Nonprofit Board Governance: Senior Leader Warning Signs to Watch For

Many nonprofit organizations have questions about what constitutes good board governance. In the first article in this series, we discussed the goals and responsibilities of nonprofit boards and provided guardrails and directions for board members. In the second article, we explained board governance warning signs and shared tips and tools to help if your board starts to get off track.

With these foundational elements in mind, it’s also vital to address the board’s responsibility to oversee the organization’s CEO/senior leader. What happens if the organization or board realizes that the leader may be at risk of compromising the organization’s behavioral standards? What steps should the board take to identify potential problems and correct any issues? In this third and final article in the series, we address what the board’s relationship with the CEO/senior leader should look like and share warning signs that can indicate a possible issue.

Elements of a Healthy Relationship Between the Board and CEO/Senior Leader

There are three keys to a healthy relationship between a nonprofit board and the CEO/senior leader: accountability, openness and transparency, and mutual respect.

• Accountability – All people, in all walks of life, should have accountability for their actions, and your leader is no different. A good CEO/senior leader will recognize the need for accountability and will not question or feel threatened by it. Work with your leader to establish consistent accountability check-ins to ensure they are setting and working on goals that further the organization’s mission, as well as other key performance indicators. Make sure accountability extends beyond the organization’s goals and mission to include the leader’s behavior and interpersonal interactions with employees, donors, and constituents.
• Openness and transparency – In nonprofit organizations, every action needs to be above reproach, and there should be a strong flow of communication between the CEO/senior leader and the board. This will also help the board identify the warning signs we discuss below.
• Mutual respect – Although mutual respect may seem like a basic element that doesn’t need to be stated, it is a vital component of a strong working relationship. Boards must respect boundaries and refrain from attempting to perform the CEO/senior leader’s job, while leaders must respect the board’s authority and recognize that the board’s role is to provide guidance and support them and the organization. And when conflicts arise, both the leader and the board should work to see the other’s point of view.

Now that we’ve covered what a healthy nonprofit board and CEO/senior leader relationship looks like, let’s examine warning signs of leadership issues that boards should be on the lookout for.

Leadership Warning Signs to Watch For

1. Lack of humility. Does your leader have an increasing desire to serve others? Or does it seem like they are becoming increasingly focused on their own agenda, authority, or benefits received from the position?
2. Too much control. Watch for signs of an imbalanced power structure, such as your CEO/senior leader beginning to associate only with other “power” people, name-dropping, expressing loyalty only to themselves, or competing with other C-suite leaders within your organization. Consider whether the CEO/senior leader is comfortable bringing other leaders into board meetings (as appropriate) or if they seem to be isolating other leaders from the board.
3. Resistance to accountability. Just as a culture of accountability between the board and the CEO/senior leader is crucial to a healthy relationship, resistance to accountability is a leadership warning sign. Everyone can benefit from having a group of people to meet and talk with consistently. To whom does your leader hold themselves accountable in their personal lives? Do they have friends, mentors, or other leaders with whom they regularly meet and share?
4. Insufficient transparency. If the CEO/senior leader is not transparent with the board and others within the organization, there likely are deeper issues that need to be addressed. If they are vague or avoid communication with the board or other leaders within the organization, the board has a responsibility to investigate why communication is not open.
5. No clear expectations. Without clear expectations and key performance indicators, the leader may head down a path that does not align with the organization’s goals or mission. The board is responsible for setting expectations for the CEO/senior leader.
6. Inadequate financial transparency. Financial transactions should never be hidden from the board. The board should increase its oversight of the organization’s financial transactions if your organization and leader cannot produce timely financial reports, there are large discretionary accounts without appropriate oversight, or personal expenses or expense reports are reimbursed without adequate documentation.
7. Poor relationships with staff. Listen to C-suite leaders and others who raise concerns about the CEO/senior leader to the board. The other leaders frequently interact with the CEO/senior leader and likely have a thorough knowledge of that individual’s behavior and work style. Be very careful, however, to ensure that such communication and the board’s response is conducted in the proper context so that it does not undermine the CEO/senior leader’s authority or diminish the board’s reputation and standing.
8. Other stresses and pressures. Discussions about family and personal life may occur naturally during conversations with your leader. While you should be careful not to overstep boundaries and pry inappropriately into their personal life, you may learn about the stresses and pressures your leader is experiencing. Being aware of these challenges can help you prepare to address any issues that arise.
9. Self-interest. If your leader places self-interest before the needs of the organization, it should be seen as a major warning sign.

How to Help Your Leader Remain Healthy

Nonprofit leaders can experience many stresses and pressures that can lead to unhealthy behavior. Proactive boards should consider providing their CEO/senior leader with access, at no cost to the leader, to resources such as professional and career coaching and personal financial planning services. The board should also ensure the leader is fairly compensated to avoid unnecessary financial pressures that could create incentives or justification for unhealthy behavior.

We hope you have found this board governance series to be informative and helpful. Successfully implementing the recommendations in these articles is a vital step toward achieving nonprofit board health and ensuring that your board is making a positive contribution to the organization.

Please contact us with any questions about board governance at your organization or if you would like to discuss how we can assist you.