Different Hats

Wearing Different Hats. Which one are you wearing now?

In any organization where people hold multiple jobs, it’s important to know what role you’re performing at any given time. I always thought of this as a hats issue.

The hats issue is a challenge all small organizations face as they get started. Consider almost all of your board members are also officers. There is nothing wrong with this. They just have to know which hat they’re wearing at any given time. A board member probably doesn’t concern himself with the day to day operations if there is an Executive Director in place. The board owns the mission of the organization and hires an Executive Director to execute the mission.

However, if a board member is ALSO the acting Executive Director, then day to day, he’s running the organization and making decisions on what to do to implement the mission. As acting Executive Director, he reports to the board. He is also ON the board. This is a potential conflict of interest and source of conflict since the rest of the board could terminate him as Executive Director at any time. (Depending on the organization’s bylaws, they could vote him off the board, as well.)

Think about when a typical nonprofit starts. There is no budget. The Founder is paying for expenses out of his pocket. There are very few volunteers, if any. The board is the founder and some friends or family.

The founder is Chairman of the Board (a Director), President (an Officer), leader of the volunteers (a staff position) and a volunteer (a volunteer position.)

Why does this make a difference?

Mainly, it makes a difference when the organization grows. As new staff is added, the founder may start giving up some of his roles. In this case, knowing which role does what function is critical, since those are the functions he is no longer responsible for doing.

So, after putting programs in place that are self-funding, with a little bit of extra money, the board decides to hire an Executive Director. An Executive Director is a misnamed position because it is usually not a member of the board of directors. The Executive Director is really the equivalent of the CEO, an officer.

The Executive Director runs the organization day to day. This means the Founder doesn’t have to do it anymore. Depending on how long the Founder has been “acting” Executive Director, letting go may be difficult.

Some Founders would want to have someone replace them on the board so they can continue running the organization day to day. However, the Executive Director works for the Board, not the other way around.

Many Founders do not understand this. Many Boards do not understand this.

If the Founder wants to become Executive Director (many do, so they can earn a salary), the Board would have to hire him. The Board would also set his salary. If the Founder is on the board, this is a conflict of interest – he would have to recuse himself from any salary discussions. He also can’t vote to hire himself. (If things go South, he can’t vote to fire himself, either. He could resign.)

So, keep track of your hats. Your goal is to give most of them to other people.