I happened to read a report from Deloitte Consulting suggesting ways that for-profit organizations can improve their performance in uncertain times. The report centers on key drivers of board effectiveness that, in my opinion, resonate with similar nonprofit situations. * Most nonprofit boards typically live with uncertainty and are perennially “on the edge.”
- Conservative leadership: Nonprofit boards are responsible for donor and charitable types of revenues that place directors in a public trust position. In addition board members typically will only be active for a median tenure period of four to six years. As a result, they often become overly conservative in their strategic views and may accept CEOs that “mind-the-store” with modest incremental growth annually. To prevent the organizational boat from capsizing in the perpetual seas of the pandemic and beyond, the board needs to rely on the best forward-looking information about strategy, people, culture, and clients. All of this must be in solid alignment with a substantial mission, or a modified one if the external environment requires it. This allows the nonprofit to cut through the barriers that impede strategy development.
- Opportunities & Strategies: Even when the organization is prospering, the board has a responsibility to press for innovations and to support small-scale experiments as called for in a “Lean Management” structure. Within this structure, the staff can test the waters via experiments to move more boldly, as long as the experiments yield positive results. ** At a minimum, the board, and management, need to focus on near-term planning during the pandemic period. They then need to move to a “north star” approach, with a ten-year framework, once the pandemic recedes. This requires management to balance the needs of the various client groups that can call for heartbreaking decisions. For example, should revenues be allocated to marketing or used for client programs?
- Match fit: Boards have a responsibility to motivate the nonprofit to realistically evaluate the tensions between new models and existing ones, for example between face-to-face meetings and virtual ones. It is already clear the virtual format has caught the attention of nonprofits. If nonprofits plan to rely on the virtual meetings to a significant extent, the board and management will need to improve their technologies, presentations and develop better ways for participants to become involved in discussions.
- Culture, culture, and culture: As Peter Drucker has noted, “Culture eats strategy for breakfast every morning,” Nonprofit boards’ cultures play a key role in determining the level of risk the board is willing to take. With key drivers, nonprofit boards will have to take reasonable risks to survive the impacts of the pandemic and work with management to take some crafted entrepreneurial risks. It now appears that fundraising, for example, will emphasize greater focus on major donors, and board members will need to provide more time and effort
- Diversity and inclusion: Board diversity is a well-established need. Inclusion not only means differences by demographics but recruiting new board members and maximizing the best they have to offer. Nonprofit boards traditionally try to acculturate new board members to the current culture instead of maximizing their potentials. For example, a person with financial strategy and accounting backgrounds will be asked to work with the CFO on accounting-related problems because this has been the prior process. Instead, he/s should be asked to develop a long term-term financial plan. This should be more meaningful work for the new board member and of significant benefit to the organization.
- Meeting format: For the thousands of nonprofits that have had to suddenly change meeting format from face-to-face to a virtual format, it is time to consider what is best for the organization post-Covid. Can the board, management, and staff be productive working from home? Will a virtual face-to-face process be acceptable in terms of productivity and client satisfaction? How can productivity be assessed under the virtual format?
- Curiosity is Key: To keep a nonprofit sustainable in the long term beyond the pandemic, Deloitte Consulting concludes, “Directors should get out of the ‘same old’ board room, and should even look across borders to learn from approaches in (different nonprofits) and companies…. Developing new skills and insights are essential for innovation and should be sought to create the questioning and challenging environment needed to imagine, inspire and deliver better outcomes (and impacts). Complacency (in uncertain times) can be a killer.”*