Executive Centrality

Similar to other formal organizations, a nonprofit organization is typically understood as necessarily hierarchical, with the board of directors in the superior position. The board is expected to define mission, establish policies, oversee programs, and use performance standards to assess financial and program achievements. The chief executive is hired to assist the board and works at the board's pleasure. This conception is the application of what organizational theorists have labeled the “purposive-rational” model (Pfeffer, 1982) or the “managed systems” model (Elmore, 1978) to nonprofit organizations. This model, generally derived from Max Weber's description of bureaucracy (1946), as well as the nature of many organizations over the last century or two, conceives of organizations as goal-directed instruments under the control of rational decision makers where responsibility and authority are hierarchically arranged. This rational, managed systems model is also the commonplace or conventional “theory” of many organizational participants. It is how, many people believe, organizations do and should work.

Much of the substantial normative literature on nonprofit boards accepts this conventional model (for example, Houle, 1997, and Carver, 1997), putting the board at the top of the hierarchy and at the center of leadership responsibility. Based on a legal requirement and a moral assumption, the normative literature has advanced a heroic ideal (Herman, 1989) for nonprofit boards. As Hopkins and Gross explain in greater depth in Chapter Two of this volume, United States law holds that a nonprofit board is ultimately responsible for the affairs and conduct of the organization. The moral assumption is that the board conducts the organization's affairs as a steward of the public interest, in a manner consistent with the wishes and needs of the larger community. Notwithstanding the wide dissemination of this normative model, a substantial body of research over the past three decades (for example, BoardSource, 2015) shows the actual performance of boards often falls short of the ideal and is a source of concern and difficulty for chief executives. Much of this literature has been reviewed and summarized by Ostrower and Stone (2006) and Renz and Andersson (2013). Further, as they state in a report on a 2011 survey of more than three thousand U.S. nonprofit chief executives, Cornelius, Moyers, and Bell found that 67 percent planned to leave their jobs within five years and an additional 7 percent already had given notice to their boards and were in the process of leaving their organizations. In both this survey and an earlier (2006) iteration, they found executive dissatisfaction with board performance to be strongly correlated with chief executive turnover (Bell, Moyers, and Wolfred, 2006). Clearly the relationship between chief executives and their boards can be a difficult one.

The notion that chief executives are simply agents of the board cannot be supported. Recognizing that the relationship between boards and chief executives is more complex than the normative model envisions, many people have invoked a “partnership” or “team” metaphor to describe (and prescribe) the executive-board relationship. Such terms are more appropriate than the conventional model's depiction of the relation as superior-subordinate. However, the partnership and team conceptions remain misleading.

Middleton (1987, p. 149) used the phrase “strange loops and tangled hierarchies” to describe more accurately the complex executive-board relationship. Boards retain their legal and hierarchical superiority (and sometimes must exercise it), whereas executives typically have greater information, more expertise, and a greater stake in and identification with the organization. Thus each party is dependent on the other, but they are not exactly equals. This complex, interdependent relation is not fundamentally changed even when nonprofit organizations adopt the corporate model of designating the chief executive “president” and letting the executive vote on board decisions. Ostrower's study (2007) of U.S. nonprofit organizations based on a stratified sample drawn from the IRS form 990 database found that having CEOs as voting board members is negatively associated with the accountability practices of having an audit, a conflict of interest policy, and a whistle-blower policy, indicating some shortcomings of that practice.

The complex executive-board relationship can be better understood, and more effective standards and practices relating to the executive-board working relationship can be developed, if other organizational models are used. Herman and Renz (2004, 2008) have found that a “social constructionist model” of organizations provides important insights into the chief executive's organizational role and the dynamics of effective executive-board relations. In contrast to the managed systems model, the social constructionist perspective abandons assumptions of hierarchically imposed order and rationality, emphasizing that what an organization is and does emerges from the interaction of participants as they attempt to arrange organizational practices and routines to fit their perceptions, needs, and interests. The social constructionist model recognizes that official or intended goals, structures, and procedures may exist only on paper. Actual goals, structures, and procedures emerge and change as participants interact and socially construct the meaning of ongoing events.

In research on critical events in nonprofit organizations Heimovics and Herman (1990) studied the “self-serving” hypothesis, which holds that individuals see themselves as causes of successful outcomes and others or luck as responsible for failure. In studying local nonprofit charitable organizations, they found that in successful events board presidents, chief executives, and senior staff credited chief executives with contributing the most to that outcome, although presidents and staff also attributed high responsibility to themselves. In unsuccessful events, board presidents and staff, consistent with this hypothesis, saw the chief executive as most responsible, assigning less responsibility to themselves or to luck. However, in the unsuccessful events, chief executives assigned more blame to themselves than to others. Accepting responsibility for things not going well is very unusual (and may contribute to burnout and turnover). In short, all (including chief executives themselves) see the executive as centrally responsible for what happens in nonprofit organizations. What does the reality of executive centrality imply for more effective action?

I believe that two possibilities are indicated. One, since chief executives are going to be held responsible, they should take full control, running things as they think best. The board then becomes either the proverbial rubber stamp or a combination rubber stamp and cash cow. Obviously, there are many instances of this manipulative pattern. Alternatively, since chief executives are going to be held responsible and since they accept responsibility for mission accomplishment and public stewardship, they should work to see that boards fulfill their legal, organizational, and public roles. I believe that this second implication is the much wiser choice. Not only is it consistent with legal and ethical duties, but it is also more likely to enhance organizational effectiveness. I am not advocating that chief executives dominate or “demote” their boards. Boards, in addition to their legal and moral duties, can contribute a great deal to achieving their organizations' missions. What the research results and experience demonstrate is that chief executives can seldom expect boards to do their best unless chief executives, recognizing their centrality, accept the responsibility to develop, promote, and enable their boards' effective functioning.

Board-Centered Leadership Skills of Chief Executives

The view that chief executives must often enable and develop their boards' abilities to carry out their duties and responsibilities is based on research on the leadership skills of effective nonprofit chief executives. Herman and Heimovics (1990) wanted to determine what behaviors or skills distinguished especially effective nonprofit chief executives from others. A sample of especially effective chief executives was created by asking several knowledgeable participants in a metropolitan nonprofit sector to identify executives they judged to be highly effective. The nominators held positions—such as heads of foundations, federated funding agencies, technical assistance providers, and coalitional organizations—that required them to make and act on judgments of executive effectiveness. Chief executives who received at least two independent nominations as highly effective were included in the effective sample.

A comparison sample was selected from among executives who received no nominations and who had held their position for at least eighteen months. Executives from both the effective and comparison samples were interviewed, via the critical event approach. The transcribed interviews were coded by trained raters to note the presence of various leadership behaviors by using an inventory developed by Quinn (1983). Recognizing that a CEO's relationships with the board and staff would probably differ, the raters coded executive leadership in relation to each.

The results confirmed the importance of distinguishing between executive leadership in relation to the board and the staff. Analysis showed that executive leadership in relation to staff and in relation to the board are independent and distinct factors. Effective and comparison executives differed little in leadership with their staffs. The most important finding was that the effective executives provided significantly more leadership to their boards. This does not mean that the effective executives ordered their boards around. Rather, as the descriptions of their behavior in the critical events showed, the effective executives accepted responsibility for supporting and facilitating their board's work. The effective executives valued and respected their boards. As a result, they see their boards as at the center of their work. Their leadership is board-centered.

The comparison executives' relations to their boards often fit the pattern described by Murray, Bradshaw, and Wolpin (1992) as that of CEO dominance. In an Israeli study of nonprofit chief executives, Iecovich and Bar-Mor (2007) found CEO dominance to be the most common pattern and that although a number of variables were related to CEO dominance in bivariate analyses, in a regression analysis only the number of hours spent by the board chair in his or her duties predicted (negatively) CEO dominance. In a few cases the boards seemed to dominate the CEO.

The following six behaviors specifically characterize the board-centered leadership of the especially effective executives:

• Facilitating interaction in board relationships. The effective chief executive is aware of, and works to see that board members engage in satisfying and productive interaction with each other and with the executive. The executive is skilled at listening (that is, at hearing the concerns behind the words) and at helping the board resolve differences.
• Showing consideration and respect toward board members. The effective executive knows that board service is an exchange and seeks to be aware of the needs of individual board members. The executive also works with the board president to find assignments that meet those needs.
• Envisioning change and innovation for the organization with the board. Given their psychological centrality and their centrality in information flows, chief executives are in the best position to monitor and understand the organization's position in a changing environment. However, appropriate response to this external flux requires that board members be apprised of the trends, forces, and unexpected occurrences that could call for adaptation or innovation. The executive encourages the board to examine new opportunities and to look for better ways of doing things and better things to do. In short, the executive challenges the board consistently to think and rethink the connections among mission, money (and other resources), and management strategy.
• Providing useful and helpful information to the board. In addition to the usual routine information, such as financial statements, budget reports, and program service data, boards need relevant and timely information that can aid in decision making. Since the executive will have access to a great deal of information of all kinds and quality, he or she must find ways of separating the important from the trivial and of communicating the important to the board. One key rule followed by effective executives is “no surprises.” The temptation to hide or delay bad news is understandable, but it must be resisted. Effective executives realize that problems are inevitable and know that by sharing the bad news, solutions are more likely to be found.
• Initiating and maintaining structure for the board. Like other work groups, boards require the materials, schedules, and work plans necessary to achieve their tasks. Effective executives take responsibility to work with the board president and other members to develop and maintain consistent procedures. In many effective organizations, the board has annual objectives. It is important that the chief executive support the work of the board in reaching those objectives.
• Promoting board accomplishments and productivity. The effective executive helps set and maintain high standards (about attendance, effort, and giving). Through the board president and committee chairpersons, the executive encourages board members to complete tasks and meet deadlines.

These findings, based on research on nonprofit charitable CEOs, are reinforced by the results of research in general leadership. Based on his review and integration of the literature Yukl (2012) has concluded that several skills are the most important leadership functions of effective managerial leaders. Among those are (1) creating alignment on objectives and strategies, (2) building task commitment and optimism, (3) building mutual trust and cooperation, (4) strengthening collective identity, (5) organizing and coordinating activities, (6) encouraging and facilitating collective learning, and (7) developing and empowering people. The similarities of these behaviors to those discussed earlier are obvious.

Executives who have (somehow) learned how to use these leadership skills in relation to their boards, as well as their staffs (including volunteers), have hard-working, effective boards. It is not clear how some chief executives learned these board-centered leadership skills. Perhaps they had coaching in such skills by a mentor who has those skills. Perhaps they are people who have always been attentive and responsive to others. Perhaps they have developed such skills based on tacit knowledge (or intuition). Ritchie, Kolodinsky, and Eastwood (2007) found that nonprofit chief executive intuition was positively related to three of four organizational effectiveness measures. Clearly, work on understanding how board-centered leadership skills are developed is needed.

Leadership Across the Boundaries: Impact in the External World

As noted above, the board-centered executive is likely to be effective, in large part, because he or she has grasped that the work of the board is critical in adapting to and affecting the constraints and opportunities in the environment. In short, the effective executive knows that leadership is not solely an internal activity. Research specifically on nonprofit charitable CEOs (see Herman and Heimovics, 1990, 1991), as well as other research, suggests a number of specific strategies for enhancing external impact.

Using the Political Frame

Research has shown that not only do successful executives provide significantly more leadership for their boards than those not deemed especially effective, but they also work with and through their boards to position their organization in its environment. Special effort is extended externally across the boundaries of the organization to manage the organization's dependence on the factors that determine the availability of the resources to carry out the mission and to establish the legitimacy of the organization. In short, effective executives cross boundaries to seek and act on opportunities in the environment to help shape the future health and direction of the organization.

Effective executives have been found to be more likely than other executives to “frame” their orientations toward external events in political ways. This political orientation helps explain how effective executives work “entrepreneurially” to find resources and revitalize missions for their organizations.

Effective chief executives use a political frame to understand and deal with the challenges of resource dependency their organizations face (Heimovics, Herman, and Coughlin, 1993; Heimovics, Herman, and Jurkiewicz, 1995). A multiple-frame analysis for understanding organizations and leadership, developed by Bolman and Deal (2013), forms the basis for understanding the political orientation of the effective executive. Bolman and Deal identify four distinct organizational perspectives, or “frames,” that leaders may adopt to think about the many realities of organizational life: (1) structural, (2) human resource, (3) political, and (4) symbolic. Knowledge of these frames, their various strengths, and their appropriate use can help leaders understand and intervene in their organizations more effectively. The following brief discussion summarizes these frames.

In the structural frame, clarity in goal setting and role expectations provides order and continuity in organizations. Clear procedures and policies and the view of the organization as a rational and hierarchical system are characteristic of this frame. Adherence to accepted standards, conformity to rules, and the creation of administrative systems confer on the organization its form and logic. Following procedures (for example, personnel systems and board performance standards) to define individual and organizational effectiveness is also characteristic of this frame, as is the emphasis on certainty in mission and clarity of direction. Leaders who rely strongly on the structural frame regard effectiveness as largely determined by clear procedures and clear goals.

According to the human resource frame, people are the most valuable resource of any organization. The effective leader, as defined by this frame, searches for an important balance between the goals of the organization and the hopes and aspirations of its members by attending to individual hopes, feelings, and preferences, valuing relationships and feelings, and advocating effective delegation. Nonprofit leaders who use this frame believe in delegation because it not only “empowers” others to take initiative but also provides opportunities for personal growth and development. This frame defines problems and issues in interpersonal terms and encourages open communication, team building, and collaboration.

The political frame assumes ongoing conflict or tension over the allocation of scarce resources or the resolution of differences—most often triggered by the need to bargain or negotiate to acquire or allocate resources. As viewed within the political frame, conflict resolution skills are necessary to build alliances and networks with prominent actors or stakeholders to influence decisions about the allocation of resources. The informal realities of organizational life include the influence of coalitions and interest groups. Politically oriented leaders not only understand how interest groups and coalitions evolve but can also influence the impact these groups have on the organization. Those who use the political frame exercise their personal and organizational power and are sensitive to external factors that may influence internal decisions and policies.

According to the symbolic frame, realities of organizational life are socially constructed. Organizations are cultural and historical systems of shared meaning wherein group membership determines individual interpretations of organizational phenomena. Organizational structure, politics, and human relations are inventions of the cultural and historical system. Leaders evoke ceremonies, rituals, or artifacts to create a unifying system of beliefs. This frame calls for charismatic leaders to arouse “visions of a preferred organizational future” and evoke emotional responses to enhance an organization's identity, transforming it to a higher plane of performance and value (Bass, 1985).

Heimovics, Herman, and Coughlin (1993) began research on the use of frames by revisiting the critical-incident interviews that served as the source of data for Herman and Heimovics's (1990) work on board-centered behaviors and the psychological centrality of the chief executive. Analysis revealed that the structural frame was the dominant frame for both the effective and comparison executives. The substantial reliance on the structural frame may be a reflection of the attention paid by both groups of executives to aspects of events that may be relatively close at hand, immediately demanding, and perhaps amenable to action.

The use of the political frame differed significantly, however, between effective and comparison executives. The comparison executives were almost twice as likely to employ the structural frame and 70 percent more likely to use the human resource frame than the political frame. By contrast, the political frame was the second most common frame for the effective executives, who were almost as likely to use it as the structural frame. Most significant, effective executives were twice as likely as the comparison executives to engage in actions defined by the political frame.

The findings on the substantial use of the political frame by effective executives are reinforced by additional data. Most of the critical events described by both groups of executives occurred in the environment external to their organizations. Both effective and comparison executives were more likely to choose an external event than an internal event to describe as critical. Examples of environmental events were usually incidents that dealt with the challenges of resource dependency, such as mergers, alliances, fundraising strategies, legislative lobbying, collaboration with other agencies, relations with government officials, new program developments, or program decline. These kinds of events were distinguished from internal critical events, such as a personnel action or problems with implementing an administrative system or procedure. Analysis of the data by location of events (internal or external) was undertaken to determine whether this variable explained differences in frame use. Again, significant differences between in the use of the political frame were found in the two groups of executives. Comparison executives were substantially less likely to rely on the political frame than the effective executives were when dealing with events in the external environment of the organization, where the political frame is often likely to be most important.

Effective executives not only relied more on the political frame but also dealt with events in more cognitively complex ways than those not deemed to be especially effective. That is, effective executives integrate and employ multiple frames and do not rely on single perspectives, as the comparison executives do. It seems very likely that the use of multiple frames by effective executives contributes to a deeper understanding of the complexities and volatility of the leadership challenges faced in the fast-changing and complicated environment of nonprofit organizations. The ability of nonprofit executives to understand and act politically, as well as through other frames, in relation to complex sets of interrelated actors helps explain why some executives are more effective than others.

Heimovics, Herman, and Jurkiewicz (1995) provide an interesting extension to the findings about the political orientation of effective chief executives. They conducted a second, independent four-frame analysis of the interviews using Argyris's distinctions between espoused theories and theories-in-use. For Argyris (1982), espoused theories are values and actions about which individuals are conscious and aware and which they often use to describe (their) effective leadership as distinct from what they might actually do, their theory-in-use. An espoused theory could be considered a personal philosophy or a statement of a leadership belief, but it is not necessarily a description of a particular action taken. Argyris has shown that commonly there are incongruities between what people espouse as their leadership action and how they actually behave. This was the case in this research.

Recall that effective executives were twice as likely as the comparison executives to engage in actions defined in the political frame. However, both sets of executives were much more inclined to present (espouse) their leadership from the structural and human resource frame than the political. Furthermore, both the effective executives and those not deemed especially effective enacted more political behavior than they espoused. In summary, whereas the use of the political frame was the most strongly distinguishing criterion of executive effectiveness, executives without respect to effectiveness acted in political ways and advocated a less politicized philosophy. Why might this be the case?

The espoused structural frame argues for the importance of rationality and the values of structures that best fit organizational purposes and environmental demands. Apparently, nonprofit executives prefer to present themselves as structured and orderly and embracing of the human resource frame. Perhaps it is important to appear as if one is ordered and rational and concerned about others regardless of whether one predominantly behaves that way. Pfeffer (1981, 2010) argues that power is most effectively exercised unobtrusively and that overt political pronouncements are divisive and likely to be met with challenges. Wrong (1988) distinguished between political operatives who say and those who do. He concludes that the doers are more effective. In short, it may be important and effective to act in accordance with the political frame; it may not be acceptable to espouse this frame as part of a leadership philosophy. Nonetheless, the research clearly suggests that nonprofit executive leadership effectiveness must encompass the ability to operate within a political framework, regardless of the proclivity to espouse a political agenda.

Summary

Nonprofit leaders continually face the challenge of integrating mission, money, and management strategy. Both boards and chief executives play crucial and interdependent roles in meeting this continuing challenge. Both must ask, “How well are we collectively meeting our responsibilities—to define and refine the organization's mission, to secure the resources necessary to achieve our mission, and to select and implement strategies appropriate to and effective in mission accomplishment and resource acquisition?” Chief executives must ask this question not only of themselves but also in relation to their boards. Are their boards meeting these responsibilities? If the answer is yes, a chief executive will surely want to understand how this happy state of affairs has been achieved and take pains to see that it is maintained. If the answer is no, a chief executive will want to consider the following four fundamental executive leadership strategies. The research described here suggests that executives who use these strategies are more likely to lead organizations that effectively meet their responsibilities.

• Effective executives accept and act on their psychological centrality. The research shows that chief executives, board members, and others often regard the chief executive as primarily responsible for the conduct of organizational affairs. This is, I'm sure, a frequent fact of life in nonprofit organizations, no matter how strongly any of us might want it to be otherwise. This fact suggests that chief executives must often accept the responsibility for enabling their boards to carry out their leadership roles.
• Effective executives provide facilitative leadership for their boards. Boards can make a difference in how nonprofit organizations meet the challenge of integrating mission, money, and management. Boards are much more likely to be active, effective bodies when they are supported by a chief executive who, recognizing his or her psychological centrality, is willing and able to serve the board as enabler and facilitator.
• Effective executives emphasize leadership beyond their organizations' boundaries. Given the extensive dependence of nonprofit organizations on their external environment, executives generally recognize the importance of “networking” and other external activities for understanding the changes in that environment. Beyond the information-gathering value of external relations, some executives recognize the importance and value of affecting events in the environment. Exercising external leadership is difficult and demanding, since executives often can bring little, if any, financial or political power to bear. The leadership resources they are likely to have in greater abundance are expertise, trustworthiness, the moral stature of their organizations, skills in coalition building and conflict resolution, and their organizations' responsiveness to external stakeholders.
• Effective executives think and act in political ways. Effective executives are realists. They recognize and accept that their organizations and the larger world are composed of groups with differing interests. Thus an important part of the leadership role consists of building coalitions, bargaining, and resolving conflicts. Politically astute executives are not immoral or manipulative. However, they are comfortable with the fact that interests differ and sometimes conflict. They are also comfortable with and skilled at negotiating, compromising, and forming alliances, although they are unlikely to proclaim these political skills as an aspect of their leadership strategies.

These four executive leadership strategies are highly interrelated. An executive who enhances his or her board-centered leadership skills is also likely to become more attentive to externally oriented leadership. An executive who becomes more active in and skilled at leadership in the external environment will be likely to develop more politically oriented ways of thinking and behaving. Obviously, these skills are increments to a solid base of other knowledge and skills, such as those of program services, financial management, human resource management, fundraising, planning, evaluation, and the like. These board-centered, external, and political leadership skills are what distinguish especially effective nonprofit chief executives.

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