Should a CEO sit on the board of his/her own directors' companies?

Tuesday, November 23, 2010

All the More Reason for Nonprofits to Collaborate…

I recently returned from the BoardSource Leadership Forum in San Francisco. BoardSource President and CEO Linda Crompton opened the convening. One of her comments was that innovation is not necessarily an event or a singular killer idea. It tends to be emergent – the result of group interaction.

I was not home more than a day before my business partner, Gail Meltzer, send me a YouTube video featuring Steven Johnson who wrote Where Good Ideas Come From. In it, Johnson suggests that true innovation comes from a series of “slow hunches” that build on one another and require time to truly incubate. Most often, he says, it is the collision of idea from others that makes the hunch lurking at the back of one person’s mind actually develop into something worthwhile. He states, therefore, that we must find spaces that will allow people with different ideas to come together and bounce those ideas off one another. He offers the analogy of the coffee houses and salons of the early 20th Century that resulted in such great art and literature.

If Crompton and Johnson are correct, then the leadership of organizations that focus internally – that is, determining how they can become better funded, attract the strongest board or gain a reputation as the ‘premier organization’ in their field – are actually working counter-productively to that end. Their organizations will never be recognized as exceptional if they don’t innovate. And, as long as they choose to avoid the interactions with the larger environment that lead to the cross-fertilization of ideas, they are doomed to merely doing more of the ‘same old, same old.’

In my mind this means that leaders must create opportunities to meet frequently with their counterparts in a wide variety of organizational entities to dialog about and to piggy-back off of ideas. The entities they choose to meet with must not only be those that are doing similar work, or that share similar visions for the future, but organizational entities that bring very different viewpoints to the table.

Obviously, this requires a certain level of trust. Therefore, the convening groups will want some rules of engagement. The guidelines for brainstorming are appropriate here – e.g., to generate as many ideas as possible, to avoid judgment, to allow time for clarification, etc. The most important guideline, however, is adopting an attitude that, once thrown out, an idea belongs to the group as a whole. Any modifications of that idea are for the benefit of the community as a whole.

Just think what we could accomplish in our communities if we all took this approach!

Tuesday, November 16, 2010

Study on Women Donors Presents Lessons for Board Recruitment

A study(1) released this week by the Women’s Philanthropy Institute at Indiana University’s Center on Philanthropy showed that women are the largest donors. They give more in actual dollars and they give more frequently than men. This is a reality that holds true regardless of the women’s own economic status; and, the disparity of giving increases with the individuals’ income. For instance, 35.2 percent of women who earn $23,509 or less annually make charitable contributions, opposed to 27.5 percent of men who earn at that same level. When income rises to at least $103,000, 96 percent of women give to charity, while only 75 percent of men of similar means give. The results, culled from a sample of 8,000 American households, also revealed that women typically give because they care about the work that is being done. Men tend to give because they are asked.

This study is already shaking up many who have traditionally turned to powerful men in the community for large financial commitments. However, it should also shake up those who are recruiting for boards of directors. According to the Urban Institute study, “Nonprofit Governance in the United States: Findings on performance and accountability from the first national representative study,”(2) while women make up almost half of all boards in the US (46 percent), they tend to be found on the boards of smaller organizations – typically organizations with budgets under $100,000. The percentage of women serving on the largest (budgets of $40 million plus), most prestigious boards is only 29 percent.

One reason for the above may be that, according to Ostrower’s findings, women often do not make the cut when organizations use financial skills and reputation in the community (“affluence and influence”) as recruiting criteria. If board members are expected to be among the biggest and most committed givers, the Women’s Philanthropy Institute’s study should cause us to question whether organizations are shooting themselves in the foot when they actively solicit more men than women.

Perhaps of even more import is the difference the study found in why people give. Will Brown’s work (3) shows that belief in the mission is the most important factor related to board performance. Conversely, Candace Widmer (4), in a now classic study, found that joining a board because a friend asks is a temporary incentive and provides neither ongoing rewards nor participation. So, unless the organization is quickly able to provide these board members with other, more meaningful incentives, they will not stay involved. Does it not make more sense, therefore, to recruit those who are already motivated by what the organization is doing? We now know empirically, this means recruiting more women with a demonstrated interest in our organization’s mission.

1) Mesch, Debra. “Women Give 2010.” The Center on Philanthropy at Indiana University, 2010
2) Ostrower, Francie. “Nonprofit Governance in the United States: Findings on performance and accountability from the first national representative study.” The Urban Institute, 2007
3) Brown, Will. Presentation at the Midwest Center for Nonprofit Leadership Conference, “Boards in Uncertain Times: Exploring the implications of financial, technological and generational change for nonprofit governance.” April 2009.
4) Widmer, Candace. “Why Board Members Participate.” Journal of Voluntary Action, 1985