We have talked a lot about the board and CEO relationship in a nonprofit agency throughout this semester, and most of the theorists and models seem to think that the board must be superior to the CEO. The board is to set policy, hire the CEO, monitor their performance as well as the organization’s performance, and they are to maintain a certain distance from the CEO. Drucker’s article “Lessons for Successful Nonprofit Governance” is a refreshing, albeit anecdotal departure from agency theory.
Although I certainly get the idea of agency theory, and it makes practical sense in some situations, I also think that in smaller organizations it is imperative that the board be more involves, because of a lack of human resources, funding, and time. These smaller organization boards have to be even more active in fundraising, policymaking, and even operations to allow them to accomplish their mission. Drucker sees a “double bridge” approach that seems a bit like holding hands to me. The CEO is to adapt to help fill in the gaps in skill level from the board, even changing that skill set as time goes on and board members change. They are to be equals in Drucker’s theory, and work together to accomplish the mission of the organization.
While I agree that they should be colleagues and work together toward a common goal, I also believe that divergent opinions and checks and balances are extremely important as well. We have discussed situations where too close of a relationship or too distant a relationship have caused disaster in their organization. As with anything, human traits change the dynamic by which any group operates, or how it interacts with another group or individual. I agree that the CEO must adapt to meet the needs of the organization, but he also must maintain a certain vision for the organization that may be different from the board. The board and the CEO have different perspectives in my theoretical perfect world successful model (it might be a bit difficult to market that model’s title, I will work on that). The CEO is much more knowledgeable in the daily operations of the organization, and therefore his or her focus will be adjusted appropriately. The board is charged with a bigger picture view, how the organization fits into the community, potential funding resources, political ties, etc. They both must tackle strategic planning together, because both perspectives will be necessary for it to be a successful and accurate plan.
Because of these different perspectives, the board and the CEO will have differing, and sometimes conflicting opinions on certain issues that face the organization. I think that this is an extremely good thing, in moderation. Differing opinions and perspectives quite often lead to a better decision being made in the end. The old saying “two heads are better than one” makes sense when you think about the board and CEO relationship. These two heads must be linked in some ways, but not joined the way that Siamese twins might be joined to make effective decisions, and to avoid tunnel vision in the operation of the organization.
So, I don’t believe that there needs to be domination by the board, or by the CEO for that matter, for the organization to run well. I think that collaboration is beneficial, as long as there are checks and balances and a healthy environment for differences of opinion to be expressed.
Drucker, P. F. (1990). Lessons for Successful Nonprofit Governance. Nonprofit Management and Leadership , 7-14.