Friday, January 16, 2009

Thinking About United Way

The Charlotte Observer  has been filling many pages about the United Way CEO compensation brouhaha. Ms. King is now shooting back, accusing the board of racism after its decisions concerning her employment. All this noise and so little substance.

My experience working with non-profits and their boards extends both to my past consulting work with them, and to my service as a board member and treasurer of a non-profit school for seriously emotional disturbed children.

An observation is that many boards seem to fluctuate between the two extremes in governance: 1) acquiescence/ sleepwalking; or 2) direct management. Neither extreme produces effective performance by the organization or, especially, the CEO. With passage of Sarbanes-Oxley, some boards awakened and began imagining that, to perform effectively as a board, one must manage aggressively and directly. Boards then  sometimes tried to begin working directly with staff below the CEO, effectively adopting the role of defacto CEO, leaving the CEO with little useful to do. That extreme is potentially even deadlier for the organization than the stage of sleepwalking that characterizes many boards. 

To be effective requires a board to understand the need to maintain balance--that they hire the CEO to manage the organization. Their job is to monitor and oversee the CEO--to monitor performance, not to manage directly. It is in the balance successful performance happens.

In the case of United Way, and Ms. King’s apparently excessive compensation, it seems clear to me that the Board was doing its best sleep-walking function. They either pretended not to know what Ms. King was making, or they actively supported the decisions to raise both her pay and her retirement package.  The ultimate screw-up of course was when the Board, having created the problem all by themselves, decided to fire the CEO.  By all accounts, Ms. King created a really effective United Way, one of the best in the country.  To thank her, first they raised her pay, then they fired her. I wonder whether the Board ever considered firing themselves? To those who believe that Ms. King should have backed away from her compensation package, I would ask them, whether they would have done as they now suggest? “People who live in glass houses” comes to mind here. I’m not aware of too many CEOs who refuse Board compensation packages, even ones that are obviously inflated.

I should note that the problem of board governance extends to the issue of Congressional oversight of Federal programs, an issue of some weight now, given the apparently hopeless job being done with regard to The Bailout . Generally, Congress acts much like sleepwalking boards. They have never understood properly how to effect oversight, mainly because they have never understood the need to define outcome performance of Federal programs--how would they recognize a successful Federal program if they happened to see one?

That is the question non-profit boards need to answer. It is, at its most basic, a question posed by program evaluators before they begin an evaluation. If boards adopted the mindset of an evaluator, perhaps they would begin to function more effectively.

But then again, that would require thinking.

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