Tuesday, May 31, 2011

Building A Better Executive Team in Three Steps

Virgil R. Carter

Many non-profit organizations and their CEOs depend on a staff executive team to help lead the non-profit to be a consistently successful organization. The day of a “one person” leadership team, in most organizations, is long gone. Are there ways for the executive team to function better? According to an article in McKinsey Quarterly, authored by Michiel Knuyt, Judy Malan and Rachel Tuffield, “few teams function as well as they could”. The authors write that there are three important steps that can be taken for more effective executive teams. Consider the following:

Get the right people on the team…and the wrong ones off: Remember the advice to “get the right people on the bus”? The matching critical ingredient is to help the “wrong” people find a new and different opportunity that more closely fits their capabilities. CEOs are responsible for selecting the staff executive team. The authors note that this responsibility “…typically requires conscious attention and courage from the CEO, otherwise, the top team can under deliver for an extended period of time.” Without the right people, the executive team’s performance will be limited.

Ensure the team works on only what it can do: The purpose and focus of the top staff team is critical. It’s up to the CEO to communicate the purpose and focus of the executive team, and to closely monitor the team’s adherence to the purpose and focus. Like committees everywhere, left alone the team will look for things to do that seem interesting and that justify the team’s existence. Thus, purpose and focus must be carefully drawn and matched to the unique needs of the nonprofit organization. Often, projects with critical cross-functional or cross regional programs provide valuable work for the top team.

Keep team dynamics and processes positive and productive: CEOs must give “unrelenting attention” to the productive collaboration of the top staff executive team. It is all too common for executive teams to become dysfunctional over opposing priorities, entrenched thinking, competitive views, and the like. CEOs must lead their executive teams, setting the example and addressing the dynamics of their team, while dealing with concrete business issues.

With a staff executive team that is willing and able to effectively do its work, a non-profit organization can achieve a major performance improvement. For the full article, see https://www.mckinseyquarterly.com/Organization/Talent/Three_steps_to_building_a_better_top_team_2743

Monday, May 23, 2011

Enduring Ideas: Understanding Your Organization

By Virgil Carter

Are you trying to better understand your organization? Are you responsible for innovation and constructive change in your association? Perhaps you’re considering an organizational and career change, and are thinking about what makes organizations successful. If so, a McKinsey Quarterly article may be interesting. “A Watershed in Thinking About Organizations” is an April 2008 McKinsey article that revisits their 7-S Framework, introduced in the 1970s. The interactive article, the first in a series, “reflects on 7-S…introduced…to address the critical role of coordination, rather than structure, in organizational effectiveness.” Readers can click on any of the seven elements in the framework and listen to McKinsey’s description of the element.

The article can be found here:

The article goes on to note “While an increasingly complex business environment has rendered some (organizational) models obsolete, others have endured.” McKinsey says the series presents “frameworks that are as relevant today as they were when first created.”

The 7-S framework “maps seven interrelated factors that influence an organization’s ability to change—shared values, skills, staff, strategy, style and systems—and shows how these forces interact”. The framework suggests that achieving progress in any one part of the framework “will be hard to achieve without progress in the others.”

Monday, May 16, 2011

Sparking Creativity in Your Organization

by Virgil R. Carter

Are you looking for more creative ideas and output in your organization? In a recent article in McKinsey Quarterly, authors Marla Capozzi, Renee Dye and Amy Howe write that organizations can use “relatively simple techniques to boost the creative output of employees at any level”. This may be particularly important in many non-profit organizations, where strategy and operations follow a predictable path, year after year, while the external environment is constantly changing.

According to the authors there are four practical ways to face the “we’ve always done it this way” mentality and to encourage new creativity. The four ways are:

--Break free of pre-existing ideas: Go outside your current workplace for firsthand experiences than differ from and challenge the normal way of doing things.

--Identify and challenge core beliefs: what if the “conventional wisdom” didn’t exist? Look for new ways and opportunities to explore.

--Use the power of association: comparisons between one company/product/situation and another, seemingly unrelated one, can “stir the imagination” and spark idea generation.

--Invoke constraints: using constraints on your business model can help spark creativity. For example, what if your dues revenues are reduced by half; what if another organization begins to offer similar products?

The authors note, “Creativity is not a trait reserved for the lucky few. By immersing your people in unexpected environments, confronting ingrained orthodoxies, using analogies and challenging your organization to overcome difficult constraints, you can dramatically boost their creative output—and your own.” For the full article, see: https://www.mckinseyquarterly.com/Strategy/Strategy_in_Practice/Sparking_creativity_in_teams_An_executives_guide_2786

Monday, May 9, 2011

CEO Agreements: 5 Things to Get In Writing!

by Virgil R. Carter

Want to be a CEO? Already a CEO, but switching jobs? Here are five components of your employment agreement that are important to consider.

1. Duties: Are the roles, duties and authority of the CEO clearly stated? Is it clear the CEO is singularly responsible for staff, budgets, contracts, and other essentials? Can these duties be changed, and if so, by whom and how? Are changes (change of duties, change of role or authority, reorganization, merger, acquisition, cessation of operations, etc) considered as termination for good reason?

2. Compensation, benefits & annual review: What is the base compensation? What are the types of variable compensation, e.g., bonus, commission, etc.? Are other types of compensation appropriate, e.g., one-time (moving, relocation, etc.) and/or recurring (car, travel, business club, etc)? Will compensation be established and maintained as “market rate” and how will market rate be determined annually? Who participates in the decisions? Does the association’s standard benefits package apply to the CEO? How is annual performance planning and evaluation conducted? Who leads the annual review process? Who participates in the process?

3. Term & renewal: Is there a reasonable initial term of employment? When and how will the initial term be extended or renewed? Who participates in the decision? What if there is no formal action to renew the term—does it renew automatically, or is it considered involuntary termination?

4. Termination: How will unfavorable “termination for cause” be defined? How will other types of favorable terminations (voluntary, involuntary and for good reason) be identified and defined? How are the termination definitions linked to compensation, benefits and any special termination pay-outs, e.g., termination in first year of employment, termination after first year, involuntary termination, for good reason, etc.?

5. Restrictions: Are there personal or professional restrictions on the CEO while employed, and/or upon termination? For example, can the CEO teach, write, do research or other similar activities, while employed? Upon termination, can the CEO immediately work for another association in the same geographical area? Can the CEO immediately approach employees of her/his former organization about career changes?

Thinking about these key parts of your CEO employment agreement and reaching mutually agreeable resolution with your volunteer leaders will help to establish your credibility as a senior executive. It will also make your life a lot more enjoyable. Good luck!

Monday, May 2, 2011

A Different Twist on Budgeting

by Steven H. Davis

As we all know, the annual pursuit of a properly balanced budget can be an arduous task. For most of us, there are three gates that must be transited. First, there is arriving at consensus at the staff level (lots of competing projects and activities vying for the available dollars), and then there is getting over the Finance Committee hump in the process (keeping folks out of the weeds can be an issue), and then there is the pursuit of approval from the elected leadership (here as well keeping folks out of the weeds can be a problem).

We all have our set approaches, our traditional issues, and our approaches to overcoming those issues. What I want to share in this posting is a process that I have refined in recent years that seems to facilitate an easy transit through all three of the gates mentioned above.

Step 1: Staff budget managers (managers, directors and the executive director) together prioritize all planned new objectives, based on set criteria, including strategic value to the membership and resource requirements to accomplish. Objectives are prioritized under each Strategic Plan Goal, with each goal treated equally. Doing this in group fashion eliminates the lobbying that often occurs in this part of the process.

Step 2: The elected leadership then goes through a similar exercise in one of its official meetings, taking staff’s priorities and reordering them as they feel is needed. This is a critical step.

Step 3: Staff then pursues an initial budget that only includes already approved activity …none of the prioritized new activity is included in this first cut. Our experience is that this leaves an in-the-black budget with a sizeable net positive.

Step 4: Staff then adds new activity to the budget, based on the leadership’s prioritization, until that net positive is narrowed-down to the desirable figure. A key in this step is to ensure that adequate resources exist to accomplish budgeted new objectives …most importantly staffing.

Step 5: Staff evaluates all current programming for sunsetting. The focus is on current value to the members, as determined through member surveys and staff/volunteer perceptions.

Step 6: Staff provides the elected leadership with draft guidelines for it to modify & approve that will outline their intentions for the Finance Committee’s role in the budgeting process. These guidelines are focused on keeping the FC strategically focused and not in the weeds. They focus the committee on evaluating the staff’s budget justifications, not the detail.

Step 7: Armed with the formally approved guidelines and the leadership’s new-objective prioritizations, the Finance Committee then works through the process fairly expeditiously and ultimately approves supporting the draft budget to the elected leadership for approval.

Step 8: Reviewing proposed new activity based on its own prioritizations, the elected leadership then has a fairly clean ride through its part of the process.

No budgeting process is perfect, but the one just outlined seems to facilitate a fairly smooth transit to a strategically focused budget that can be readily embraced by everyone.