Next-McGovern Becomes 10th Red Cross CEO in 12 Years

May 1, 2008       Mark Hrywna      

Describing it as the job she’s been training for the past 30 years, Gail J. McGovern hopes her experience in the business, academic and nonprofit worlds will help bring some needed stability to the American Red Cross (ARC) as its new CEO.

The Red Cross announced her appointment last month, capping a three-month process sparked by the forced November resignation of Mark Everson in the midst of a sex scandal. McGovern, who has taught at Harvard Business School for the past six years and spent nearly a quarter century at AT&T, will assume the post on June 23, becoming the ARC’s 10th permanent or interim CEO in the past 12 years.

“A number of challenges the American Red Cross faces are completely similar to those that you’d encounter in the for-profit world and in fact ones that I’ve personally encountered and had to deal with,” McGovern said. “Everything from systems, infrastructure, financial stability, these are things that I’ve dealt with in my previous life,” she said during a telephone interview with The NonProfit Times.

Mary Elcano, the interim CEO since Everson resigned, will return to her post as general counsel and corporate secretary. Everson departed just six months into his tenure after it came to light that he had an affair with a chapter executive in Mississippi.

McGovern, 56, will earn an annual salary of $500,000, in addition to a $65,000 signing bonus. She was among 170 people considered and 20 who were interviewed during a process that started at the end of 2007.

“I’m at the point in my life where I want to work for an institution that has a higher purpose,” McGovern said, calling it the capstone of her career. “I feel like I’ve been in training for it probably the last 30 years of my life and I truly hope that I’m here for a long time to come.”

The ARC has stumbled upon tough times the past few years. In addition to the scandal involving Everson last year, the organization has a $200-million operating deficit, prompting layoffs of a third of the Washington, D.C. headquarters staff, and previous criticism about its response to the Sept. 11, 2001 attacks and the Gulf Coast hurricanes in 2005. The organization has been under a U.S. Food and Drug Administration consent decree for more than a decade regarding its blood collection and distribution.

“This is a woman who does her homework,” said Bonnie McElveen-Hunter, chairman of the ARC board. “She’s coming into this organization very aware of the circumstances, and very knowledgeable, which is a huge advantage.”

Born in Brooklyn and raised in northern New Jersey, McGovern has lived in Boston since joining Fidelity Investments in 1999. Since 2002, she has taught at Harvard Business School, where she last year was appointed to the chaired position of the MBA Class of 1996 Professor of Management and Practice and teaches in the MBA and executive programs. She holds a bachelor of arts in quantitative sciences from The Johns Hopkins University and an MBA from Columbia University.

McGovern started her career in 1974 as a computer programmer for AT&T, eventually rising to executive vice president of the consumer marketing division. In that position, she was responsible for residential long distance and Internet services, which included 75 million customers, $26 billion in revenue and 40,000 employees. Fortune magazine twice recognized her as one of the most powerful and influential women in corporate America.

McElveen-Hunter said the ARC will be well served by McGovern’s combination of business experience in complex, regulated organizations and the creativity she brings to challenging situations as well as her work fundraising for nonprofits. “All those business experiences are really opportunities to draw from those that will benefit the Red Cross.”

The ARC enjoys “a powerful brand and not dissimilar to large brands that I’ve encountered in my business career,” McGovern said. “It’s taken a couple of hits, but I think by and large that the American public has great affection for the Red Cross and one of our challenges will be to tap into that affection.”

Having led organizations that have downsized, McGovern said it’s been her experience that organizations “emerge stronger and more determined, and with the right kind of leadership — and I’ve met a number of people on the leadership team here — I believe we can emerge stronger for having been through this process. I’m very positive, given the type of person who works for an institution like this and their desire to do good works, I think we can regain a positive morale here and move forward.”

McGovern was a member of the Board of Trustees and co-chair of the Campaign Executive Committee at Johns Hopkins University during a seven-year, $2-billion campaign that exceeded its goal two years ahead of schedule and eventually raised $3.2 billion. She also has been active in events for Children’s Hospital Boston, Dana Farber and United Way of Boston. She serves on two for-profit boards, the Hartford Financial Group and DTE Energy.

McGovern said she enjoys fundraising – which she has done on a volunteer basis Ð particularly when it comes to things she feels strongly about, like the ARC and its mission. “The challenges that need to be dealt with first and foremost are ones that I can bring my experience and even my experience at Harvard in looking at brands, I think I can bring here and hopefully have an impact.”

The appointment of McGovern was met with hopeful optimism around the nonprofit sector. H. Art Taylor, president and CEO of the BBB Wise Giving Alliance in Arlington, Va., praised the ARC for landing an “individual with outstanding leadership credentials. We can all be hopeful now that this event severs the string of leadership challenges that the organization has had over the past seven years,” he said. “Certainly a leader with these credentials will bolster our hope that the Red Cross will become the organization that Americans need and want it to be.”

Diana Aviv, president and CEO of Independent Sector, a national leadership forum for nonprofits, foundations and corporate giving programs, expects some learning curve for McGovern as far as the nonprofit sector, but called her “an accomplished person with business skills and encouraging fundraising experience.”

What the ARC desperately needs, Aviv said, is sound integrity. “There is a huge amount for her to do in the first 100 days without putting the pressure that that will make or break her.”

The ARC needs to rebrand itself, according to Paul Light, a professor at New York University’s Wagner School of Public Service, not because of the Everson scandal but because of a string of problems in recent years. “They have a lot of work to do,” Light said. “I think it’s a hopeful appointment. She knows how competitive the world can be. What the Red Cross needs right now is a dramatic change in focus, they needed a quick hire and a person that understands organization restructure.”

The first 100 days are critical for the relationship between the CEO and board and both need to “make it a constructive leadership and make sure it is working best for the Red Cross,” said Marla Bobowick, vice president of products for BoardSource, a Washington, D.C., nonprofit that provides governance guidelines for nonprofits.

“The Red Cross has gone through a lot of challenges and they need to sustain the strong board with a strong CEO,” she said. NPT

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