Professional Documents
Culture Documents
Interim - Report.nov. 10 Draft
Interim - Report.nov. 10 Draft
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
KUMIKI GIBSON
DATE:
RE:
SUMMARY
While the Foundation has grown impressively over the past several years, it has a
number of fundamental organizational challenges and deficiencies that
undermine its effectiveness, expose it to significant risk, and, ultimately, threaten
its long-term survival. The Foundation (as opposed to its initiatives, which I have
not reviewed) operates more like a political operation focused on immediate
situations, tasks, and events, as opposed to a professional, strategic, and
sustainable corporation committed to advancing its overall mission. While that
may not be a problem while the President is personally involved in the
Foundation -- and can garner support based on that involvement -- it will be a
problem when he is no longer involved, and the Foundation has to rise and/or
fall on its own name and work only.
If the leadership (that is, the Board and the CEO) intends and wants the
organization to survive beyond the Presidents personal involvement, then it
must take measures to move the organization onto a path of sustainability,
starting with revamping both the Legal and Human Resources (HR)
Departments; reviewing its corporate structure and governance documents;
and, perhaps most importantly, having a frank discussion with the President
about the current state of the organization, the future of the organization, and
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
his appetite and willingness to allow the Board and CEO to make the changes
necessary for it to become sustainable, even great.
The time for making these changes, if they are desired, could not be better: The
presidential campaign, which distracted some key employees and caused
uncertainty among others about the future of the organization, is now over;
virtually all of the employees interviewed are anxious for more structure,
professionalism, and mission-focus; and funders are expecting the same.
II.
BACKGROUND
-2-
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
In order to ensure that the review, the assessments, and subsequent actions
address all aspects associated with organizing and operating an effective
organization, I structured this review around the McKinsey & Co. 7-S Framework.
As you may know, this Framework is recognized as capturing the fundamental
elements of an effective and holistic organization: (1) shared values,
(2) strategy, (3) structure, (4) systems, (5) staff, (6) style, and (7) skills.
This report looks at each factor separately, discussing the findings and the
implications of those findings. (A detailed list of all of the major findings is set
forth at Tab B.)
1. Shared Values: This factor focuses on the central and shared beliefs and
attitudes underlying and driving an organization.
There seem to be two principal beliefs that permeate the Foundation:
(1) that its entrepreneurial culture, which sets it apart from most not-forprofits, makes it more effective than like organizations, and (2) that
structure, rules, and processes result in a bureaucracy that slows down an
organization. The former is true to some extent, but not entirely: While the
Foundation appears to be nimble and quick in response to opportunities
and to problems, it is not very good at planning. This causes the
Foundation to be less strategic and less efficient than it could be and
increases the risks of mistakes or worse, which could affect it in significant
ways legally and/or reputationally.
The belief that controls (through structure, rules, and processes) slow down
an organization is also a bit misguided. Structure, rules, and processes
ensure that the Foundation operates lawfully, consistently, and efficiently,
which ultimately enhance its effectiveness and reputation. It is unclear
whether certain managers shun such controls because they have never
worked in an environment that was both entrepreneurial and disciplined;
because they do not know how to create and/or manage an
office/initiative that is entrepreneurial, but disciplined and structured;
because they prefer working, as they do, with little oversight or
accountability; and/or all, or some combination of all, of the above. No
-3-
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
matter what the cause, this disdain has resulted in a culture that undervalues structure, controls, and compliance.
Because the lack of planning and controls can adversely affect the
Foundations effectiveness, efficiencies, and reputation, and because a
being entrepreneurial and being strategic and compliance-oriented are
not mutually exclusive, the Foundation should work to turn around what
appears to be current values in a way that leaves intact the
entrepreneurial culture of the Foundation and its employees.
2. Strategy: As you know, mission focuses on the why, and strategy
focuses on the how. Strategy provides a game plan for an organization
to achieve its mission, by setting priorities, directing staff and resources
toward those priorities, and enhancing the decision-making process and
actual decisions, by focusing both on priorities, in the face of what are
oftentimes conflicting requests, demands, and pressures, made daily.
Finally, a strategy ensures accountability, both by the organization as a
whole and by individual employees.
The lack of a strategy tied to an articulated vision is one of the major
deficiencies of this organization. Employees, even at the senior level,
could not articulate the organizations game plan for achieving its mission,
confessed that there are no goals or measures tied to any strategy, and
complained that the work across the organization is not linked to each
other or, even worse, does not always advance the Foundations mission
or best interests.
The lack of strategy has resulted in, among other things, a lot of confusion
across the organization about organizational priorities (which many claim
appear to shift constantly); missed opportunities (as a result of shifting
priorities and lack of a game plan); very little, if any, accountability (as no
ones work is measured against established goals and measures); a
bottom-up budget tied to the priorities and desires of individual
department heads, not to the organizations mission; and wasted time
and resources.
Absent greater strategic clarity, the Foundation may be able to achieve
some immediate tactical goals, but is unlikely to ever fulfill its mission, to
maximize the Presidents impact, or to endure beyond the Presidents
personal commitment or lifetime. Moreover, without such clarity,
improvements in other fundamental areas (e.g., skills) will be limited or
misguided.
-4-
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
-6-
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
RECOMMENDATIONS
The assessment of the organization through the 7-S Framework makes clear that
the organization is not operating as effectively or efficiently as it should or could.
Indeed, it has major deficiencies in each of the fundamental areas. Each of
these deficiencies, standing alone, threatens the effectiveness of the
Foundation in the short and long term. When combined, as currently the case,
they threaten its very existence (absent the Presidents involvement).
Because it is unclear whether the President wants the Foundation to exist
beyond his personal involvement, the Foundations leadership (that is, the Board
and CEO) should address this question head-on with the President. That will
require a frank discussion with the President about his desire, willingness, and
appetite to move the Foundation to the next level of development. If the
President concludes that he does, in fact, want the Foundation to survive and
thrive beyond his involvement, then he should authorize and empower the CEO
and Board to make the changes necessary for this survival.
While you and/or the leadership puzzle through this question, the Foundation
should begin improving immediately the Legal and HR Departments, which
have responsibility for a number of the 7-S elements (i.e., systems, staff, skills, and,
to some extent style).
-8-
KSGS REPORT
NOV. 10, 2008 DRAFT
A.
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
No matter what the leadership decides about the larger, over-arching question,
it must act immediately to bring the Foundation into compliance with the law
and standards that govern not-for-profits, and must create strong legal and HR
offices so to prevent any lapses in the future. To this end, I recommend the
following:
When the proposed policy is drafted, I will not ask you to approve it for
adoption; rather, I will want your permission to circulate it to department heads
for their review and comment. Because it will change the way the Foundation
(continued . . .)
2
-9-
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
I urge you to adopt the recommendations set forth above and authorize me to
execute against/implement it, which work will include, among other things,
developing an organizational chart for the two departments, drafting position
descriptions for the General Counsel and HR Director positions and for the
internal controls position, and retaining a consulting firm (such as prm
Consulting) to conduct a compensation review across the entire organization.
B.
BOARD-RELATED WORK
My review also disclosed that the Foundations Board may not be functioning as
effectively as it could or should and that the Foundations governance
documents may be dated and/or inappropriate given the current state of the
law and of the organization. To that end, I recommend that you expand my
assignment to include reviewing specifically the Boards structure and governing
documents so to ensure that they meet current standards, and that I do so in
time to enable you/us to present any changes to the Board at its December
meeting.
C.
BROADER IMPROVEMENTS
As noted above, the Foundation has challenges and/or deficiencies in all of the
7-S areas, which have significant implications as to the viability and sustainability
of the organization. You/the Board should discuss with the President these
findings and their implications.3
If the Foundation is meant to survive only for the time that the President is
personally involved, then it may want to only focus on bringing itself into
compliance and on maintaining that compliance, through the revamping
suggested above for Legal and HR. If, however, the Foundation is committed to
surviving and being effective beyond the Presidents personal involvement -that is, until the problems it is attacking are resolved, which likely means into
perpetuity -- then it should consider undertaking an in-depth review of its
(continued . . . )
does business (specifically, retains records), I want to make sure that the
proposed approach is workable.
This report expresses no view on whether the Foundation should survive
beyond the President or should be structured to survive beyond the President.
These considerations are being proffered in the event that President and the
Board want to address this bigger issue or conclude that it should.
3
- 10 -
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
structure and operations, which should include, among others, the following
considerations:
CONCLUSION
The challenges and deficiencies plaguing the Foundation cannot be overstated: They are real and undermine the organizations effectiveness,
immediately and more long term. To address the issues that present immediate
threats, the Foundation should revamp its Legal and HR operations, should
review its governance structure and documents; and should have an open and
honest discussion with the President about the future of the Foundation.
- 11 -
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
TAB A: OUTLINE OF WORK TO DATE
Interviews with all department heads, with the exception of Terry Krinvic
Note: This report does not include any back-up documents, and I will retain
those documents in my files unless requested otherwise by you to submit them or
release them. Please be advised, however, that the notes of my interviews have
not been transcribed or typed and that a number of staff members requested
that the contents of their interview be treated as confidential and not shared
with anyone other than you, for fear of retribution. I promised these staff
members that I would not share them with anyone but you, but could not
commit you to confidentiality.
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
TAB B: SIGNIFICANT FINDINGS
Set forth below are the significant findings to date, which serve as the basis for
the assessments and recommendations in the report.
RELATIONSHIP BETWEEN THE FOUNDATION AND THE PRESIDENT
There are members of the staff who are paid by the President/his office
and the Foundation, which may cause apparent or real conflicts of
interest.
o For example, a senior staff member being paid by the President, the
government, and the Foundation allowed the Foundation to host
what may have been (or may have been viewed as) a political
event, apparently, without official pre-approval from the
Foundations legal department and without regard, before the
fact, to the impact of that decision on the Foundations tax exempt
status.
o It has been reported to me that a senior staff member has
attempted to have (and perhaps succeeded in having) her travel
paid for by the Foundation when traveling with the President on
mixed trips, even though her presence may not have been needed
for the Foundation.
o It is not apparent how staff members paid through various sources
(which means, presumably, having more than one full-time job) are
able to fulfill their responsibilities and duties to the Foundation given
the amount of work associated with those responsibilities and duties.
Many staff members believe that staff members with closer ties to the
former President receive better benefits or more favorable treatment from
the Foundation as a result of those ties.
o Many staff members believe that certain people are untouchable
because of their relationship to the President.
o A few commented on Lauras extended absence and her late
arrival time, believing that both violate Foundation policy and/or
standards.
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
It is not clear that the Board is sufficiently independent from the President
and/or is structured appropriately given the current size of the
organization and the breadth of its work.
Virtually all Harlem staff interviewed expressed relief that the campaign is
over, advising me that many staff members turned their focus on that
during the campaign and others advised that they were concerned
about the Presidents commitment to the Foundation during the primary
and after the election if the Senator had prevailed.
-2-
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
LACK OF STRATEGY
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
Many key Foundation staff came from the Presidents political world or
through the internship program, and, thus, lack real management and/or
not-for-profit experience. A number of staff members complained about
the lack of real managerial experience among the people filling key roles
(virtually all citing Laura Graham as an example, and a few citing Julie
Becker).
-5-
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
The Foundation has paid very little attention to its workers or their
professional development and has not insisted on or paid for
management training for its staff.
SALARIES IN THE NEW YORK CITY OFFICE APPEAR TO BE BELOW MARKET
Virtually everyone I interviewed stated that morale was low in the entire
organization or in certain departments and that upper management
either did not know this or care about it.
-6-
KSGS REPORT
NOV. 10, 2008 DRAFT
CONFIDENTIAL DRAFT
ATTORNEY-CLIENT PRIVILEGE
-7-