Reputations are universally seen as valuable, but reputation risk is poorly understood. As a result, reputations are left unnecessarily at risk.*
Reputation matters in the nonprofit world. Few nonprofit boards exist today that don't worry about how they are perceived in the communities or associations they serve. And to make sure their images remain pristine, many turn to crisis consultants and other forms of expert assistance. A tarnished reputation can have a huge impact on a vast network of stakeholders as confidence in the organization ebbs and support starts to dwindle. Nonprofit board members must be sensitive to signals of impending reputation risk and immediately roll up their sleeves in an attempt to rebuild confidence.
I was once involved in a board that was bitterly divided over an issue -- so much so that the intense conflict in the boardroom became public knowledge. As an anomaly, the staff continued to be productive and the organization maintained its functionality. But the damage had been done. The United Way placed the organization on "probation," warning that financial support would be reduced unless the board took measures to heal the rift.
Recalling this near-catastrophe, I resonated with a recent post that focused on board composition. (http://bit.ly/1BFQcLh)
Here are four of the suggestions in the post that can be directly applied to nonprofits to avoid and help repair a board's sagging reputation.
1. Infuse your board with persons who are strategic thinkers and/or who can quickly assess the CEO's vision and what the CEO can do with it. Persons with these strategic and management abilities often can't be assessed from a resume. References have to be thoroughly vetted, often a difficult task time-consuming task for part-time directors. For example, persons with business experiences, such as s budget experts or legal counsels, may have never managed more than one or two people or have never been in a position to make strategic decisions. Only robust vetting would surface this information, either formally or informally via interpersonal information sources.
2. Ensure that directors and committee chairs are rotated. This is especially true for directors who make it difficult for the board to react with proper timing and/or implement decisions. They are call "process people" who always want to review the issues involved or to continually talk about the decision. Also of concern are nonprofit board committees that continually nominate candidates who are friends or family of current directors. These persons should go though the same review processes as all others. The nomination and rotation processes can be difficult in cases where a director is also a significant financial contributor and insists on dominating meetings and committee discussions. Nonprofit hoards can be highly resistant to formally remove any incumbent director because of the interpersonal conflicts that are likely to arise. In these cases, "tough love" to ensure the organization's future may be as necessary for nonprofit boards as it is for raising children.
3. Evaluate each director's performance at least every two years. Where possible, have an outside expert conduct the evaluation to assess the overall expertise of the board. The adage that "A" level players attract other "A" level players also applies to board reputation or repairing a reputation. The CEO and board chair have a responsibility to ask "A" level directors to be involved in recruitment. The two also need to ensure that the "maintenance" of "A" level directors takes place. Each of these directors must feel that she/h is meaningfully involved.
4. Focus on "softer" director attributes. As mentioned previously, nonprofits tend to recruit directors largely based on their professional backgrounds -- accounting, marketing, physician, attorney, etc. Both nonprofit and for-profits, in the 21st century need to seek candidates who are critical thinkers, good at teamwork, communicate well and can have a reasonable, not necessarily passionate, commitment to the mission.
Nonprofit reputations are fragile and require high maintenance. No matter how many years of impeccable history, regard for an organization is only as good as it is in the present. An ongoing team of consistently vigilant directors should see to it that it continues to deliver in the future.
* Anthony Fitzsimmons (2015) "Reputational Risk" Reputability, May 6th.