How Nonprofit Boards Can Insure CEO Effectiveness



In a sense, nonprofits are big business.

“Few people are aware the nonprofit sector is by far America’s largest employer,” wrote Peter Drucker, Ph.D.

It was a quote in a chapter, “What The Nonprofits Are Teaching Business,” from a compilation of his writings, “The Essential Drucker.”

business man-170645_1280The world’s greatest business philosopher explained his exuberance about nonprofits:

“In two areas, strategy and the effectiveness of the board, they are practicing what most American businesses only preach.”

He admitted all nonprofits aren’t flush with cash:

“Yet in its productivity, in the scope of its work, and in its contribution to American society, the nonprofit has grown tremendously…”

The salient area to be questioned is management. 

If you’re serving on a board, congratulations. But remember, you need to be diligent — not a rubber stamp for the chief executive officer.

The term, management, is no longer a dirty word in nonprofits. So manage.

Here are four recommendations:

1. Retain a local search firm to recruit CEO candidates.

It’s OK to conduct a national search for a CEO, but use a local firm.

If your nonprofit has strong connections and reputation, perhaps you might get it done by reputable firm on a pro bono basis.

Either way, you’ll get a higher degree of accountability from the search firm and you’re less likely to be victimized by conflicts of interest. You’re less likely to run the risk of getting the wrong applicants.

2. Be assertive with your CEO.

Support your CEO, but have a productive culture between you, other board members and your CEO. You need to ask the right, tough questions on ethics, finances, and controls to prevent embezzlements.

3. Use formal processes with complete transparency.

Implement formal reviews for your CEO. Benchmark them.

Use common sense on CEO initiatives. Remember to use the adage, “When in doubt, don’t.”

4. Keep an open mind as change can be positive.

Don’t micromanage or create fear by getting too cozy with the staff.

The staff and other stakeholders are where “the tire meets the road.”

But closely monitor the organization. If you sense a change is necessary, consider it.

From the Coach’s Corner, suggested reading:

Screening Resumes to Hire the Best People — 5 Tips — If you want to hire an impact person, your hiring process is really important. The wrong hires result in costly turnover — a waste of money and time. Before you start interviewing, the place to start is your screening of resumes. Don’t take shortcuts. 

Embezzlement – 21 Tips to Protect Your Nonprofit or Company Assets — Embezzlement is a widespread nightmare in business and the public sector. If you surf the Internet using the key word, embezzlement, you’ll find seemingly countless headlines. 

How Nonprofits Can Win Maximum IRS and Donor Confidence — Now that nonprofits are facing more scrutiny by the IRS following a wave of scandals, there are three main precautions and a lot of details to insure a nonprofit’s success. 

Liars and Cheats – Clues You’re Dealing with a ‘Pinocchio’ in Business — Italian writer Carlo Collodi probably had no idea what he was starting in 1883 when he wrote the children’s novel, The Adventures of Pinocchio. It was the story about a woodcarver who created a wooden puppet that wanted to become a real boy. Pinocchio’s short nose would grow longer whenever he told a lie. 

“Today I shall behave as if this is the day I will be remembered.”

-Dr. Seuss 


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Seattle business consultant Terry Corbell provides high-performance management services and strategies.