3
Catalysts and Watersheds
You never want a serious crisis to go to waste.
—Rahm Emanuel, Mayor, City of Chicago
Julia Hamm is president and CEO of the Solar Electric Power Association. Until 2003, SEPA had been run by a management services company. Hamm came on board as the first actual employee in 2004. She recalls the board she inherited:
There were no continuing programs and no infrastructure; we had to build from the ground up. We had a very hands-on operating board (midlevel managers from the companies within our membership), and we largely needed them to be active in this way.
But around 2008, we skyrocketed. The industry was changing and our organization gained prominence because of what was happening with the growing need for changes in the world's energy resources. Solar was no longer an afterthought. We grew very quickly, from one to twenty employees, from a hundred to a thousand members, from a budget of $300,000 to $6 million. It became clear to me that we no longer needed the board to be involved in day-to-day operations.
As will be shown in SEPA's case, described in full at the end of this chapter, transformational or other types of change often occur through what Lynn Isabella (1993, p. 18) describes as “trigger events.” These are catalyzing events that require a full organizational reaction and may precipitate new behaviors and mindsets on the part of leadership.
Their magnitude and potential for organizational [and] personal impact set in motion a series of mental shifts as individuals strive to understand and redefine the situation. By their very nature [trigger events] unbalance established routines and evoke conscious thought on the part of organizational members.…In short, trigger events bring people's mindsets into the arena of change.
Trigger events describe situations that an organization may not be able to address through pre-established organizational routines. And in the case of the stories in this book, the trigger events caused board members and staff to realize that their organization could not respond without a better board. In the general management literature, trigger events may include mergers, relocations, new leadership, reorganizations, downsizings, rapid growth, new strategic directions, or unanticipated crises (Isabella 1993). In the following section, we describe the patterns of events that triggered governance change in organizations studied for this book.
Concepts and Application
Many Windows of Opportunity
Chicago Mayor Rahm Emanuel's quote at the beginning of this chapter closely mirrors what we heard from some of our interviewees. Wylecia Wiggs Harris, COO of the American Nurses Association, also observed, “Don't waste a crisis.” The point illustrates two important ideas: First, organizational leaders must recognize that any new event—whether a crisis or a grand success—may offer a window of opportunity for a new outlook on governance. Some events challenge an organization's very survival. We heard stories of lawsuits, deaths, and other serious crises. These events could be quite traumatic, as our stories will relate.
Other times, there was no crisis at all, just opportunity. As David Harvey of the Society of Estate and Trust Practitioners told us:
We were lucky we were not in a crisis situation. We had recognized the need for change before change was desperately needed. It's harder to enact change when it's forced upon you.
Some catalyzing events could be described as a gentle nudge—a simple question about term limits or board member recruitment that started a generative conversation about improving the board. Tracie Kenyon of the Montana Credit Union Network recalled:
Members were already having a conversation about “redistricting.” I said, “Don't you really mean governing?” But not all of our board members felt this way. I told them there are two sacred cows in associations, the dues structure and the governance structure, and we need to talk about them both every year. We can't just leave the elephant sitting in the room until the elephant is dead. So we started to have the conversation. The dues conversation happened first, in my first year of employment. That was the low-hanging fruit—easier to talk about, so that's where we started. It helped to foster the culture we needed for governance change later.
What made the outcome successful for the people behind these stories was the will to seize opportunity. Shannon Carter, CAE, of the Competency & Credentialing Institute (CCI) recalls:
When I arrived CCI was in a turnaround situation. Not financially—they were solvent—but they needed to move to a more effective model of governance for this organization's life cycle. It was an outgrowth of some painful board–staff relationships. The board recognized that change was needed.
Many Starting Points
The second idea is that governance change does not share a single starting point. An analysis of the initial catalyzing events for the board changes we studied identified two major sources, which we have termed “insider action” and “unexpected events,” displayed in Table 3.1. We also display both possible negative outcomes as they were described to us and strategies for success suggested by the association leaders we interviewed.
Table 3.1 Starting Points for Governance Change
| Catalyzing Events | Examples | Possible Negative Outcomes | Strategies for Success |
| Insider action | Board initiates change. | Staff resistance to new ideas. | Communication. Invest in professional staff development. |
| Current CEO initiates change. | Board resistance to new ideas. | Board education. Scout for new board members as change agents. | |
| Board hires CEO as change agent. | Membership or section resistance. | Transparent and inclusive change process. | |
| Unexpected events/shocks to the system | Regulatory level: Change to state nonprofit law forces bylaws change. | Board caught by surprise. Section resistance if forced to change bylaws to conform with national board. Member resistance to sudden end to shared governance. | Advance awareness of legislative trends and of Model Nonprofit Corporation Act. |
| Organizational level: Fiscal crisis, rapid growth, rapid decline, scandal, merger, turnover, new accreditation requirements. | Challenges of dealing with a crisis while addressing governance change. | Clearly defined roles and responsibilities for crisis management (i.e., organizational spokesperson, common messaging). Developing a two-track system for dealing with crisis and dealing with change. | |
| Board level: Major policy disagreement, lawsuit. | Board factions, dissension. | Active communication; use of outside facilitation. | |
| Staff level: CEO departure, health crisis. | Board or other staff respond to fill the “leadership vacuum”; get in the weeds; power grabs; confusion. | Predetermined Emergency Succession Plan in place that gets activated. |
Insider Action
Practically speaking, all governance change begins via insider action, since a board is legally responsible for changing its own structure. Our research discovered two kinds of change agents operating from within: executive staff already employed within the organization, who initiated action, or board members who did so. As Table 3.1 reflects, what these organizations experienced and what strategies they used to guarantee success varied as well. We briefly list here and will discuss in more detail in Chapters 5 through 7 the suggested strategies for board-led, staff-led, and jointly led governance change.
Here are two comments we heard in cases where association executive directors served as the change agents:
- “When I joined them 12 years ago, they were in the middle of a significant financial crisis. Actually, the upside of it meant that they were willing to listen to me because there were some emergency measures that had to be taken.”
- “When I was hired, the board was comprised of two factions. They were almost at war. No trust, little communication. They were losing money, were not following policies and procedures, and it was somewhat political. With work the result was a more knowledgeable, visionary board. Infighting stopped. More open communication. Better overall relationships across the board. Everyone developed trust and confidence.”
However, as our analysis found, the most common trigger events came from the board members themselves, particularly when new members brought knowledge about good governance with them:
- “Several board members ran on a change ticket.”
- “We had a couple of board members who knew there was a different way to do things because they had prior governance experience.”
- “The board decided to do a strategic planning session that had previously been run and supported by the staff. This led to a larger level of engagement.”
In some instances, boards recognized the need for change and hired their next CEO as a change agent. Study participants observed:
- “The board realized they could not get out of the weeds until they hired somebody to take care of the weeds for them.”
- “Our evolution started with the commitment to hire the first association professional.”
Sometimes, the first inside person to recognize a need for change was the board's presiding officer. We heard the following accounts from executive directors:
- “The chair told me he was tired of sitting around and seeing the board not doing anything.”
- “I wasn't looking for something new for my sake. Things were going well. And an executive director needs to deliver the means and not the ends. So for the president to say, ‘Let's look at this,’ was significant. It was so great for somebody else to pose it.”
Unexpected Events
Organization leaders also recounted many examples of unplanned change that began as a result of an external shock to the system, crisis, or other unplanned event. These events caused board members and staff to recognize the need or opportunity and galvanize the organization into action (for observations on how such events change perceptions, see our section on Malcolm Gladwell's “tipping points” in Chapter 4). Our analysis of these stories suggests four levels of external influence on the governance system: regulatory-, organizational-, board-, or staff-level events or crises.
At the regulatory level, we have already heard one story of an association, AOTA, that took advantage of a change in public law to restructure its board. AOTA's story is interesting in that its leaders were already involved in a deep, somewhat painful, but also generative discussion with members about effective association leadership. Since they could not put off the need to revise bylaws to conform to public laws, the new nonprofit incorporation law served as a useful tipping point toward governance change that was already underway.
At the organizational level, fiscal crises, rapid growth, scandals, and new accreditation requirements caused a variety of responses by association boards. In some instances, having any change thrust upon the entire organization generally fostered a healthier outlook among board members about governance change specifically. Dorothy Mitstifer, executive director of Kappa Omicron Nu, described how a merger between two associations caused her board to easily accept the need for governance restructuring: “After the merger it wasn't strange to look at something new.”
At other associations, leaders pointed out that major organizational events required their board members to evolve to be more effective during the transition. In the words of S. Joe DeHaven of the Indiana Bankers Association: “We had to have good board leadership during that change. Every aspect of the merger had to be battled out.”
At the board level, dissension and bad internal politics can force the board to hold a mirror to itself. But we did not hear many stories about entirely dysfunctional boards, and that fact suggests that healthy governance change is usually preemptive and occurs before an association's board has reached the point of failure.
And while a board may initially feel a need for some kind of change, sometimes it takes a new CEO to clearly articulate that change is not just needed but imperative. As will be shown in the case of the Association for Corporate Growth at the end of this chapter, board chair Chuck Morton noted: “When [our new CEO] came, all of our organization's records were in the trunk in a staff member's car. We were a mess.”
Finally, at the staff level, association boards may be forced to confront change—or may find new opportunities—when a longtime executive director departs. Our interviews reflected two circumstances where unexpected staff changes impelled governance change. In some cases, longtime (sometimes founding) executive directors had prevented change from happening. In other cases, longtime executive directors clearly saw the opportunity for change and sometimes even facilitated governance change in the course of their departure. In both cases, a CEO's retirement or passing required the board to step up and accept its responsibilities. Dennis Simmons, AAP, recently retired CEO of the Southwestern Automated Clearing House Association, told us:
I've been with the association for almost 18 years. I told my board that someday I would like to retire! I was the catalyst but when the light bulb went on, the board got over its denial that I was leaving. One of our board members was going through a similar process herself and she became the driver for succession planning.
Summary
These paths to governance change reveal many starting points and suggest organizations can take advantage of many windows of opportunity to achieve governance change. This diversity in unfolding events has its own contradictions and dynamic tensions. In some associations, change was bound to happen and insiders simply recognized and facilitated the opportunity to grow, whereas in others, someone forced change upon an unwilling organization or board. In some cases, change was brought on by a budget crisis or other need, but in others the evolution of the board was supported by healthy growth and new resources. Some change was staff-driven; other change was board-inspired (Table 3.2).
In some associations, change was bound to happen and insiders simply recognized and facilitated the opportunity to grow, while in others, someone forced change upon an unwilling organization or board.
Table 3.2 Catalyzing Events in Governance Change: Three Major Dimensions
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The stories we heard do suggest that each dimension of these catalyzing events has its own particular challenges. For example, need-driven board change involved some painful transitional periods for boards and staff dealing with the stress of financial problems. But change agents who initiated a board restructuring when the organization was healthy struggled with other challenges, mostly of the “why fix what isn't broken?” kind. Understanding board change from this multidimensional perspective also brings home the point that regardless of who starts the ball rolling, everyone will need to be involved in the outcome. The following two cases—Solar Electric Power Association and Association for Corporate Growth—illustrate how associations leveraged opportunities for board change by taking advantage of growth.