When Customers are Owners: The
Non Profit School Board.
Thousands of independent non profit schools are governed by Boards of Directors made up primarily of parents. Board members are rarely given the training they need to approach their jobs effectively.
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Thousands of independent non profit schools are governed by Boards of Directors made up primarily of parents. These volunteers agree to take responsibility for school finances, fundraising, planning, budgeting, and oversight of the school principal or director. With little or no training, private school Boards tackle projects involving finance, real estate, leasing, contracts, insurance, and liability. In some cases these Boards accomplish great things by working together with school staff and parents to build a community of support for the children in their care. However, often times, private school Boards fail to support their institutions and lead them into crises or decline. Board members are rarely given the training they need to approach their jobs effectively.
One of the most important ideas for Board members to understand is the challenge of being both and owner and a customer in the same organization. In most of our day to day life we are either owner or customer. As owners of a business we strive to make decisions that will benefit us long term. We seek to satisfy all of our customers, even those whose needs differ widely from others. We don’t make business policies to please one particular customer or another. Instead we try to create policy that meets the organizations goal, supports its mission and supports the greatest number of customers.
The customer’s needs on the other hand, are primarily short term and personal. Customers simply want to find the product or service they desire at the best price. They don’t concern themselves too much with the needs of others, long term organizational goals or the needs of other customers. Customers seek out products or services from a variety of sources with little concern about the long term needs of the supplier.
One of the common pitfalls of the parent-run school Board is the belief among Boar members that their job is to represent their fellow customers. We hear slogans like “the customer is always right” and Board members believe that as parents, they are appointed or elected to represent the customer interests of all their friends and acquaintances. The truth is that to do their job well they must take off their customer hat when they enter the Board room. The Board and its committees must always be wearing their ownership hats when doing the Board’s work. This doesn’t mean that the school’s customers have no where to go for service and redress. In a well run school they get their customer service from the the staff, the teachers and and administrators. This is no different than in a for-profit business. Imagine you are at a fast food restaurant and you get a cold cup of coffee. You don’t go to the corporate Board of Directors for a new cup. You speak to the person behind the counter.
In a non profit school, the members of the Board are the ownership. They are elected or appointed to represent the ownership interests of the school’s stake holders. They guide and maneuver the institution within the greater marketplace. They set prices, policies and planning goals for all of the school’s stake holders including staff and parents. If they sit at the Board table wearing their customer hats they will create an institution that meets their personal and short term needs and will leave the school unable to meet the needs of all its customers for the long term. Only by thinking as owners, and taking into account the needs of all the school’s stake holders (both parents and staff), can the Board guide and nurture the institution that they love. This is not an easy task, and getting agreement from all Board members to take off their customer hats when making policy is not always attainable. However, it is critical if the Board hopes to get beyond the short term cost cutting that so often hinders the stability of non profit institutions.
The toughest part of thinking like an owner comes when the Board is confronted by customers who pressure the Board to make customer-friendly policies like the lowest possible tuition rates. Low-cost tuition is often associated with low teacher salaries and benefits since labor at a non profit school is regularly 70 to 80% of the total budget. Lower tuition through low teacher wages keeps the customers happy but degrades trust between the Board and staff and leads to higher teacher turnover which negatively effects programs. The trick to having meaningful discussions with parents from an ownership perspective is to educate them about the importance of leaving their customer hats at the door when school policy is discussed. The Board must make it clear to all stake holders that in the Boardroom the ownership perspective rules. Once this is understood the tough decisions about improving programs and budgeting for longevity and stability can be addressed with a common sense of purpose.