November 18, 2009

Meet Me in the Middle: Compromise in a Risky World

By Melanie Lockwood Herman

Compromise and consensus are common themes in the nonprofit world. When debating controversial issues we are eager to discount “extreme” views and look for middle ground. Compromise—“the middle way between two extremes” is intuitively appealing. But another definition of compromise—“settle by concession”—offers a hint of the downside of our compulsion to compromise.

As New Yorker columnist James Surowiecki explains in his book “The Wisdom of Crowds,” our zeal to reach the middle ground may inspire less than optimal decisions. We compromise when we fail to collect and analyze data that would enable us to make informed decisions. We enjoy the thrill of “seat of the pants” decision making more than our missions warrant. Our lack of desire (and in some cases, our inability) to make cost-benefit calculations is yet another form of compromise. When a proposed new activity requires risk-taking we too often prefer to back away rather than getting close enough to estimate the probability of success and identify strategies to mitigate potential losses.

According to Surowiecki, instead of working to reach the best possible decision, we sometimes “accept one that seems good enough.” Caution and compromise are lauded values in the nonprofit sector, and I would be foolish to suggest we abandon either. But the missions of our organizations matter. I encourage you to examine instances of compromise in your nonprofit and consider whether a different approach would better serve your mission.

• Performance Standards – Can you recall an instance where you were quick to offer excuses for poor performance by paid staff or volunteers? When you disregard poor performance are you protecting an employee from discipline and avoiding an uncomfortable conversation or compromising mission fulfillment? Do your supervisory practices align with fundraising and promotional materials that tout top quality services?
• Board Accountability – When two or more CEOs gather to discuss the topic of “governance” the topic of poor performing nonprofit boards is quick to surface. When in the company of a kindred spirit, nonprofit CEOs are eager to share stories of bad board behavior. Complaints about boards generally cover the full spectrum from disinterest and apathy to meddling. When I hear colleagues whining about their boards it occurs to me that accountability may be in the hands of the critic. What steps are you taking to inspire accountability by your board and increase the professionalism of your governance practices? When a CEO sits on the sidelines and merely observes an ineffective board, he or she is complicit in compromising the mission of the organization and the board’s potential to support that mission.
• Policy Design, Implementation and Enforcement – Nonprofit leaders generally understand the importance of policies to guide behavior and performance. Yet too few leaders give policy design, implementation and enforcement the effort the nonprofit deserves. It’s easy to visit a popular search engine and find an investment policy developed for an institution hundreds or thousands of miles away. But is that the best way to guide the investment decisions for your nonprofit? Designing custom policies that truly suit the culture, circumstances and resources of your nonprofit is a better approach. Establishing a code of conduct for participants isn’t rocket science. But confronting the parents of children who violate the code may require nerves of steel. When we adopt ill-fitting policies or ignore enforcement we compromise the safety of our clients and well-being and health of our missions.

Compromise is a basic instinct for nonprofit leaders. Discerning when compromise may impair mission fulfillment, however, is a skill we must learn and practice. Resisting the urge to compromise may not be easy, but it is necessary to protect the mission of your organization and your commitment to deliver on that mission each and every day.

Melanie Lockwood Herman is Executive Director of the Nonprofit Risk Management Center. She welcomes your feedback on this article and your questions about any risk management topic. Melanie can be reached at: Melanie@nonprofitrisk.org.

2009 and 2010 Webinars

The final program in our 2009 series of monthly webinars will take place on December 2, 2009 at 2 p.m. Eastern. The topic for the program is: Conducting a Youth Protection Risk Assessment. The program will examine the process of examining risks in a youth-serving agency as well as the design of appropriate risk management strategies for nonprofits serving children and teens. To register, visit: http://nonprofitrisk.org/training/webinars/webinars.shtml.

The Center’s 2010 Webinar Series will begin on January 6, 2010 at 2 p.m. (Eastern) with a dynamic program on nonprofit boards. The title of the first program is: House of Sand or Foundation of Stone: The Board of Directors/Trustees. During the webinar series kick-off the Center’s executive director will explore best practices and practical risk management strategies in the areas of board composition, board operations, inspiring a culture of candor (“culture of dissent”) and more. For more information on the 2010 series, visit: http://nonprofitrisk.org/training/webinars/webinars2010.asp.

Fall Issue of Risk Management Essentials Now Available

The Fall issue of the Center’s newsletter, Risk Management Essentials, is now available. To download a PDF of the newsletter, click here. To view the articles featured in the new issue online, click here. To request copies of the printed version for distribution within your organization, contact Sue Weir Jones at (202) 785-3891 or Sue@nonprofitrisk.org.

© 2009 Nonprofit Risk Management Center