Good Business People Don’t Always Make Good Board Members

I am the President of Ted Hull Consulting. I get to make all the decisions. Which clients will I serve? How much will I charge? And what brightness of photocopy paper will I buy when I stand in the aisle at Staples? I even get to decide how often and how well I clean the office. I am the President. I don’t have to collaborate and I don’t even know how to spell concensus. I am a business person.

So when I sit on a board it can create some special challenges for me. The board does not always benefit from my wisdom and years of experience. I cannot issue an edict and expect it to be carried out. So there is the temptation to wield whatever weight I can. “I’m not sure I want to put my money behind that” or “I would be reluctant to encourage people to support this initiative”.

A board needs to have a mix of gifts and perspectives. It should listen to the risk concerns provided by an insurance broker, look through the detailed eye of an accountant, use the wordsmithing capacities of a lawyer…and heed the entrepreneurial experience of a business person. But in the end, a board must be comprised of individuals who can collaborate and carefully consider the input of others. A board member must not sulk, pout or bully when his/her input is considered but not heeded.

If we all have the same view of an issue, all except one of us is unnecessary.

The command to “consider others” can be particularly challenging for those of us used to making all the decisions ourselves.

Why Boards Shouldn’t Approve Budgets

Definition of Budget: An idea about how much money will be received and spent. The board’s approval of a budget is its agreement that the Leader has an idea. No budget in history has ever been met. Anticipated expenditures are higher in some areas and lower in others, but never being exactly what was projected.

What does the board value. Let me correct that: what should the board value? It should value the ultimate purpose of the agency.  The details of how that happens should be of far less concern than the overall purpose of the agency.

For example, a mission agency exists to see that churches are planted in Cambodia.  The board approves $7500 for travel expenses. We already know that travel will not cost $7500. It may cost $7838.54 or $6994.13, but never $7500.00. At the end of the year what will the board care about? Many boards will be mildly concerned with the amount over budget and more delighted that travel costs were under budget.

I have now identified the values of the board. Spend less than management’s original idea. Keep costs down. It rewards the Leader for inflating projected costs and spending less than projected. But were the objectives of the ministry compromised by the savings? Suppose the under budget travel expense included a trip to Chile; having nothing to do with the purpose of the agency? That question is seldom asked. The board is more concerned about meeting budget than the values which should undergird the budget.  

So what should a board be concerned about as it relates to the budget?

It may want to see a budget that projects breaking even; and that is arguably a good thing. But the more important question is whether the Ends of the agency were advanced by the travel. It should be equally concerned if the Ends of the agency were materially compromised by significantly reduced travel.

Be clear about the value of accomplishing the reasons for the agency’s existence: seeing that churches are planted in Cambodia and done so without incurring a deficient.

 And ignore the numbers.

When Charities are Run Like a Business - Part II

In my last blog, we were challenged to consider our resources as something to be carefully invested. To simply take care of what we are without investing it in a Kingdom initiative which reaps significant returns is unacceptable.

We referenced the two parables which Jesus told in Matthew 25 and Luke 19 in describing the importance of creating an effective return on our investments. While the two parables look similar. There are some distinct differences.

•      Matthew 25 Jesus spoke to the disciples; Luke 19 He spoke to the multitude
•      Matthew 25 A landowner is going on a journey; Luke 19 A nobleman is going to get a kingdom
•      Matthew 25 The return of the landowner is imminent; Luke 19 The return of the nobleman is not immediate
•      Matthew 25 There appear to be three servants; Luke 19 There are ten servants

However, specifically note the following differences:

•  Matthew 25 Each servant receives a different amount; Luke 19 Each servant receives the same amount
• Matthew 25 Each servant appears to be given based on capacity; Luke 19 Each servant is given equal amounts
• Matthew 25 Inequality of capacity does not affect their reward
• Luke 19 Inequality of responsibility does affect their reward.

 With all these differences, Jesus chose to underscore one common theme. The anger toward the servants, who did not blatantly sin, but did nothing; they did no squander, waste, steal or even spend the owner’s money. They just did nothing.

This should be a caution to individuals and organizations. We must be careful how we invest and we must not be guilty of the sin of just safely maintaining what we have.

With that in mind, let’s run our charities because of what they are: Kingdom businesses that are deserving of all the divine wisdom and energy we have been given.

When Charities Are Run Like A Business

Periodically I hear the comment that churches or mission organizations are run too much like a business. I have never been quite clear as to why that is intrinsically a bad thing. It could be argued that if some businesses were operated with the same lack of strategic and fiscal diligence we give to churches, those businesses would have been out of business a long time ago.

Policy Governance^® describes the Ends of an organization as being what (the benefit), for whom (the beneficiaries), and at what cost (cost/value). Charities can do significant work in defining the benefit and the focus of those benefits, but with little or no consideration for the cost/value of those benefits.

Jesus used two different parables (Matthew 25 and Luke 19) to describe the importance of an effective return on investments. (You can look up the parables to see at least 10 differences). But the common theme in these parables is the anger of the master when he finds out that those to whom he has entrusted his resources did not invest them with passion and diligence. The stewards of these resources did nothing wrong: they did not squander the investment nor did they fail to take good care of the investment. Their sin was a failure to use what was entrusted to them in seeking to advance the kingdom of their master.

One of my desires in consulting with mission organizations, Christian schools, Bible camps, and churches is to assist them in the effective use of their resources by not becoming bogged down in the process of governance. Undue amounts of time can be wasted at board meetings and the governance process often fails to provide direction, but rather becomes a distraction. I recently attended the meeting of the board on which I serve where heavy issues were discussed with clarity and focus; with the board being very clear regarding its mandate. It was encouraging to serve with other women and men who were clear about their responsibilities and not distracted by the responsibilities of management.

In my next blog, we will look at some of the differences in the two parables which Jesus told. In the meantime consider how your investment of time, giftedness, energy and resources is being used; with a view toward personal safety or eternal returns?

Trusting Your Leader for the Right Things

Let me begin by begging you not to ask my wife if she trusts me. The reason being that the list of things with which she would trust me is much shorter than the list of tasks she would not delegate to me. For example she does not trust me to dress myself using clothes with acceptable colour combinations nor does she trust me to do anything in the kitchen except dry the dishes and empty the dishwasher. Anything more complicated than changing a light bulb will have her calling a handyman or handywoman.

But after forty years of marriage, she is at least able to articulate those areas in which she has trust and those areas in which trust would be sorely misplaced.

Boards and leaders often don’t get that far. While one board can treat its leader like knight in shining armour who can do anything, another board begins with the assumption that it must check everything short of whether the teeth of its leader have been brushed.

Trust is a word that one does not want to throw around without context or specificity.

A board must start with two opposing assumptions. The first is that the leader will not instinctively know what the board does not want. This limitation is combined with the leader’s humanity which at times will be characterized by flaws, shortcomings and a less than perfect memory.  The second assumption is that the leader is endowed with a level of competence that does not require the condescending input of the board. (If a board has concerns about the competence of its leader, that is arguably a greater commentary on the incompetence of the board to do its job in hiring a competent leader).

When a board delegates unqualified responsibilities to a leader, that is more a reflection of the board’s mistrust in itself than its categorical trust in its leader. It believes that it has nothing to offer in terms of the overall direction of the organization. This is not only untrue; it is an abdication of the inherent responsibility a board has to govern on behalf of its legal and moral owners.

On the other hand what about the board which feels the need to respond or weigh in on every decision a leader makes? This is often seen as a board’s fiduciary responsibility or its provision of sober second thought. (Does this imply that the first thought was germinated in the soil of non-sobriety?) But I digress. The reality is the board has failed to articulate (a) what ultimately needs to happen as a result of the organization’s existence and (b) what it has set as unacceptable actions or inactions in achieving the heretofore unarticulated results. This two-fold failure on the part of the board to do what is arguably its only reason for existing, leads to aimless wandering through the backwater of irrelevant minutia which invariably leads to it becoming entangled with the barnacles of extraneous detail.

Once the board has the destination in view and identified the reefs that need to be avoided, it can turn over the sailing of its ship to the captain it has hired.