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Hardest Part of Board Member’s Job?: Orienting a New Executive Director

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Imagine starting a job where you have 5 or more bosses with whom you meet once a month. They are thrilled to have you on board – relieved, really – because they haven’t been intimately involved in the day-to-day operations of the organization and they know that there is lots of work to be done. Staff is glad to have you on board, too, and is anxious for direction.  Where do you start?  How do you make sound strategic decisions when you’re still trying to figure out where the bathrooms are located and remember everyone’s name?
This scenario may seem like a bit of an exaggeration, but, sadly, it replays in nonprofits of all sizes again and again, year after year.  The “costs” of replacing a key executive in any type of organization are costly because of the requisite learning curve. Flattening that learning curve is especially important for nonprofits – both because they are working with fewer resources than their for-profit counterparts and because the services they offer are critical to clients who rely on them.  Ironically, right at the moment that the board of directors sighs with relief after hiring a new executive director, that’s when the real work needs to begin.
In their article, “Boosting Nonprofit  Board Performance Where it Counts,” published in the Stanford Social Innovation Review, July 16, 2014, Lisa Walsh, Libbie Landles-Cobb and Leah Karlins offer 5 specific strategies for nonprofit boards to employ to help a new executive director transition more successfully to your organization:
  1. Do your homework in order to hire well.
  2. Collectively set the new leadership agenda.
  3. Get clear on goals.
  4. Go slow on orientation to go fast on the job.
  5. Make performance management routine.
For more specifics about each of these recommendations, read the entire article here.

How Much Should You Pay Your Nonprofit Executive Director?

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Lately at Spokes, we’ve received a lot of questions about nonprofit executive compensation.  Many nonprofits are planning and budgeting to hire their first-ever executive directors in 2016.  Others, unfortunately, have suffered some turn-over in their executive positions.

So, how does a nonprofit that is hiring a new executive director – either for the first time or to replace a previous one – decide what to offer to attract and retain the best person for the job?   How does a nonprofit compete with increasing employment opportunities in all sectors of our economy?  How does a nonprofit balance its fundraising obligations with its desire to retain good employees?

The answer is complicated. And, there is no one solution for all organizations.  As with all nonprofit management issues, there is quite a bit of art mixed in with the science of budgeting and managing employees.

First, visit Spokes!  We have purchased the most recent Compensation and Benefits Survey for Southern & Central California Nonprofit Organizations.  Published by the Center for Nonprofit Management, the survey provides detailed compensation information from 509 participating nonprofits for every staff position, including executive director, bookkeeper, administrative assistant, program officer, volunteer coordinator, development manager, counselor, receptionist, gardener, case worker, activity director, thrift store clerk, network technician and many more.  We have only one reference copy available in our library, so you’ll need to visit us to view the survey. Members, however, may also call us to request scanned copies of portions of the report.

One of our favorite educational resources, Blue Avocado, recently published an article that offers some concrete steps boards can take to better inform their compensation discussions and decisions. Highlights include:

  1. Consider the value the individual brings to your organization.  Salaries are paid for the work to be done.  What would it cost to recruit and hire someone else to meet your goals for next year?  If your expectations are escalating, perhaps your salary budget needs to grow as well.
  2. Ask other nonprofits what they pay their executives. If there are not enough local comparisons, consider similar positions in same-size organizations in the for-profit or government sectors to establish a benchmark that’s in line with your community’s cost-of-living.  Remember, salaries within the same sector can vary widely throughout the country.
  3. Consider what benefits you are offering.  Retirement and health benefits can add thousands of dollars to the overall compensation package.  More and more employee candidates are more interested in benefits than salary, especially with escalating healthcare costs and concerns over the future of social security.  If you don’t offer benefits, the salary may need to be higher to allow the employee to purchase/invest independently.

For many of us, a new fiscal year and budget will be here before we know it.  Start planning now by scheduling time on your next board meeting agenda to discuss your process for evaluating the executive director, ensuring that other employees are being evaluated and defining a strategy or policy to guide your salary and budgeting discussions.  As always, please let Spokes know if we can assist you as you move through your process. We’re here to help!

Blue Avocado article link: http://www.blueavocado.org/content/how-much-pay-executive-director

Nonprofit Cost Saving Strategies: Reimbursing vs. State Unemployment Insurance Taxes

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Do you have former employees collecting unemployment benefits?  Does your nonprofit employ more than 20 employees (or at least 10)?  If so, you may be missing an opportunity to save some significant costs for your nonprofit.

In 1972, the Federal Government enacted legislation granting 501(c)(3) Nonprofit employers the right to self-fund for unemployment, rather than pay State Unemployment Insurance (SUI) taxes. Today, thousands of Nonprofits across the country utilize this little known tax break and save millions of dollars on their unemployment expenses.

Here’s how it works – rather than pay SUI taxes that cover all of their employees in case they become unemployed, Nonprofits that self-fund are only responsible for the actual benefits that their former employees collect. This self-funding strategy is also known as “Reimbursing,” and typically saves Nonprofit employers about 50% a year on their unemployment expenses.

Although understandably appealing to for-profit employers, this right to choose which unemployment option they use (SUI tax paying vs. Self-funding) is only available to 501(c)(3) Nonprofit employers.  Read more here to learn more about Self-funding and determine if it’s a potential cost-saving solution for your organization.

TIME-SAVING TIPS FOR NONPROFIT PROFESSIONALS

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School starts next week.  For working parents, this is always a frenetic time of the year.  There are so many demands on our time – both self-imposed (finding time to enjoy the last days of summer vacation with our children) and forced-upon (school registration days, back-to-school nights and hunting for school supplies).  And, in a region with so many folks employed by academic institutions, it’s the start of a busy time for lots of folks without kids, too.

So, in the spirit of helping our nonprofit peers meet all the demands that will made of them in the next few weeks, we thought we would share this insightful article from one of our favorite nonprofit folks, Vu Le, a nonprofit executive director, activist, blogger and very funny guy.  “21 Creative Time-Saving Tips for Nonprofit Professionals” offers a variety of tongue-in-cheek strategies to help you do more nonprofit work in less time.  You may not be able to apply them all (any?), but we promise that you’ll have a good laugh.  And, you may even start to consider a few of them seriously the next time you are stuck in traffic due to school pick-up or the return of hoards of college students.  Know that you’re not alone.  We’ll be microwaving as quickly as we can at Spokes… Get your 21 tips here!

Create Cultural Values, Create Value for Your Nonprofit

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Lots of nonprofit organizations tend to “skip” the creation of cultural values for their organization.  Are you one of them?  If so, you may be missing a valuable opportunity to establish a tool that will help you more effectively identify and recruit board members, staff and volunteers who can best move your mission forward.

Most business management mantras will dictate that having the “right” team members is critical to the success of any organization.  But, how do you know if your team members are the “right” ones?  How do you evaluate or identify if a prospective team member understands and embodies the key values needed to realize your mission if you haven’t yet defined those values for the organization as a whole?

The value of your values may start with building your nonprofit’s leadership, staff and volunteer teams, but that value grows as it permeates every layer of your organization.

Take strategic planning, for instance.  After confirming your vision and mission, it’s important to clarify your organization’s values – the “rules of engagement” for how your team (board members, staff, and volunteers) will treat each other, your donors and, most importantly, the men, women and children you serve.  If your organization is fortunate to have a broad team with individuals independently working towards common strategic goals, its important that they share and abide by a core set of values to ensure that they can a) identify and recruit more of the “right” folks, as needed; b) meet minimal expectations for individual performance and c) create consistency in the interactions they each have with your organization’s various external stakeholders.Remember, too, that the work of a nonprofit (perhaps life, in general) rarely progresses in a linear fashion.  Unforeseen and unexpected events pop up all the time.  Having great policies in place will help you weather the worst case scenarios that may arise from most unforeseen events.  But, what about that exceptional event that falls outside all of your policies?  What then?  Think of your organization’s values as an umbrella insurance policy for the work of your organization.  When all other policies fail to provide adequate direction for a specific circumstance, your organizational values serve as an ultimate guide for each of your team members to help them make the very best decision possible.

Values are most valuable when they are regularly reviewed, modified as needed and disseminated throughout every level of your organization.  If it’s been a while since your organization has reviewed its corporate values – or if your organization doesn’t have any written values – consider allocating 15 minutes of your next board meeting to have a thoughtful review or discussion about them.  Use Spokes’ Core Values Worksheet to help identify what values are most critical for your organization at this point in your history.  Starting from scratch?  Identify at least three core values as a start.  Know that the board is always able to add new values as they may be identified – or rewrite previous ones.

To help you start the conversation about values within your organization, consider sharing this video: http://bigthink.com/videos/culture-at-30000-feet-above-ground from Dr. Frances Frei, Professor, Harvard Business School, and Anne Morriss, Chief Knowledge Officer of Concire Leadership Institute.  (The video is directed to for-profit companies in the service industries; please remind your colleagues that every nonprofit is a service organization.)

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