Self-regulation, Board Action Can Douse Potential Executive 'Flameout'
ANN ARBOR, Mich. Boards must be more active in reviewing the performance of nonprofit agency executives before many of them engage in behavior that could harm them, their organization or their industry, says a University of Michigan Business School professor.
Destructive behavior, or flameout, involves the inappropriate use of agency resources, embezzlement or sexual misbehavioroften a result when personal and agency control structure are not working well, says John Tropman, adjunct professor of management and organizations at the Business School and a professor at the University of Michigan School of Social Work.
Flameout, he says, occurs when an executive "goes down in flames." Calamity occurs when that executive takes his or her family and agency down with him/her, while supercalamity occurs when a whole industry is affected.
"Because of Enron, Health South, Tyco and others, many people feel that executive misbehavior is simply limited to the business community," Tropman says. "Nothing could be further from the truth.
"Governmental figures are involved as well. From Grover Cleveland to President Clinton, the presidency has been touched by scandal. And there have been significant numbers of nonprofit executives who have lost their jobs and harmed their agency and sector."
Some well-known examples of the latter include William Aramony of the United Way of America and Frank Hudson, the chief executive officer of Catholic Charities in San Francisco who was forced to resign after he spent nearly $73,000 of the charity's money on personal expenses, including cosmetic surgery.
Tropman says that senior managers are pushed to succeed and are rewarded for it, but it's important that they, as well as the board, be alert to the signs of impending calamity and move proactively to prevent such destruction. This involves self-regulation and board action to hold the person accountable before they flame out or turn to self-destructive behaviors that are extremely inappropriate and harmful, he says.
Apart from the personal damage, these calamities can violate the trust Americans have in their nonprofit sector.
"We owe our citizens better performance," says Tropman, whose work, "Flameout/Calamity in the Nonprofit Sector," appears in the journal Administration in Social Work.
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