Cut the Cord When It’s Time for Directors to Leave the Board

09/05/2018

This article was adapted with permission from Lessons From the Nonprofit Boardroom by Dan Busby and John Pearson.

Business man cutting yellow ropeCaution! If you want a healthy board, recruit healthy people. Is this myth alive and well on your board?

“One of the myths of volunteer board work is that you see only fine, well-motivated people who agree on what needs to be done, when to do it, and how to do it. . . Good people disagree, do a little politicking, try to make decisions in the bathroom (the worst form of exclusion), and come to meetings totally unprepared.”
Max De Pree in Called to Serve: Creating and Nurturing the Effective Volunteer Board
 

We know. We know. It’s so tempting to keep the peace and not deal with difficult or toxic board members. Take “George,” for instance. He was in the second year of his three-year term.
Yes, he created problems in virtually every board meeting, but hey—he’ll term out in just five more board meetings. How bad can it be?

In a recent governance survey we conducted of more than 1,600 CEOs and board members, participants were asked to rate their boards against 20 effectiveness indicators. CEOs, board chairs, and board members all gave their lowest rating to this statement: “Our board has policies in place—and the integrity required—to ask an under-performing board member to resign.”
 
Governance takes guts! We’ve seen a board’s nominating committee ready to enthusiastically recommend that a well-known person join the board. Before the vote, a discerning board member asked a boardroom-silencing question: “Have you checked his references lately?”

The timid answer—no. Long story short, the individual’s lifestyle and values did not square with the board’s values, and the directors went back to the recruitment drawing board.

The values discussion is mandatory. “One way to get a healthy culture is to hire healthy people,” says Miles McPherson, the former pro football player and Emmy award winner in Master Leaders: Revealing Conversations With 30 Leadership Greats by George Barna and Bill Dallas. So let’s paraphrase McPherson: If you want a healthy board, recruit healthy people.
 
Jack and Suzy Welch describe “The Ultimate Values Test” in their book, Winning: The Answers—Confronting 74 of the Toughest Questions in Business Today.

The Welches recommend that managers [and board members] should be evaluated on two key areas: their performance and how well they live out the corporate values. So for boards, two critical ingredients must be nailed down: the board member’s job description and your credit union’s core values/corporate culture. Here’s how we chart these insights:

 

 

THE ULTIMATE VALUES TEST

 

 

Where are your board members today?

LIVES

OUR VALUES

DOES NOT

LIVE OUR VALUES

 

GREAT

PERFORMANCE

Group 1:

Praise
and reward!

 

Group 3:

Warning! Start walking the talk or you’ll need to exit.

 

UNSATISFACTORY PERFORMANCE

Group 2:

Give them
another chance.

Group 4:

Cut
the cord!

 

To paraphrase Jack and Suzy Welch:

  • Board members in Group 1 deliver great results and adhere to your core values. “They should be praised and rewarded at every opportunity.”
  • Board members in Group 2 deliver poor results but adhere to the values. They “deserve another chance, maybe in another position within the organization.” Perhaps you’ll need to give them a sabbatical from the board for a season—maybe inspiring them to serve in a volunteer role where they can have an impact.
  • Board members in Group 3 deliver great results but don’t live your values. In many organizations, says Welch, these people “deliver the numbers, but usually on the backs of their people. Companies very often keep these jerks around for way too long, destroying morale and trust as they do.”
  • Board members in Group 4 have poor performance and poor values. This one’s easy to deal with, says Welch. “When you finally get the guts to cut the cord, you’ll wonder why you didn’t do it sooner.”

Welch also warns not to get rid of value offenders in Group 4 with such surreptitious excuses as, “Charles left for personal reasons to spend more time with his family.” Instead, he cautions, inform your team publicly and “announce that Charles was asked to leave because he didn’t adhere to specific company values.”

As you define and refine your board’s core values, be discerning to know when you must show grace and when you must show someone the door.
 
APPLY IT TO YOUR BOARD ROOM:

At Christian Community Credit Union, the executive committee conducts an annual board member self-assessment process, which includes an online survey. The board chair creates the expectation that board members will function in “Group 1” and so the board reviews the survey results together. Board members seek to inspire each other to engage at a high level, but if there are values or performance issues, they are addressed by the board chair—gently, and always with an eye to improvement.

Christian Community CU affirms six core values for the staff and board: 1) God-honoring relationships, 2) the uniqueness of every person in the credit union, 3) creativity and a diversity of ideas and solutions, 4) the wise use of our time, talents and unique God-given gifts, 5) accountability for ourselves and all team members, and 6) a well-balanced life.

Dan Busby is president of ECFA (Evangelical Council for Financial Accountability), and author of numerous books including Before and After Babe Ruth: A Story of the New York Yankees Told Through the Lens of Tickets and Passes (July 2018). Nonprofit Times named Busby one of the 50 Most Powerful Nonprofit Leaders from 2010-2015.

John Pearson is a board governance consultant and author of Mastering the Management Buckets: 20 Critical Competencies for Leading Your Business or Nonprofit. He served six years as board chair at Christian Community CU and continues as a board member.

Questions for your Board:

  1. What are your board’s values?
  2. How are you ensuring that your directors live out these values?
  3. Looking at the table in the article, what groups do your directors fall into?
  4. What changes could you make to better align your work with your vision and values?

Get more on governance when you attend Directors Conference and/or CUES Symposium: A CEO/Chairman Exchange.