Takeaways from the NACD Conference: Nonprofits’ Need for More Strategic Dialogue
Last month, I was fortunate to attend the National Association of Corporate Directors (NACD)
2014 Board Leadership Conference. The conference was attended by over 1,200 leaders—with broad representation from both for-profit and nonprofit boards of directors—who gathered to share experiences over three days of presentations and working sessions that revealed the shifting focus and increased engagement of today’s boards.
During the conference, the NACD presented its latest Blue Ribbon Commission Report, The Board’s Role in Strategy
, a thought-provoking state of the union address on board governance that provided an in-depth explanation on why boards should reassess their role in strategy development and execution. While the report and its findings are noteworthy on their own, what I found most impressive was the NACD’s ability to pointedly address a topic that was brought up again and again in discussions throughout the conference: the need for more dialogue and coordination around strategy between boards and management teams.
How do most boards and management teams actually engage one another around strategy? The answer used to depend heavily on whether you were talking about a for-profit or a nonprofit organization. Historically, for-profit boards have tended to be more engaged in regular dialogue with management teams around strategy development and execution, whereas nonprofit boards have lagged in this respect. That divergence is now disappearing.
With greater competition for financial resources, greater technical innovation and heightened operational and reputational risks, nonprofit management and boards are breaking down walls and reconsidering how they engage one another. Here are three of the biggest advantages that this more collaborative approach to strategy can bring about:
1.Regular dialogue creates nimbleness:
The old adage of “review and concur,” in which a management team develops strategy on its own and then presents it to the board on an annual basis, no longer suffices. As was apparent from conference discussions, nonprofit boards are increasingly engaging in collaborative relationships with management teams to monitor the environment in which they operate and evaluate the need for strategy adjustments. This point was reinforced during a presentation by Save the Children CEO Carolyn Miles and Director Dona Davis Young, as they described how more consistent strategy discussions recently provided them the ability to more rapidly and effectively respond to the Ebola threat in countries impacted by the disease.
2. Enhanced resource management:
Allocating resources is one of a board’s most important responsibilities, and it’s a lynchpin for effectively mitigating the many risks that nonprofits face. Organizations need to secure the best forward-thinking leaders, secure digital platforms that house hundreds of millions of beneficiary and donor records, and safeguard their reputations in order to attract and retain donors. Funding is a critical component of achieving these ends, and transparent, collaborative dialogue between boards and management teams is the oil that keeps the engine running.
3. Executive compensation and succession planning:
Nonprofit boards play an instrumental role in the selection and compensation of their organization’s executives. Long term sustainability relies on the board’s ability to select and retain the right leaders, and a poorly-planned or ill-timed transition can undermine a nonprofit’s momentum. It can also threaten the organization’s financial stability and employee job security. To establish the right process to identify and compensate the right leaders at the right time, boards must coordinate and communicate their strategy with the right stakeholders across the entire organization.
For ideas and recommendations for nonprofit directors on how to enhance the dialogue between their boards and management teams, we encourage you to read the full NACD Blue Ribbon Commission Report
on Strategy Development. As your nonprofit organization addresses its future challenges, how is the relationship between its board and the management team evolving to keep pace?