Bob Harrington // January 07, 2014 14:05
When two or more nonprofits decide to merge, there is generally a lot of interest, inquiry, and work regarding the integration of staff — and staff cultures — of the organizations. This is to be expected, and is essential for a merger to be successful. The integration of the boards of the merging organizations can be equally critical, though it often does not receive the level of attention it deserves.
Boards of directors can be very different in their cultures, philosophies, and levels of engagement prior to a merger. Some of these differences (such as how boards make decisions) may become evident during the merger negotiations, but others (like their respective roles in fundraising) may not. Once a merger is approved, the integration phase of bringing the organizations together must include establishing mutually agreed upon expectations and responsibilities for both the board as a whole and for individual board members coming onto the merged board.
Using a board assessment framework can help in clearly identifying the differences and potential conflicts needing to be addressed during the integration of the organizations. Areas to assess include:
- Mission and Vision: During negotiations, the organizations will ascertain the level of alignment in their respective missions and visions. However, it is generally after the decision is made that a merged mission statement is finalized. This is a great area for a merged board to begin working on together — at the heart of the merged organization.
- Strategy: A newly merged organization needs to create a unified strategy to guide its work going forward. Engagement in a large-scale strategic planning process can be a challenge during a period when an organization is putting its energy and time into integration activities. A more efficient strategy development process such as Real-Time Strategic Planning can help the board and staff leadership quickly create strategies around the most significant issues and opportunities facing the organization.
- Fiscal Management: After a merger, the board needs to be in agreement on the process of financial oversight. Assessment in this area can ensure alignment on what is necessary as part of the fiduciary responsibility of the board while avoiding involvement in day-to-day financial management, which is a staff responsibility.
- Risk Management: A merger provides an opportunity for the board to assess its risk management role, which includes maintaining adequate insurance, monitoring potential sources of risk, and ensuring that staff is engaged in the implementation of risk management procedures. This is important, as mergers may entail expansions in program activities or other factors posing new levels of risk.
- Resource Acquisition: Boards of two or more merging organizations often have very different experiences in and expectations for their involvement in fund development, from event planning, to donor identification and approach, to personal contributions. Managing and aligning these expectations as a merged board can be a challenge and needs to be addressed in the integration phase.
- Program Effectiveness: Developing a process for appropriate program monitoring is also important for a merged board. Consider the respective roles of the board and staff so that the board is not engaging in micro-management of programs or staff, while at the same time, the board can depend on staff for timely reporting and appropriate evaluation of program effectiveness.
- Public Relations: The first 6-12 months right after a merger is an important window of opportunity to enhance the organization's public image. There is a natural curiosity about what a merger means for an organization, providing the potential for increased media coverage and opportunities to heighten awareness among current and new supporters. Assessing and coming to agreement on the merged board's role in this area, including how individual board members are expected to serve as ambassadors for the merged organization, is especially critical during this early phase.
- Select, Supervise, Support, and Review the CEO/ED: The relationship between the board and the CEO/ED is critical to all nonprofits. A merger often means that at least part if not all of the board will be working with a new CEO/ED. This relationship can be further complicated if board members are not in alignment about their supervisory role moving forward. The merged board will need to ensure that there are common expectations for this relationship, and that the board does not become overly involved in the operational roles of the CEO/ED.
- Board Engagement, Structure, and Culture: Successful boards are engaged boards, and the successful engagement of board members is often tied to the creation of an efficient board structure. A merger provides an opportunity to evaluate what has worked for each of the organizations and what changes would be helpful as the newly merged organization integrates its governance structure. Embedded in this area, and as a thread throughout the board assessment, is an understanding of the respective board cultures (norms, styles, traditions, etc.) and the formation of a new, unified board culture for the merged organization.
When two organizations have gone through the process of negotiating a merger, they often find themselves more open to change. We encourage organizations to take advantage of this openness to review their governance philosophy and practice. A board assessment framework can assist in the evaluation of potential changes that can enhance the functioning of the merged board and the organization as a whole, ensuring strong integration and setting the stage for success.