November 15, 2017 | Read Time: 7 minutes
Just 60 percent of nonprofit executives report that they were evaluated in the past year, according to a 2017 BoardSource study, and 15 percent said they have never had a formal assessment.
Why don’t all nonprofit boards evaluate their chiefs? Volunteer board members have limited time. Some don’t have the professional experience to conduct a high-level evaluation — they simply don’t know how to go about it. And some fear that critical feedback will prompt a CEO or executive director to leave.
When nonprofit founders are at the helm, evaluations can become even more complicated.
“If they are the founder, they have that founder syndrome, and they have created the board for themselves basically,” says John Russell, chairman of the board at Brightpoint Health, a New York health-services nonprofit. “It does make it more difficult.”
Still, holding a chief executive accountable is a board’s most important responsibility, say nonprofit leaders and management experts; an organization’s success depends on it. And the best time to establish a process, or rekindle a dormant one, is now.
“If you wait until you’re in a situation where you feel like you have a performance issue, then it is really easy for that evaluation or assessment to feel like it is coming from a punitive place,” says Anne Wallestad, chief of the nonprofit BoardSource.
The Chronicle interviewed nonprofit executives and consultants about how to create an evaluation process that produces meaningful benchmarks, actionable feedback, and clearly articulated goals while fostering discussion among board members and top executives.
1. Make the case for the value of reviewing a CEO’s performance.
Mr. Russell, who has helped hire and evaluate nonprofit chiefs while serving as a board member for a number of health and arts nonprofits, makes the argument this way: “If a person knows their objectives and goals, then it is easier to reach them,” he says. “If a CEO doesn’t know exactly what is expected of them, and what their objective and goals are, how do they know if they are doing a good job?”
Good employment and management practices must be applied to nonprofit executives, just as they are to leaders in other industries, say Mr. Russell and others.
Sometimes it’s the executive director or CEO who has to initiate these conversations.
Abel Nuñez took the helm of the Central American Resource Center, or Carecen, a Washington nonprofit serving Central American immigrants, in 2013, following the death of the 20-year leader. At the time, the annual review consisted of little more than a conversation with the board president. Mr. Nuñez had already established several standing board committees, revamped the employee-evaluation process, and created and adopted a strategic plan. So in late 2016, when rousing his somewhat reluctant board to develop a review process for his position, Mr. Nuñez framed it as another vital practice to adopt.
Conducting an evaluation carries a connotation of judgment, Mr. Nuñez says. People feel uncomfortable being judged or judging others. So he recommends talking about the evaluations of top executives as a “visioning” exercise, or an opportunity to discuss plans and achievements for the organization.
He explained to his trustees that he didn’t want them to “throw roses at my accomplishments,” but to come up with goals to move the organization forward.
2. Identify key criteria.
Determining the benchmarks by which a CEO or executive director should be evaluated starts with a clear and up-to-date job description.
At Carecen, a committee made up of Mr. Nuñez, board members, and staff created a review process. They identified nine main job functions by which to assess performance, including financial management, fundraising, and advocacy. Trustees also measure the leader’s performance against goals set in the previous year’s review. The process also includes setting new goals for the year ahead.
In the 2017 BoardSource study, 16 percent of executives reported they did not have any written goals, and just 59 percent reported that their evaluations were based on goals mutually agreed on with their boards.
3. Research the marketplace and update evaluation tools regularly.
Nonprofits, of course, are dynamic and changing organizations. Evaluation tools need to be, too, so be prepared to modify your approach as needed.
For example, a nonprofit supported for years mostly by government grants may find itself in need of private support, says Carol Weisman, a consultant. Charitable fundraising is a distinct skill, and the CEO’s job description and subsequent performance evaluation would need to include it.
At Brightpoint Health, says Mr. Russell, chief executive Paul Vitale’s job has changed dramatically since 2009 as the nonprofit merged with and acquired other organizations. Revenue at Brightpoint tripled, and the CEO took on additional responsibilities, according to Mr. Russell.
To ensure that the chief’s salary is in sync with the market rate, among other things, the board chair uses consultants to pull data on compensation for leaders of organizations in New York and across the country similar in size to Brightpoint.
“Determining the CEO salary is really hard, especially when you have a really good CEO and you want to pay them the price they are worth,” Mr. Russell says.
4. Tap low-cost resources to help.
It can be worth the money to hire a consultant who specializes in nonprofit boards and executive leadership to design an effective evaluation process, many say.
No money? You’ve still got options.
“Sometimes you can go to a corporation and say, ‘You’re one of our donors. We want to do good a job. Would you give us one of your HR people for 10 hours?’ ” says Ms. Weisman, noting she has seen a number of nonprofits successfully use pro bono work this way.
Community foundations can be a resource for nonprofit leaders who want to establish or revamp a review process. So, too, can organizations that support capacity-building or offer technical assistance to nonprofits.
You do not need to start from scratch. For example, Mr. Nuñez and his board borrowed from their newly revised employee-review guidelines when creating the evaluation process for the chief executive.
And most nonprofits that already have good evaluation tools are happy to share them, says Bob Wittig, who while head of the Jovid Foundation helped Carecen develop its evaluation process and now serves as executive director of the Catalogue for Philanthropy.
“What I would recommend is: Let board members reach out to other groups that they know and ask them what they do, how they do it.” Mr. Wittig says. “There is no reason to reinvent the wheel.”
5. Seek feedback from non-board members.
Ms. Wallestad warns against relying solely on board members’ perceptions of executive performance. That can overemphasize the leader’s relationship with the board or his or her performance in meetings.
Reviews should include feedback from staff members, including those who report directly to the executive director. Feedback from external stakeholders is also valuable, Ms. Wallestad says.
“If you do have one individual board member that has a perspective that is out of sync with the rest of board, the board needs to understand and manage that and communicate with the executive about that and put it into context, rather than leaving it to the executive to make sense of or resolve that on their own,” she says.
At Carecen in Washington, the newly developed evaluation process includes gathering feedback from the nonprofit’s management team as well as from foundations, other organizations the group works with, government contract sources, and other professionals working on immigration issues.
6. Build the process into a routine.
Evaluations should occur at predictable intervals. Aim for an annual review, say experts, although they acknowledge that it may only be possible to do a robust review involving staff and external stakeholders every few years. Set a schedule with firm deadlines, says Ms. Wallestad. Board members should ask themselves: When is the next time we’re going to touch base on this? What expectations do we want to set in advance?
“Sometimes it is really helpful to have a specific board member or a specific board committee take responsibility,” she says.
