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Sunday
Aug262012

Physician Leadership On Nonprofit Boards

Practical insights for physician board members and chief executives.

Physician leaders are often asked to serve on boards of nonprofit organizations.  Physicians in transition may also want to explore this—not only as an opportunity to apply their leadership skills outside of clinical practice—but also as way to give back to their communities.

I have found that a lot of ink has been devoted to the theories that drive nonprofit board leadership—but perhaps, too little about the nuts and bolts of ensuring effective boards.  While serving on a nonprofit board can be richly rewarding, it can also present a leadership challenge.  Depending on your past experience, you may want to take a closer look at the practical aspects of nonprofit governance, including formulating board structure and process, developing a strong partnership between board and staff, and structuring effective board and committee meetings.

Nonprofit organizations are one of America’s greatest heritages and a distinguishing feature of our society.  Business supplies goods and services, government controls and regulates, but the nonprofit organization has a different mission.  Its “product,” writes Peter Drucker, “is neither a pair of shoes nor an effective regulation.  Its product is a changed human being.  The nonprofit institutions are human-change agents.” We are drawn to what Drucker calls the “high ground effort of changing lives for the better” in a world of selfish interests. 

Changing lives is exciting business, and working with people who have similar goals can be very gratifying.  But it is also a challenge.  The agenda is usually open-ended and subject to change at any moment.  You must please many constituencies, often with differing priorities.  Much of your success depends on raising enough funds and finding enough good volunteers.  The measurement of results is difficult and open to various interpretations.  The days are as long as they are in any professional job. And in my opinion, the board and chief executive of a nonprofit organization have a greater leadership challenge than their for-profit counterparts. 

Fundamental roles of a nonprofit board

Just as boards are inherently diverse, so are the assumptions individual board members bring to the group.  For this reason, a shared understanding of the roles of a nonprofit board is essential to effective governance.  Here is a checklist of ten functions you can use for clarifying your board’s role:

  • Determine the organization’s mission (or purpose)
  • Select the chief executive
  • Support the chief executive assess his or her performance
  • Ensure effective organizational planning
  • Ensure adequate resources
  • Manage resources effectively
  • Determine, monitor, and strengthen the organization’s programs and services
  • Enhance the organization’s public standing
  • Ensure legal and ethical integrity and maintain accountability
  • Recruit and orient new board members and assess board performance

Here is a framework for clarifying role definitions.  Think of each board member as having three hats to wear:

  • Governance hat: Worn only when the full board meets, propoer notice is given, and a qorum is proesent.
  • Implementation hat: Worn only when the board gives one or more board members authority to implement a board policy.
  • Volunteer hat: Worn at all other times, when board members are involved with organizaitonal activities as volunteers. 

Problems arise when board members and /or staff confuse these hats or when board members assume that individual and collective board responsibilities are interchangeable.  They are not.  Much of the confusion has to do with authority.  Governance is a group action.      

Major differences between nonprofit and for-profit boards

There are fundamental differences between nonprofit and for-profit boards, such as their over-arching goal, size, and public accountability.  But there are also similarities in these two types of corporate boards. (A nonprofit organization is an incorporated entity, too).  The differences are in purpose, effectiveness, and motivation, not so much in legal principles. 

Sorting out the board’s role in relation to the staff

Too many chief executives seem to compete with their boards, so they have little motivation to help them define a clear, strong role.  This is unfortunate, because everyone can be more productive when roles are clear and board members and staff agree not trying to do one another’s work. 

One good reason for clarifying roles is legal liability in organizations whose boards do not set and carefully document policy.  But the most compelling reasons have to do with organizational effectiveness.  In my experience, strong nonprofits have strong boards, and string boards become excellent with the help of their organization’s chief executives.  The best boards stick to their governance role and stay out of staff responsibilities when doing board work.  Conflicts arise when staff is equipped to do a better job than a poorly functioning board.  

In the business of sorting our roles, the best advice is to put it in writing.  Verbal communication does not work well in nonprofit governance.  Turnover of board members and staff can lead to confusion.  And besides, people bring different experiences to the board room and translate them into different assumptions about what should happen.  The result is miscommunication, misunderstandings, and mistakes.

The best approach is to think ahead and give clear signals about what the board intends to do and what it expects the staff to do.  Decide together what works for the organization, within the board roles, and then write it down in simple and straightforward terms so that the people involved, now and in the future, can easily refer to a written set of expectations.

How a board should be structured

There is no magic formula; the board’s willingness to make the structure work is more important than following a textbook definition.

  • Evaluate structure every couple of years and change as needed
  • Keep the board as small as possible to get the job done
  • Evaluate the chairman as part of the board evaluation
  • If the board has an executive committee, limit its authority to actions that are necessary between full board meetings
  • If the organization has paid staff, don’t allow chairman to act as the chief executive
  • Clearly designate chief executive as sole agent of the board
  • Have as few standing committees as possible
  • Use short-term, ad hoc task forces to address special needs of the board
  • Consider forming an advisory group in addition to the board
  • Limit board membership to volunteers with exception of chief executive

The role of board chairman

If roles are clearly understood, the partnership between the board chairman and the chief executive will help the organization flourish.  If these two organizational leaders agree to do whatever is necessary to make each other successful, the success of the board will follow.  Assuming the organization has a clearly identified chief executive and a volunteer board chairman, here are the chairman’s basic responsibilities:

  • Preside at board meetings
  • Coauthor board agendas (with the chief executive)
  • Appoint and assist committees
  • Manage group development
  • Maintain organizational integrity
  • Support eh chief executive
  • Link with the major constituencies

Concluding thoughts

A key take-away from my experience is that boards and chief executives have different, noncompeting roles.  They must learn to complement one another for each to be truly successful.  As Peter Drucker emphasized, nonprofits waste uncounted hours debating who is superior and who is subordinate—the board or the executive officer.  The answer is that they must be colleagues.  Each has a different part, but together they share the play.  Their tasks are complementary.  Thus, each has to ask, “What do I owe the other?

This is what servant-leadership is all about—each side of the dual leadership wanting the best for the other and taking initiative to help the other succeed.  Everyone wins.  Service in the organization is rewarding.  Lives are changed for the better.  Everything is possible in a team effort if it doesn’t matter who gets the credit.

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