 Welcome and thank you so much for joining us today for a nonprofit thought leader episode and today we have Jeffrey Wilcox CFRE and CEO of third sector company joining us from the Pacific Northwest and Jeffrey is going to share with us how you can survive executive performance reviews so stay tuned set aside any distractions that you might have going on and you make sure that you dial in and focus on today's conversation. We are thrilled to continue these conversations Julia Patrick is here as the CEO of the American nonprofit Academy. I'm here as well Jarrett Ransom your nonprofit nerd CEO of the Raven group, and we are so excited to have the continued support and investment from these presenting sponsors. You can see on the screen in front of you we highly recommend that you check these companies out. If you have not done so yet. We are really thrilled to have again their investment not only in the episode but truly their partnership throughout the sector at large so these companies exist to help you do more good, just as our guest is going to help you do more good in and around when it comes to your performance review so Jeffrey welcome back. Thank you. Always a pleasure to be with you I'm among friends. You know, we are always so interested in the things that you have to say because I feel like with the work that you do across this country. It gives you kind of like like us a different vision of what everybody's doing. And so it's really exciting to get you in at this point in time as we're finishing up the year. It's been another very interesting year filled with challenges and opportunities. And one of those things is going to be follow us, and that is the executive performance review. And so we thought wow this is a great time to talk about this. Because it's pretty daunting and I would imagine a lot of organizations last year said we've had too much going on so we're not even going to do it. We're going to pile it all on at one point. So we're really interested to hear what you have to say. So, right off, right out the gate. What do you mean this isn't a popularity contest. Yeah, you know, I think a lot of us, the first thing we'll say as well, you know, I want to like someone I want someone to like me. The difficulty with being the leader of a not for profit organization is you have to make some tough decisions have decisions about social problems and issues that are challenging people, families, communities, and our country. And you're not always going to make a popular decision in your leadership. And so what what what happens with a performance review is if we turn it into, well, you know, does everybody like someone that really challenges the effectiveness of someone respecting someone. And sometimes, you know, an executive director for not for profit organization is constantly earning the respects of a huge diverse group of people. So corporations Julia may have stockholders, but in nonprofits we have stakeholders, and their investment of sweat equities is important as a stockholders investment of financial capital. And anytime that we have not engaged someone into our cause and what we do that becomes a real issue for us and so we want to have leaders who are naturally catalytic and they are charismatic, but they make tough decisions and that's not always like. So let's get the idea about this is not about a popularity. This is about leadership. So, let's back up just a moment, because when you and I first started chatting about this. I immediately went into the financial part. I saw this as a salary review benefits review that whole thing. I saw this with a different lens, and I'm wondering if you could educate me and probably a lot of our viewers as to what the difference between a salary review and a performance review might be. I'm happy to do that because let's first of all talk about what a performance review really is and what it is is a demonstration of an organization's commitment to a culture of accountability and excellence in human resources. A culture of accountability and wanting to demonstrate excellence in human resources. And this joy is a piece of that, but it's not the entire pie. The accountability is, I need, I need you you need me we need each other and ultimately the community needs the impact of that. And so what I often say is an executive performance review is part of an accountability commitment that includes first of all evaluating the organization. You have to evaluate the board, and you have to evaluate management, because it takes all three in order to thrive in a community, allow me to say that again, you have to have an effective organization that is led by effective boards that has an effective leader. And here's the sad part about it. If the only one of that that that three legged stool is being evaluated guess what happens that one leg is held responsible for holding up the other two, because they were not hold it held accountable for their part of the bargain in serving the community. I'm going to say, you know, back to the popularity contest. I feel and you really made it so clear as you always do Jeffrey is if you're doing the job of the community, and to help provide a solution to the community problem. You're making really difficult decisions and you probably are rubbing some people the wrong way, but you're really keeping that mission focus and in alignment, which is the the number one job of the executive and the board. Yes, and you know what, let's change the language. Let's talk about it's one thing to rate somebody on on being popular. How about if we change that word to being purposeful. Because what happens is, when someone is purposeful, I may disagree with what they've had to say. But it's very clear that their intentions, their ethics, their behavior was grounded in a commitment to being a purposeful leader. And when we change the language about am I being purposeful. Am I being methodical. Am I being profound in how I approach difficult problems. You're not going to enter into conversations about no one human being can do that on their own. But a leader helps to facilitate and bring out in others the ability for all of us to be profound purposeful transformational and the result of that is we have a community impact we can all feel ownership in. Okay, so then given that I'm what I'm hearing you say is that it should be done at the same time if you're going to be doing a performance review. It should be with you know your C suite, your board chair, the board, I mean, is that true, or, or we separating these off. So let's, let's think of an evaluation, not as an event. We've got it as an accountability system. It is a process. It's embedded with how we work. It's part of our culture, which means at a certain given point in time in the year, we all come together and we evaluate our beloved organization that is the focus our attention. It's an impersonal look at the systems, the processes how COVID has impacted us, how our state has done us a favor or done us a disservice, but we get a sense of the state of our organization without any kind of personal comment about what we got there. So Julia that's the first piece. The second piece is we look at our governance is our board absolutely optimal in the community leadership that's stewarding this cause. And then we can say, now let's look at the management piece of this without an organizational assessment how do you have anything to base factually the performance of management on because you have no data on how the organization is actually tracking your own subjective on experience. And Julia, I got to tell you, here's where the Achilles heel comes in. You've got people who sit on boards, the total number of hours they've stepped foot in that organization over the course of a year is less than 24. And yet a person's career is hinging on that. Really? That is scary. Well let's talk about so there has been a lot over these last two years that have happened. We talked about, you know, the great resignation we've talked about how some senior leaders were really looking towards a retirement plan a succession plan. And many of them were like, I'm not going anywhere. I'm going to stay with you until the end. We're still, you know, not not sure when when the end is coming up when in this process because I heard you say it's not an event. It's a process and I appreciate that as well. And then do we consider negotiating additional benefits and perks, assuming we are staying and residing in this executive position. When is it the time to do the negotiating? You know, there's a variety of schools and thoughts on this, Jared, and I'm just going to I'm going to call out that there are varying opinions about this. And I've asked for mine and I have seen a lot of these done. And so, first of all, I'm going to tell you it depends on what state you're in. Because in the state of California, for example, if you're in an organization that meets certain criteria around what they call their nonprofit integrity act, there actually has to be a separate compensation committee. And so, and this was all from as a result of the Enron, which was how are organizations actually providing stewardship to the sorry administration by law in some states this has to be two separate processes. It has to be a group of people that are looking at how is your salaries in line with the marketplace. I believe it should be two processes and I'll tell you why. Because you should be negotiating your additional quirks, but the board has a responsibility to have a reserve of dollars in which for negotiation to take place, which means you have to constantly be asking, is this position at market, whether the person has earned it or not. You have a responsibility as a board to begin to have reserves that puts the organization in a negotiating position. I tell you, I've seen executive directors not negotiate I've seen executive directors big. And the reason why is because the organization has not stepped up and said, we have a salary administration responsibility, which means we have a reserve to pay our people at markets. We have a reserve to consider reasonable increases. We have a reserve to do replacement costs, which could include a search firm. We also have the ability to think about sabbaticals and perks cost money. So if we don't build into our investment portfolio, the investment of people. This negotiation becomes a little bit of a bartering system. So here's the here's the short answer to your question. You need to have a good performance review to understand how you've done and how to have an accountable organization. You step back from that and say as a result of that process you now move into a negotiation process. I appreciate you mentioning the different states because there are requirements and, you know, regulations that differ between our states and the California example is a perfect one. And, you know, third sector company works across the nation even into Canada and maybe maybe further since since the last I know. So really having your finger on the pulse I so I'm so appreciative of your knowledge Jeffrey, because that is something that I don't quite think many, many leaders are really, you know, in tune with and I know now with a lot of our teams working remotely maybe not the CEO but it's really about where that person resides, you know, and so while your team previously could have been all local in your community, during the last two years we found that many of our workforce has taken this opportunity to relocate, which now makes you a multi state employee regulation and that that changes changes policies. And Jared you're hitting on something that I think is the surprise actually the sobriety test for boards. We're talking about executive performance reviews today, but this is really about human resource law. We're in the we're in the interim executive management business that's what third sector company does to pay us mortgage. And unfortunately, the vast majority of people who call third sector company have had a bad performance review, and are going to leave their position and need an interim. And I can tell you that boards are not completely safe from being bad human resource directors cannot do a performance review that would break the law. You cannot come after a person for who they are in their personhood you cannot write things. We sometimes forget as nonprofits that we have a tax status, but that doesn't change the fact that we operated a state and we're an employer in a state. And whether we're for profit or nonprofit, our employees have certain rights that did not end by coming to a not for profit organization. And the informality of boards, and sometimes think well because we're not profit we can know we can operate a little differently. And I will tell you, courts will not agree with you on that if there has been mistreatment harassment, there has been unfair or a wrongful termination tax status has played very little roles in the determination of courts in those areas. So let me ask you this question, because you're, you're bringing up these things that are really important. And in my perspective and I don't know Jared what you think. I feel like a lot of boards don't get this. And so in the same, same place, you're asking that person for who's going to be reviewed to also educate their board on what the process is. And that seems to put that CEO really in a bad way I mean how do we mitigate what needs to be done, who's explaining that to the board, and then ultimately that CEO is going to receive that information and seems kind of wacky but I don't, I don't know how you get around that. That's such a great question Julia, because every study that's ever been done has shown that not for profits are lagging in the discipline of human resources, it's one of the last professional staff positions that is ever, ever put on the books. And so we as board members have to ask ourselves two questions. We have a responsibility when we are recruiting volunteer talent to our boards is do we have people who have competencies in talent development talent retention and talent evaluation. It is such an important commodity when looking at the towns that we're looking for that comprise our boards and our volunteer efforts. And I will tell you, it is well, well spent money to invest in a human resources consultant for an organization to guarantee both to the board to the executive to the staff and to the community that a fair and equitable review has taken in terms of the leadership of the organization by an independent third party. It is such a wise investment to look at a potential consultant to help in this area. And I will tell you because, you know, full transparency I've been through the interim executive academy and as I serve in this placement. HR Jeffrey is one of the top topics that comes up of my suggestions during the organizational health assessment is identifying a lack of expertise in that space. And so I appreciate you, you bringing that up and I know we don't have too much time with you but I want to ask you, if you would be willing to share with us, what are some of the trends that we're seeing currently in the performance review process. Well, you know, as you talk about what's happened with COVID and what's happened with, you know, our, we have fewer and fewer performance reviews taking place so one of the current trends unfortunately it's not a good trend. I'm going to talk in just a moment to I think what is the target of your question, but I got to start with the reality of the question is the current trends is there occurring less because of the operating environment we're in. That's just not good for everybody and at all. Now, what are the real trends that are occurring in performance reviews organizations are thinking that the old fashioned 360 that has been done in not for profit in for profits for years is not a fair assessment and nonprofits, because of the, because in a corporate environment you have protected touch points in a not for profit environment you have a dynamic touch point. What's happening is we're, we're doing a lot of performance reviews no longer by tabulation and survey we're doing it by interview. Talking with people, you know do you tell me about your experience working with Jared how did that feel, and it's making more people accountable because I will tell you that in personal performance reviews, invite passive aggressive behavior. I'm hiding behind making accusations and don't have to say anything about it other than write some stuff on a survey and send it in. And that's just not working. So the first trend is a lot more interviews are being conducted to get evaluation. It's not one of talking to everybody it's talking to a representative group of stakeholders and forming some consensus. Here's the other thing about trends and performance reviews. This is the nature of figuring out of setting a policy boards are now setting policy that says a performance review has to be conducted by x day each year. Not when we get around to it. Okay, because some board chairs will do it in June and other board chairs will do it in August that's not fair. You're seeing a much larger tendency to say we have a policy about when it's going to be done. And number two, we have a policy about how it's going to be done. And number three, the board chairs process they use their corporation they bring it over to the nonprofit. It's a representative constituency of diverse people and voices. It's an equitable process. And this is how it's done. I love that and I think that that helps with just the administrative aspect and continuity of leadership because if you're moving through, you know, board leadership at a pretty rapid clip like so many, you know, organizations do. You're starting all over, and if you can have some of these policies set up. Everybody knows what's going to go on it's it's an expectation issue for me. You've got to get these things if you will calendarized in essence, in essence, so that we're all grown in the same direction. You know, and you're so right to you because if we go back to the basics of what constitutes a good review. I don't want to leave today's program without you know answering that question. I think a good review has the following attributes. Number one, a group of people have agreed on what organizational success looks like. And therefore we can have a conversation about what board and management success looks like. How can you manage performance or measure performance if there hasn't been going into the transaction. I'm going to agreement on what success is. And you know, I'll tell you, Jared, the number of boards when I say could you please tell me what constitutes success for your executive director. That's that that is a family feud game where nobody gets the first three answers. That's exactly right what are the top priorities of your executive director. And the people, it's their priority, their force to be the board the executive director's priority. And wow, that's a big change now here's your bonus question from today's game show. An executive director if there's a board of 20 people. How many bosses doesn't executive director have. Yeah, there is varying opinions on this. But I will tell you when I counsel on this, there is a difference between your supervisor and your management team. And I have to tell you the board chair is your supervisor. You cannot have no employee can have 20 supervisors. Can you imagine in a corporation Julia where you walk in and you say okay you're a C sweet exec and guess what you're going to report to 20 people. Everybody take that job. So we have to ask ourselves. Yes, the board is the employer. Now here's the question was the supervisor. Every good employee deserves a good supervisor. If you want to be a good employer. Yeah, I love that I love the way you phrase that. Otherwise there's a lot of dotted lines to those 20 individuals and I'm curious Jeffrey because I again, I want to make sure that everyone who is listening to this thought leader episode. And maybe some some thoughts are coming to mind to say that's not how we do it I would love to change how our performance reviews are done. We are using that 360 we did have someone from corporate say here this is what we do why don't you just do this as well. Might we engage in a different conversation with our board and leadership to start the paradigm change to shift into a process not an event and to really have this equitable process in place as you have described it. I think there that is that is such a great question because we have to attack it from three different ways Jared. Number one, I think there has to be a definition of what is the difference between leading a corporation and leading a cause. And you want an executive performance that is based on people who are leading causes. So we have to agree as leaders. Number one, our executive director plus me as a board member plus me as a C sweet person. All of us are here as leaders of causes and what are the attributes of cause based leadership versus corporate based leadership. I don't want to make them mutually exclusive but I want to tell you they are variations on a theme of this or a piece of music. And number two, we also have to understand what success looks like. Because I think we're going until we understand what success looks like a 360 is nothing more than a methodology. And if we understand that what we're trying to accomplish is organizations the following pieces of success. I think we're going to find that a 360 is not probably a fair way than the methodology to see if we actually were successful. That's the difference between popularity and purposeful. Yeah, yeah, that has been great and I, I, I appreciate the higher level thinking on this, because it seems to me, Jeffrey, a lot of the points that you've raised, they go well beyond the topic of performance review. I mean they really become a way of thinking about your organization thinking about management. And it seems to me if you can get your, your organization to be kind of changing their mindset. This is going to impact many different parts of the organization. It's pretty substantial. It's quite well taken because we tend to focus on the content of the review, and really what we need to be focusing on is the context of the review. Yeah, and we all walk into the boardroom into the organization with our own context and that's great but that's a starting place not an ending place. And Julia, I want to tell you why this is so important, because we have a lot of executive directors who've been the victims of bad performance reviews. These communities have lost these assets. These are men women and people who said, I want to get up in the morning and I want to make a difference in the world. And they were put through a process that turned them off and turn them out into the street is unemployed people. And I have to tell you I appreciate talking about this, because when we talk about raising resources for organizations, raising up great executive directors needs to be among the top of the list, because we can raise a lot of money. But if we're not raising up good leadership, we're not going to leverage that money for the good it's supposed to do for the communities who want to see thrive. Yeah, exactly. Well, I don't want to let you go today without talking about third sectors, really interesting Academy piece and I don't even know if you've got room, because this is coming up on December 1 so I should have asked before I put this up together. But I know, major, this is a program that you went through. I did yes so I've gone through this one as well as the board chairs Academy so if you are a board member and you were thinking, I have a responsibility in this performance review process I highly recommend that you check that out as well. But this opportunity that you see before you is exactly where I met Jeffrey it's exactly how we've become fast nerd friends. And, yes, so this introduction to interim executive Academy this new cohort starts on the first of December. So Jeffrey, do you have space. Yes, we do have space and this actually is just an overview introduction. Anyone who is interested or thinking about maybe I'd like to be an a strategic transitional leader now we use the word interim because that's what everybody uses. But if you're really interested in learning become a strategic translational leadership, a leader for an organization. We'd love to have you in the Interim Executive Academy and come find out what it's all about it's totally free. It's a 938 Pacific time. Yes, please do check that out check out third sector company, Jeffrey his team, they again work throughout the US and Canada. So much information, these individuals are knowledgeable they are experienced. And also the board chairs Academy, I highly recommend that because there cannot be enough education for our boards and that is so needed in around throughout our communities. Jeffrey, you're always a joy to speak with I always learn from you. And I'm so appreciative that you came on to join us for the episode and to be a thought leader so thank you. My pleasure. Amazing and Jared and I are always so grateful for the different perspective you bring to what has really going to take our nonprofits to the next level and so it's so critical. And I think, you know, Jared, knowing you and having gone through your trainings. It speaks volumes and so we're really, really privileged that you are in our orbit as we like to say. Also in our orbit or our are all of our sponsors and we are incredibly grateful for them, because they allow us to have these amazing discussions. And day out we're well past our 400th episode as we finish up the year and so it's pretty ding dang exciting for all of us here don't you think Jared. Very exciting yes and as Jeffrey said, I remember when so a lot a lot has changed and we are moving forward into the new year as well. I'm so grateful to have you on again Jeffrey. Thank you because you have been a staple of knowledge throughout our last 400 plus episodes. Highly recommend everyone check out third sector company and Jeffrey and his team phenomenal. I hope that everyone will join us here tomorrow and the way we end every episode and we mean it is we ask you to please stay well, so you can do well. Thank you everyone for joining us and thank you Jeffrey.