Executive Director Management

Finding that perfect balance of power and productivity is one of the most common challenges that nonprofit leaders face. 

The board governance model is one of four primary nonprofit governance models. These organizations are structured to grant the power of governance to the board of directors and power of Executive Director management.

Unhealthy leadership cultures are often evidenced by one of two polarized governance styles: micromanagement or rubberstamping.

We will outline the top five responsibilities that governing bodies assume for the Executive Director (ED).

Understanding where the board’s responsibilities end and the staff’s begin is the first step to ensuring a positive and productive internal work culture

The Board’s Top 5 Responsibilities For Executive Director Management:

1. Hire a Qualified Executive Director

Start-up organizations often adopt a “working board” model due to limited funds or the desire to generate community buy-in with a 100% volunteer-led mission. The working board model requires that board members assume both the role of governing body and that of daily operating managers. An organization transitions into a “governing board” model when an ED is hired.

One of the most impactful decisions a board makes lies in the selection of an Executive Director. To fulfill the fiduciary duty of care, the board must engage in an intentional ED onboarding process.

“Fifty-three percent of nonprofits report having difficulty finding qualified candidates to fill fundraising jobs.” (Compass Point 2019 Nonprofit Study)

Essential steps in the hiring process require that the board consider the following questions:

  1. What experience/qualifications will allow our new ED to address the current realities of the organization?
  2. What skills will our new ED need to achieve our strategic plan goals in the coming 3-5 years?
  3. What specific duties fall within our ED’s job description? 
  4. What expectations do we have of our ED? (Number of weekly work hours, availability, etc.)
  5. What is fair compensation based on the job description and expectations (approved compensation levels to attract/offer candidates)?
  6. How will we market the job position to attract qualified candidates?
  7. How will we screen applicants to narrow down the selection of ideal candidates?
  8. Who from the board will create and engage in the ED hiring process?
  9. Who is authorized to extend an offer?
  10. What will the onboarding process entail and how will each board member participate?

2. Create an Effective Onboarding Process for the Executive Director

Once the ED is hired, the board must commit to an effective onboarding process. During the onboarding process, the board should confirm the following:

  1. Who will serve as the direct supervisor or point of contact for the ED? Some organizations establish the Board chair as the point of contact, member of an HR committee, or an officer from the Executive Committee. If a primary and secondary point of contact is not clearly established, miscommunication is more likely to occur.
  2. What specific measurable achievements will our board use to assess the ED’s performance?
  3. How often will our board conduct performance reviews?
  4. What will be communication and reporting norms between our board and the ED?
  5. How will the board address short-comings or incidents involving the ED?

3. Conduct Regular Performance Reviews of the Executive Director

As the “face of the mission” and staff supervisor, the Executive Director has the potential to make or break the organization. It is essential that the board conduct regular performance reviews of the ED to assess the following:

  1. Is the ED achieving stated goals on appropriate timelines? (If no, why not?)
  2. Is the ED operating within approved parameters (the vision, mission, budget)?
  3. Does the ED engage in a timely and appropriate manner with our clients and stakeholders? 
  4. Do performance measures need to be modified so they meet SMART criteria (Specific, measurable, action-drive, realistic/relevant, timely)? 
  5. How does the ED’s leadership style impact the internal work environment? (Positive or negative)
  6. What areas/opportunities for professional development should the ED explore to excel in the role?
  7. What support does the ED need from our board to overcome obstacles or achieve goals?

Regular evaluations should allow the ED to dialogue with the board, share concerns, exchange ideas, and confirm leadership is moving in the same direction. 

4. Compensate the Executive Director Fairly

Nonprofits, as purpose driven organizations, tend to attract ED’s who share a passion for the mission. However, keeping quality Executive Directors long-term continues to be a challenge for nonprofit. 

Voluntary annual turnover rate of nonprofit leaders is 19% — far outpacing the all-industry average of 12%” (ExactHire.com)

Annual trends indicate that small to mid-size nonprofit might expect to retain an ED for an average of five years.

Boards must remember that the heart does not pay the bills. 

Nonprofits can create toxic and unsustainable work conditions by failing to demonstrate the value of their ED though a fair compensation plan. Offering a base level salary while expecting the ED to work excessive hours is counter productive. Unrealistic expectations and under compensation often contribute to burnout, financial strain, and higher turnover levels.

Of the 45% of nonprofit Executive leaders who said they’d seek other employment, a plurality — 49% — said that nonprofit organizations do not pay enough. Additionally, 19% said that nonprofits do not offer good long-term career opportunities, and 12% concluded that nonprofits are not well-run businesses.”  

5. Fire the Executive Director When Necessary

Finally, it is the board’s responsibility to acknowledge when an ED is no longer a viable leader for the organization. Board leaders can be compassionate supervisors but must not abdicate the fiduciary duty of loyalty, which requires board members to put the well-being of the mission above all personal conflicts of interests.

Firing the ED can create upheaval within the organization and should be handled with care and under legal counsel. Board members should approve the firing process after carefully assessing the following:

  1. What precautions should the board engage in prior to firing the ED (Hostile transition procedures)?
  2. What succession plan will be implemented to ensure smooth operations until a new leader is hired? 
  3. What laws might impact the firing process? (Fire at will state? Discrimination? Unemployment?)
  4. How will the ED be informed of the decision to terminate employment?
  5. Who will notify the ED of the decision? 
  6. When will the termination take effect?

To learn more about nonprofit leadership and Executive Director management, check out Funding For Good’s upcoming Leadership Development Series: Leading With Intent.

Nonprofit Sustainability

Amanda Pearce
A grant writing expert, executive coach, and national fundraising trainer, Mandy Pearce, CFRE, launched Funding for Good, Inc. in 2009 to equip organizations with the skills and tools needed to become successful and sustainable.