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PHIL HARDWICK — The first job of a new board leader




Management guru Peter Drucker said that the first action of an effective leader is to determine what needs to be done. Stated another way, the first job of a new leader is to assess the organization. If you are about to assume the leadership of an organization, more specifically a nonprofit organization, there are several ways to assess the organization. There are presented in no particular order.

One way to begin assessing an organization is to have a conversation with each recent past president. They should be able to tell you about issues that they dealt with during their terms of service. They can also tell you about hidden agendas, effective and ineffective board members and challenges that they faced during their terms as leaders. These conversations should be considered as being held in strictest confidence.

There should also be a candid and thorough conversation with the current executive director of the organization. Ask him or her to list the strengths, weakness, threats and opportunities of the organization. You will want to feel assured that the executive director has a vision for the organization that is consistent with that of the board of directors. While you want to learn about any frustrations or dreams that the executive director might have, you also want to watch out for hints that the executive director might be looking for another job. As the incoming board president you need to know that this is an uncertain time for the executive director. On the other hand, assuming that you have been serving on the board already, the executive director should know something about your vision for the organization. Also, you want to learn what the executive director feels is the role of the board of directors. The most common complaints that executive directors have about their boards is that they micromanage or that they are not involved enough. How’s that for a paradox?

Read the minutes of the meetings for the past years. Obviously, if you have been a board member for a while you know what the minutes contain. Nevertheless, think about what information should be contained in the minutes and how they are worded. Minutes are not transcripts of a board meeting. They are a summary of the meeting, a record of motions made and voted on and action taken.

Look up the IRS 990 form. This is a form required by the IRS for most nonprofits. It requires the organization to describe its mission or other significant activities. The organization must then disclose financial details on its revenues, expenses, assets and liabilities. A significant portion of the form requires information on how the organization is governed, and specifically requests the names of its officers, directors, highly compensated employees and other employees who are involved with managing the organization. An organization that over-compensates its management may jeopardize its tax-exempt status with the IRS. You can go to the IRS website – www.irs.gov – to search, although I find it to be not as user-friendly as some other websites that provide the same information. I personally prefer the Foundation Center’s 990 Finder webpage to be a good starting place. It’s at http://foundationcenter.org/findfunders/990finder/.

Interview and consult with fellow board members about their opinions and views of the organizations. Members will usually share information in private that they might be reluctant to discuss in an open board meeting.

You should also study the most recent financial statements and the auditor reports. Make certain that the reports are presented in such a way as to provide the board with useful information that pertains to the organization. For example, for some organizations it might be useful to include year-to-date data compared to last year’s data. Also, many nonprofits receive revenue on a staggered basis instead of regular monthly revenue even though many the monthly expenses are fixed. It is not uncommon for a nonprofit to have an annual fundraising event, and thus receive most of its revenue in only one certain month. You should become very familiar with the financial statements and how to present and explain them to other board members and outsiders.

Interview three customers. So who are your board’s customers? One way to look at whom your customers might be is to think of your funders/contributors as customers and your beneficiaries/recipients as your customers. Find out what they want from the organization and why they are involved with the organization.

Finally, it is useful to conclude with something else from Peter Drucker. He suggested that leaders, including nonprofit leaders, be able to answer five essential questions. He even coauthored a little book entitled “The Five Most Important Questions You Will Ever Ask About Your Organization.” They are:

  1. What is our mission?
  2. Who is our customer?
  3. What does the customer value?
  4. What are our results?
  5. What is our plan?

» Phil Hardwick is a regular Mississippi Business Journal columnist and owner of Hardwick & Associates, LLC, which provides strategic planning facilitation and leadership training services. His email is phil@philhardwick. com and he’s on the web at www.philhardwick.com.


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