (Are we in balance or have a surplus? Why or why not?); and

·         introduce strategic planning, change, and entrepreneurship (Are we committed to improvements and completely new directions?).

Individual Board Assessment

Similarly, the board needs to regularly evaluate each member. This process can begin with a self-assessment and then move to a collective discussion. Think of it as akin to college and professional athletes watching game films. Each player begins with a self-commentary, and then other players contribute suggestions for the good of the team.

Both types of assessments are vital to strong governance. First, the assessment itself leads to improved performance. Second, and more subtly, the awareness that individual and group functioning will be assessed leads to better quality as the board carries out its business.

Board Development

Related to, and often taking place soon after the board assessment is complete, is board development.

Often a board will conclude its internal assessment with the design and implementation of a development plan for itself. This can involve a half-day event designed to improve areas of weaknesses that were identified during the assessment process. There should be a retreat event like this every year.

Similarly, for trustees, there should be individual development activities around board position and roles. An example plan may involve letting each trustee select something of professional interest to research or pursue academically, and then asking each trustee to report his or her findings. The report empowers all trustees to gain increased knowledge and competency in support of the organization’s mission and services.

It was Socrates who said, “The unexamined life is not worth living.” Similarly, for nonprofit boards, the unexamined board is not worth having.

 

ADDITIONAL INFORMATION:


Data Supports Need for Strengthening Development, Education of Nonprofit Boards

The University of Notre Dame’s Nonprofit Professional Development unit of the Mendoza College of Business annually offers executive business education to more than 400 CEOs and other senior managers from some of the nation’s best-known nonprofit service providers.

Prior to each new executive education session, Notre Dame surveys the executives on how they rate the quality of their nonprofit boards. After two years of such surveying, a pattern is emerging:

·         Senior managers rate their boards at a 7.1 level on a scale of 1 to 10, with 10 being the best. In academic terms, this is a 71 percent, or a barely passing grade. It hardly indicates best practice.

·         Almost all participants indicate their boards have a policy limiting terms of service for trustees, as well as for officers. Yet, these same managers report that the policy is not observed by 20 percent of the boards. Similar inconsistencies surfaced in the basic function of annually evaluating the executive director.

·         Only 47 percent of participants indicate their boards use an annual self-assessment tool to evaluate their own performance as trustees.

This data reveals several interesting trends that support the need for strengthening the development of nonprofit boards.

Resources for Self-Assessment

A variety of tools are available to assist nonprofit human service boards with their annual assessment activities. We recommend:

-Requesting assistance from the Alliance Severson Center to determine which tools are most frequently requested by Alliance and United Neighborhood Centers of America members;

-Using the bulleted questions found in the main article;

-Referring to Peter Drucker’s suggestions in How to Assess Your Nonprofit Organization With Peter Drucker’s Five Most Important Questions and The Five Most Important Questions You Will Ever Ask About Your Organization

To contact the Severson Center, go to alliance1.org/severson/request. Drucker’s books can be found on amazon.com. 

This article, written by Thomas Harvey and John Tropman, originally was published in On Board, a publication of Nonprofit Director. Thomas J. Harvey, MSW, is director of the Master of Nonprofit Administration Program at the University of Notre Dame’s Mendoza College of Business. John Tropman, Ph.D., is professor and associate dean for faculty affairs at the University of Michigan School of Social Work. He’s also an adjunct professor at the university’s Ross School of Buisness. Harvey and Tropman are co-authors of “Nonprofit Governance,” a book published in 2009 that offers modern information and practical guidelines for directors and executives of nonprofit organizations of all sizes.