[00:00:00] Tommy Thomas: A strong board of directors is essential to the success of any non-profit organization. The board of directors plays a critical role in providing guidance, oversight, and support for the organization’s mission and operations.
There is no cookie-cutter or one-size-fits-all when it comes to Nonprofit Board Governance and Board Service. However, there is a lot we can learn from people who are active on the Boards of high impact and highly effective nonprofit organizations.
Over the past 104 issues, we have devoted a lot of time to this topic. From time to time, we will highlight excerpts from some of these conversations.
Today is the 3rd time we are compiling these excerpts. I will have links to the previous two episodes in the Episode Notes.
Christin McClave has over 20 years of corporate leadership, beginning her career with Johnson & Johnson and serving in senior leadership in her family’s large automotive aftermarket business – Cardone Industries. Christin has served on and continues to serve on several nonprofit and corporate Boards.
I’ve been in this business a long time and I’ve worked with probably 300 or 400 boards, over the last 30 years. And if I look at them, I would say a lot of the time they’re males.
They might be closer to my age than your age. And now things are changing. So, what are you seeing, or maybe what are you doing to lower the mean age on a board and to maybe bring more gender and ethnic diversity?
[00:01:43] Christin McClave:
So, I think we see a lot of changes in the general demographics, right? As our society and culture are changing. The positive thing is there’s so much more diversity coming up through the leadership ranks.
And I think the traditional way that we’ve, I’ll say we, because I’ve done it myself as well, when we’ve needed a new board member on a board, I instantly think about who have I worked with before? Who’s like me, who thinks like me, who would be easy to plug and play into this board that I’m on? And so that’s been our traditional way of pipelining onto boards. Let’s find people who we know and who we know could be very quickly successful and contribute value to this board.
I think what we’ve learned over the last couple years is that doesn’t necessarily bring diversity to these boards that we are trying to diversify. And we’ve seen the pressure coming from the public sector the SEC, not quite regulations, but suggestions that we need a certain percentage of diversity on the public boards.
And there’s a lot of pressure in the market for that. And then that has trickled down its way to nonprofits and to the private sector. So, everyone is looking to diversify their boards at this point. And I think, a key piece of the job requirements that we have in the past always assumed on larger boards, I’ll say.
And most boards in general, everybody’s wanted, okay you need to have a CEO or CFO or a C level executive. But preferably a CEO or CFO who’s been in the chair before. And I’ve had people say that to me as well, that’s what they’re looking for. And I think we know just from sheer data that a lot of women and diverse candidates in general haven’t had those opportunities.
We are definitely developing that pipeline now and being very much more intentional. But I think like through the past few years and now looking at the talent market being as hot as it is and the demand for diverse talent we have, we are at the place we need to take a look at those very narrow criteria that we’ve said, oh, you have to be a C-level executive to be on a board and to be able to contribute value. And I think, now I’ve seen a lot more being written, a lot more being talked about, diversity coming onto boards where I’m reading someone’s background and I’m like, wow, that is so cool.
Maybe 10 years ago that person wouldn’t have been chosen for that very significant board seat. So, I think we’ve opened up our criteria and have opened up our thought process and how we see people’s experiences. We’re looking at people’s resumes really differently these days.
From an HR perspective in internal, when we’re screening candidates we took the requirement of having a college degree off of our requirements, probably, about 10 years ago, which was a little bit ahead of our time, but it just opened up our talent pool and we realized there are a lot of people out there that may not have a bachelor’s degree but are way more experienced with their life and work experience that we were not being able to tap into because we had that very strict requirement.
So, I think we’re seeing that across the board at all levels, including at the board level.
[00:05:34] Tommy Thomas: Alvin Sanders, President & CEO of World Impact, a nonprofit that focuses on redemptive poverty and cultural proficiency in the urban community. Alvin and his Board are huge proponents of the Policy Governance Model – an integrated board leadership paradigm created by Dr. John Carver.
I’m asking people these days about bringing younger people onto boards. And philosophically, do you have a position on that? And then I’ll ask a follow up.
[00:06:10] Alvin Sanders: Yes, we try to hold it at nine, because we think a smaller board is better for getting things done. And I think in terms of thirds, a third of our board, we want gender diversity, a third of our board, we want age diversity, a third of our board, we want racial diversity.
And then we want half and half, what I would say, marketplace people. These are business folk, and then the other half ministry people. Because if you have all marketplace people, the ministry gets lost. It’s been my experience. And if you have all ministry people, the business of running the organization gets lost and it loses knowledge and expertise.
So that’s my philosophy of how you have you bring a board together. But you definitely need people, especially since I just read the other day that millennials now are the most dominant generation numbers wise. It’s no longer Baby Boomers. It’s never been my generation, Gen X. We’re the forgotten generation, I think.
Nobody gives a rip about Gen X, but Millennials now are it and you’re just being silly if you don’t have Millennials on your board.
[00:07:23] Tommy Thomas: Caryn Ryan, Managing Director at MissionWell, an organization that provides financial and strategic counsel to nonprofit organizations. Caryn is the former CFO for BP/Amoco and World Vision International. She currently serves on corporate and nonprofit Boards.
I want to ask you one question then I’ll close. So, my next to the last question has to do with succession planning and the board. At what point should that begin to occur? And how does the board address that without the CEO thinking “I’m a short-timer”?
[00:08:04] Caryn Ryan: Okay. Yeah, that’s great. I’m dealing with that right now at one of the boards that I sit on. And I’ve just dealt with that last year as well. And it works both ways if it works all, all different ways. So let me just talk about one where the CEO does get the feeling. If you have this conversation that they’re a short timer.
I want to just say first of all, that can sometimes go back to the trust issue again, right? When there’s a lack of trust between the board and the CEO then, and you bring up the succession of the question of succession planning, the first thing that goes of course into the CEO’s mind is, oh, I’m getting fired. I’m a short termer here.
So that has to again, be addressed, the trust issue, before you can have productive conversations around succession planning. But even longer term issues are going to take some time to get resolved. There’s something you can always do on the succession plan that’s very short term and that every single board must have in place.
And that is you need a succession plan in case of an emergency. If your CEO becomes ill is hit by a bus, or whatever, you need an emergency succession plan that is an interim structure or very well thought through way that you’ll manage in the absence of the CEO.
And usually, it’s not going to bring out the same negative feeling for the CEO. On the part of the CEO because they understand that, oh yeah, if I’m not there, we need to have some interim structure. And so, they’ll begin helping the Board and thinking through, look, okay, if something happens to me, let’s make this person on our staff the interim, or let’s pull this Board Member out and see if they’ll be the interim.
Or they’ll start to engage in the ideas for how that could work in interim a structure. And as long as you can get that interim structure put in place and everybody’s in agreement that it’s workable, that then gives a chance during the interim structure for the Board to go out and begin doing a search to find a replacement candidate.
Regarding succession planning for a Founder – S/he just might not be willing to step aside.
They might have created a whole lack of number twos in the organization who can step in, even in an emergency. It just may not be anybody. So that’s a different situation where the board needs to probably, in addition to working on trust, which can be very difficult with the founder.
You might be off the board if you start having those kind of conversations. But what you can do as a board is do your research. How would you do a search? You can get your research done on executive search firms who could step in and help you. You can just keep in mind, and Tommy, you’re the one who should be telling your podcast listeners this, but it’s a long process to do a search.
You’ve got to set up a search committee. You got to figure out how you’re going to recruit the person. You’ve got to have an approach. You have to execute it, you have to review the candidates. It’s just really time consuming. You at least have to think through all of these, how that’s a minimum thing, even if it’s a founder situation.
I’d say two things. Number one, for sure, have an interim emergency succession plan, no questions asked. That’s an absolute minimum mandate for every board. And number two, if you’re on a founder board, you have to do some special extra work along the side with networking, quiet networking, just to figure out the process and figure out how you would do, how would you do that if something did happen to your founder, if your founder’s not willing to participate or help with that. Does that make sense?
[00:11:33] Tommy Thomas: Rich Stearns, President Emeritus at World Vision US. Prior to joining World Vision, Rich was CEO for multiple organizations in the private sector, thus reporting to their Boards. He cut his teeth on nonprofit Board Governance as President of World Vision US.
When I interviewed you back in 2017 you mentioned that from your perspective, the best thing that the World Vision Board did for you when you came on was you recalled an offsite retreat where y’all got introduced to each other. Could you share a little bit about that with us?
I think we probably have a lot of up and coming CEOs listening and that might be an interesting discussion.
[00:12:14] Rich Stearns: Yeah, I don’t know how much that costs. Probably not much, but it was the best money World Vision ever spent. When I came into World Vision the Board and the CEO had what I’d call a turbulent relationship.
He wasn’t thrilled about his board and the way they behaved, and the Board wasn’t thrilled about him in certain ways. And so, I was coming into kind of a troubled marriage, right? You could say there’d been a divorce, and I’m the new husband coming in. And so, the Board had enough wisdom to say, you know what, we should start off on the right foot here.
Why don’t we hire a board consultant to come in and do a two-day retreat with a new CEO to teach the Board and the new CEO, how best they should interact and communicate with one another. So, a friend of yours and mine named Bob Andringa, he’s retired now, but he was in the Board consulting business.
He’s written at least one book, if not several. He came in and he conducted a Board Governance 101, 102 course for all of us. And gave us tools to use and dealt with different scenarios of here are the dos and don’ts for Board Members. Here are the dos and don’ts for the staff and the CEO. Here is the best way to understand your responsibility as Board Members.
This is what your responsibility is, and this is what your responsibility is not. This is the role you play. This is the role you don’t play. And same with a CEO, Rich, your role is this the board’s role is to establish policy. I guess the best way to say it is it laid down the ground rules for a healthy relationship.
And I don’t think it’s an exaggeration to say I had a 20-year honeymoon with my board. Not that there weren’t an occasional, marital argument over the years. But it was like a 20-year honeymoon with the board. And I respected them, they respected me. My staff, when I first started, after a year, they said, boy, you’ve had a one-year honeymoon with this board.
It’s amazing. Because they’d seen some of the dysfunction in the prior years. And 20 years later, they were still saying you’re still on your honeymoon. And I in terms of my response, what I attribute it to, is what I talked about earlier, Tommy, that the board knew they could trust me.
I would never tell them a lie. I would never hide anything. I was completely transparent. Anything they wanted to talk about at a board meeting, we could talk about. Any numbers they wanted to see, we’d show them. If I had some bad numbers, I’d bring them to the board and say, look, this is not good, and here’s what we’re going to do. They never felt I was hiding anything. And so that created trust as well.
[00:15:03] Tommy Thomas: One of the guys that you’ve influenced over the years is Joe Mettimano at Central Union Mission. And when I interviewed Joe there, he talked about a lesson he learned from you about the president’s report to the board. He would attribute part of his success to what he learned from you there. Tell us about that.
[00:15:22] Rich Stearns: I started every board meeting with a president’s report. So, the Board is gathered, in the case of World Vision they’ve flown in from all over the country, and here they are at the World Vision board meeting and remember, they’re all volunteers, some are pastors, some are business people. They’re from all walks of life and so I tried to use the President’s Report to basically bring them up to speed on what was going on at World Vision. What were the important issues? What were we doing about the important issues? How are the finances doing? I tried to answer as many questions as they might have in advance.
Because the rest of the board meeting, the finance committee was going to meet and other committees were going to meet. And I tried to use the President’s Report to cast a bit of a vision for where we were as an organization, where we’re headed, what my outlook was for the coming year or the coming quarter.
And I try to use the Board Meeting to really cast a vision to remind them of the mission of World Vision. Often, I would start with a trip report. I’ve just gotten back from the Syrian refugee crisis, and I want to tell you what I saw. I would remind them, we’re sitting here in a nice boardroom, but people are dying all over the world.
And our job is to intercede for them to help them to rescue those who are perishing as the book of Proverbs says. And so, trying to remind them why they were here, why World Vision was here and then look under the hood at, the financials, the numbers, the revenues, the overhead, and you had to deal with issues like real estate transactions and mundane stuff like that.
I wanted to always to put it in the context of the bigger mission, vision and values of the organization. My President’s Report would sometimes go 90 minutes to two hours which is a lot. But usually, the board would say that was the highlight of the meeting because that really brought them up to date on everything.
[00:17:16] Tommy Thomas: Paul Maurer, President at Montreat College. Paul is a student of Board Governance and identifies as a “governance nerd”. Paul is on his second college presidency and has learned a lot – some through the school of hard knocks about effective Board Governance.
And a lot of people that I talk with, there’s a move toward lowering the mean age of the board and increasing diversity. What kind of experience have y’all had at Montreat around those issues?
[00:17:45] Paul Maurer: We’re intentionally trying to increase diversity. We’ve not found that to be an easy pathway, but we are we are committed to it.
And on age I would just gently push back on the median age lowering. I’m very much of the Aristotelian camp that young people have less wisdom. And part of what you want for board members is wisdom. Wisdom comes with experience, and experience comes with age and the hard knocks of life and just the journey of life with gray hair and getting beat up occasionally. And I want younger people on the board, but that’s less common. They’re actually very hard to get on the board because they’re less qualified candidates in my view, and they’re uber busy with career and family.
So, the young members, the 30 somethings, I have on my board, I have two of them. They’re like up to their eyeballs, four or five kids each, they’re CEOs or leaders in their own rights and rising in the ranks. And these people have large portfolios and enormous demands on their time.
Then my 70- and 80-year-olds, and I even have a 91-year-old board member who I recruited at the age of 87. And he said to me, he said, Paul, what if I die? And I said, Bill what if I die? We’re all going to die. You’ve got a lot of gas left in your tank. You’ve got enormous amount of wisdom.
And you may have others who think that you’re too old to be a board member. I don’t think that at all. And if a day should come when your health has slipped, your metro capacities have slipped, we’ll have that conversation and we’ll have it openly and honestly. Honestly the seventies, eighties, and 90-year-old trustees I have are easily among my best trustees. They’re phenomenal.
[00:20:04] Tommy Thomas: Let’s change over a little bit to the board aspect of being a president. What was the biggest adjustment that you had to make between, say, reporting to the CEO as a cabinet member and then as the President reporting to the Board?
[00:20:20] Paul Maurer: Yeah, it’s a great question. I’m a bit of a governance nerd. I really think about and study governance. I did that in my doctoral work. I do it as a college president in nonprofit governance. And so, the president needs clarity. What is the role of the board? What is the role of the president? What’s the role of the relationship and what’s the role of everyone else on campus in relationship to the board? And so, in the world of board governance, there are working boards and there are policy boards.
Startups tend to have working boards, like true startups, like really small organizations. More established organizations. If they haven’t transitioned to a policy board, they probably ought to consider doing so. Because you don’t really want a board involved in the operations of an organization.
And so, I’m deeply grateful that my board gave me the lead role in board development, meaning recruitment of new board members, training of board, the board policy manual. And we have a great board today, and they really understand that the board should not be involved in operations.
That’s the CEO’s job but should be sure that they’re being fiduciaries, that they’re making sure there’s a strategic plan that’s being carried out their success along the way and that they manage or evaluate. They don’t manage, they evaluate the presidents. They hire and fire the president, the CEO.
I do think that my argument would be that it’s more important for a President to be a CEO than a President. The President is, as I think of a bit of an old model for college leadership, it’s rooted in what I think is not a very useful model of shared governance. I think the CEO is a better model, but you also need a CEO who’s sensitive to campus dynamics and the idea that consensus really matters.
And a consensus building CEO I think is the best model, but I think that the CEO also needs to be the CUO – the Chief Urgency Officer. Because things are changing so fast.
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