Wednesday, May 16, 2018

LESSON 26 - Spotting, Catching, or Exiting a Falling CEO

Welcome to Lessons From the Nonprofit Boardroom Blog, a 40-week journey through the new book, Lessons From the Nonprofit Boardroom, by Dan Busby and John Pearson. Each Wednesday, we're featuring a guest writer’s favorite snippet from the week's topic. Ed Morgan is our guest blogger this week for the second of three lessons in "Part 8: Boardroom Worst Practices.”
LESSON 26 OF 40 - Spotting, Catching, or Exiting a Falling CEO 
Watch for the critical signs.

 In Lesson 26, we’re reminded that a board uninformed, and asleep at the switch about the effectiveness of their CEO, is a failed board. That failure can cost the ministry everything—reputation, results and future potential.

There are plenty of warning signs along the way in this account—like a few departures of top talent, slow loss of major givers, and seemingly excused unbalanced budgets, to be sure. But the cardinal sin of omission by the board is the lack of yearly evaluations against board-approved goals.

Having the right CEO in place is the number one responsibility of a non-profit board—period! If you don’t have that, very little else matters.  

MY FAVORITE INSIGHTS from Lesson 26, pages 131-135: 
• It all started with a two-year honeymoon with a new CEO—a common and understandable mistake—but that reduced accountability turned very costly.
• Before long the board had accepted an environment with reduced opportunity for the board to spot a failing CEO.
• What eventually happens in a lack of accountability situation is only obvious in the rear view mirror. Don’t let it happen to you. 

It’s ironic and tragic—in a town or city where the ministries all know each other, often everyone knows about a failing CEO, but the board is the last to recognize it. I’ve seen it in New York.

So we have to ask ourselves, as this lesson advises, are we in touch enough to see what everyone else sees—or are we part of the problem?

The “case of the falling CEO” illustrates why board governance needs to be taught. How is it that 12 perfectly rational, sensitive, and relationally intelligent people can come together into a group—called a board—and get really dysfunctional?

It’s because board governance is a learned skill and learning to behave like a board, not an opinion gathering body, is an acquired skill. Catching and helping a falling CEO—relatively early—may be one of the signature things you look back on with satisfaction in your board service. 


Ed Morgan is the President of Inspirational Leadership, LLC, which he founded after 22 years at the helm of The Bowery Mission in Manhattan. He remains President Emeritus there. He previously spent 20 years in executive communications at General Electric. Ed spends most of his time helping younger leaders these days, but also leads a board good governance program for the Association of Gospel Rescue Missions and its members. Ed and Judy, married 50 years, have two sons who are actually raising families in Manhattan—and it’s working!

• At your next board meeting’s executive session, ask the question: “Does everyone on the board believe we’re adequately encouraging and holding our CEO accountable?" Go around the room to make sure.
• If you don’t do a regular evaluation of your CEO, you have abdicated a key board responsibility and your organization is in danger. Get started this week! 


On May 23, 2018, watch for Mike Pate's commentary on Lesson 27, "Report Once and Report With Clarity. Hearing the same report more than once is a '10' on the pain threshold!"

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