Self-regulation, board action can douse potential executive 'flameout'

06/14/04

ANN ARBOR, Mich.---Boards must take a much more active role in reviewing the performance of non-profit agency executives before many of them engage in behavior that could harm them, the organization or industry, a University of Michigan professor says.

Destructive behavior, or flameout, involves the inappropriate use of agency resources, embezzlement or sexual misbehavior---often a result when personal and agency control structure are not working well, said John Tropman, a professor in the School of Social Work and adjunct professor in the U-M Business School. Flameout occurs when an executive goes down in flames; calamity occurs when that executive takes her or his family and agency with him; supercalamity occurs when a whole industry is affected.

Tropman's paper, "Flameout/Calamity in the Nonprofit Sector," will appear in a special issue of the journal Administration in Social Work this summer.

"Because of Enron, Health South, Tyco and others, many people feel that executive misbehavior is simply limited to the business community. Nothing could be further from the truth," Tropman said. "Governmental figures are involved as well. From Grover Cleveland to President Clinton, the presidency has been touched by scandal; and that is just the 20th century. 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 this harmful stage include William Aramony of the United Way of America. Another example is Frank Hudson, the chief executive officer of Catholic Charities in San Francisco who was forced to resign after it was known that he spent nearly $73,000 of the charity's money on personal expenses, including cosmetic surgery.

Senior managers are pushed to succeed and are rewarded for it. 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, Tropman says. 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 said. Apart from the personal damage, these calamities have multi-year and culturally negative consequences to the trust Americans have in their nonprofit sector.

"We owe our citizens better performance," Tropman said.

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Last reviewed: By John M. Grohol, Psy.D. on 21 Feb 2009
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