Board Member Responsibility #2: Selecting the Chief ExecutiveApril 02, 2021
The CEO is the Captain of your ship, choose wisely. Part two of our Ten Basic Responsibilities of Nonprofit Boards Series explores the process of selecting a CEO.
*Editor's Note: This blog has been updated as of April 2, 2021 for accuracy and comprehensiveness.
The second most important job of the non-profit Board is selecting the organization's chief executive. The role may have a different title (i.e., executive director, president, managing director, etc.) Regardless of the title you place on this position, this is the most critical hire and typically the highest compensated position at the non-profit organization. Before starting the search, the Board members should get a consensus on the organization's mission, strategic objectives, and most pressing priorities that will become the expectations of the CEO. Let's dive into part two of our blog series.
Two primary functions of the Board
Many organizations start with no employees, and the Board performs two functions. They are the governance Board and a working Board since all the activity at the organization is conducted by Board members or other volunteers under the direction of one or more Board members.
During the start-up phase, many organizations will make an initial hire (the first compensated employee), and the person serves as the administrator for the volunteer board rather than being the Chief Executive/President (CEO). In this example, the initial hire may not necessarily be the chief executive position. Boards in this situation should be careful in that initial hire so that both the employee and the Board realize that this is not a CEO position. The CEO, along with the Board members, is the face of the organization, and they must hire a qualified and effective leader to fill that role.
What does the Board expect the new CEO to achieve?
Before starting the search for the CEO, the Board must reach a consensus on the attributes that CEO should possess and the expectation and responsibilities they will be charged with (i.e., a job description.) Authentic leadership is more than a simple list of obvious skillsets. The job description should include specific kinds of issues, needs, and challenges that the chief executive will encounter and the qualities and experience desired.
The Board should decide on the degree to which the CEO should be a visionary, guiding both the Board and employees on the organization's future challenges and opportunities. Another critical role of the CEO is the decision-maker. To what extent will the CEO involve the Board in decisions? The board involvement may change and evolve, but the current state needs to be documented in the current job description.
Once the organization has developed the position criteria, the next step is to determine who will perform the search. Often, the Board will opt to form a search committee responsible for the marketing of the position, the vetting of candidates, the interview process, and the selection and offer to the candidate. The time involved in this process is significant and often underestimated, increasing the length of time it takes to find the right leader because busy volunteers are doing the work. The Board should strongly consider hiring an executive search firm to help with the search process. The executive search firm has the experience and often a database of qualified candidates to make the process efficient for the volunteers on the search committee. The CEO search process shouldn't be rushed, but it should not take years to complete. It is not uncommon for a CEO search to take six months to a year to complete.
When an organization hires a chief executive, that individual is primarily responsible for carrying out the strategic plans and policies established by the Board. The individual reports to the Board. In larger organizations, the Board interacts with the organization only through the CEO. The CEO may request that a Board member with a particular skill work with a specific employee for a time (i.e., the CFO and the Treasurer). The Board is responsible for directing the CEO, and the CEO leads the rest of the organization's employees. An organizational chart should directly link the Board to the CEO and no lines from the Board to any other employees. A successful chief executive ultimately results from a strong, supportive, and collaborative relationship between the CEO and the Board.
The CEO's managing responsibilities…commonly misunderstood
The CEO's role as manager is one quality that is frequently misunderstood by Boards. Managing the organization's human, financial, and physical resources to achieve the mission is the primary responsibility of the CEO. The tendency is to select an individual with specific expertise related to the organization's mission (i.e., environmentalist, human service professional, athlete, etc.). However, all non-profit organizations are businesses with a non-profit mission rather than solely a profit goal. If finding a mission-experienced individual with managerial expertise is difficult, I suggest that boards focus on managerial talent.
Board developer role
The last role in designing the CEO job is that of the Board developer. While Boards are self-perpetuating and must attend to their evolution, the CEO is best suited for identifying the organization's board-level needs.
A successful chief executive ultimately results from a strong, supportive, and collaborative relationship between the CEO and the Board. I like to think of the CEO as the Captain of the ship. The entire organization will take explicit and implicit direction from this person. After establishing the overall direction for the ship, hiring the Captain is the most critical task facing the Board.