Case Study #423

One year an internationally known commercial development company purchased large parcels of land to build a shopping area with plans to include apartments, condominiums, houses, office building, and a park. It was slated to be a "Live, Work, Play" community. The only remaining parcel of land the company needed was owned by the local school district. The parcel of land was in a strategically important section of the proposed development. The project could not proceed without that parcel of land. An old high school building that housed a non-traditional high school, a small performing arts school and a teacher training center was on the section of property the development company needed to begin the project. Also, there was a 40-yearold high school football stadium in bad repair behind the school building.

The board, school district CEO, local businesses and property owners were in favor of the purchase. However, two local board members who lived in the area were worried about traffic problems. The developer's plans would have relieved traffic in the area, but the two board members spoke out against selling the property. They never said anything about what was best for the entire school district, the business in the area, and what the long-term plan was for the property, or even what was best for students and the neighborhood. However, the two local board members pressed hard to refuse the developer's offer on the land. The five other board members supported the purchase but said very little in opposition to the two board members. No one from the business community, the neighborhood, parents, nor other board members tried diligently to influence the dissenting board members. The developers offered $64 million. The only portion of the $64 million that would be obligated was for replacement of the stadium, which was about $10 million (purchase of land and the cost of building a stadium). The rest of the money would not be obligated because a new facility for the non-traditional high school and plans for the other program occupants of the building were already approved and funding for construction of the school was available from a special purpose local option sales tax (SPLOST), which is used to avoid bond debts.

Because the school district owned the last essential piece of property to complete the site plan, the school district could have received several million more dollars for the sale of the land had they continued to negotiate with the developers, but that did not occur. With resistance from only two of seven local board members who refused to see the value to the school district overall and in the long term the possibility of funding a new regional stadium to replace the dilapidated one and the availability of money that could have been used for other essential projects to help students was forever lost.25 Fast forward a few years to find the same school district struggling with its budget because of the declining economy, reduced local revenues, and education cuts at the state level.26 Instead of $54 million in the bank, assuming $10 million would have been spent on a new stadium, for the first time in the school district's 80 year history employees were laid off and the operating reserve was down to just a few million, enough to operate the school district for one day in an emergency.27 Additionally, the school building on the site of the property had to be abandoned because of the poor condition of the building and the school district's lack of resources to remodel or maintain the building. The detrimental determinants of the two self-serving board members coupled with the failure of the CEO and the other board members to press forward to do what was best for the school district damaged the school district for decades.

The Negative Effects of Boards

In an article by Lisa Iannucci, she describes the disruption caused in a community neighborhood association through the voice of a board member who was demoralized by the behavior of a fellow board member, which is an example of how board behavior can jeopardize the mission of an organization regardless of its mission or size. There are the WIIFMs (What's in it for me) and the Idiots. The WIIFMs get on the boards because they have an ax to grind or a pet issue they want to promote. The Idiots either get roped into it by some well-meaning family member or neighbor, or they think they know everything and know nothing. To be good board members they must be able to set aside their personal biases and ambitions, be willing to learn and listen, and think about the good f the whole community and organization. Many folks find that very difficult."28 Iannucci strongly suggests that the other board members ...have a talk with difficult board members, explaining to them what it is they are doing wrong. If there is a bad board member and it affects your situation it may worth trying to win him over.29 The Pros and Cons of the "Business Model" Many local board members and the public accept the premise that all the ills of every organization would be or could be remedied if they would only adopt the "business leadership model." Of course, this is reference to the western culture business model. Board members are particularly outspoken about the value of operating organizations like a business.30 It is a popular notion. But should school districts or non-profits or for that matter any organization really operate like a business? Should all businesses operate the same? Should a background or experience in the business world be a qualifying requirement of prospective board members and organizational leaders? What does it mean to run an organization like a business? Many board members with a business background readily agree that organizations should be run like a business. It certainly is an opinion that is shared by board members and leaders of many organizations, but those that advocate so ferociously for this focus on the business model should be cautious about forcing it on organizations and fellow board members without describing and defining exactly what that declaration means. It is a crucial point because the business model may not suit every organization. Forcing an organization to adopt a business model is outside of the responsibility of board members because it is dictating the operational functions of the organization but unfortunately, it is not uncommon. Since many board members believe that all organizations should operate like a business, let's take a closer look at what that really means. According to Forbes, eight out of every 10 new businesses fail within the first 18 months. That is an average of 15,000 business failures per year in the United States. Which company business model do board members want organizations to adopt? The overgeneralizations about running all organizations like a business run up against the data and facts. Instead of relying solely on a business model, boards and leaders should first consider what is best for the organization and how their behavior and decision-making can benefit the organization. The strategic plan should be an operational plan that remains true to the purpose and nature of the organization instead of being forced into a model that may not be suitable.

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