The American Red Cross Interim CEO Club

February 1, 2006       Marla Nobles      

The Interim CEO Club of the American Red Cross (ARC) is quite the exclusive, yet growing club. Comprised of the first African-American to lead the ARC, one of Georgia’s 100 most powerful people, an attorney and a leader in the biomedical field, the ARC’s past four interim presidents are an impressive assembly.

Preceding current interim president Jack McGuire, are Gene Dyson, who substituted for president Elizabeth Dole during her 13-month hiatus from October, 1995 to early 1997; Steve Bullock, interim for seven months when Dole stepped down in January,1999; and Harold Decker, who took the reins following the controversial October, 2001 resignation of Dr. Bernadine P. Healy. McGuire was appointed following the Dec. 13, 2005 resignation of Marsha J. Evans.

“All CEOs have a delicate relationship with the board of their organization,” said Decker, who was interim for roughly 11 months. “At the Red Cross, the CEO needs to remember that you have 50 bosses, in the form of the 50 members of the board of governors, one of whom is the ‘principal officer of the corporation,’ i.e. the chairman, according to the charter and by-laws.”

The ARC has been plagued by the frequent turnover of its chief executive officers for the past decade, leading many professionals — and now Congress — to speculate that the issues at the ARC may run deeper than the organization has acknowledged. This past December, an ARC spokesperson said that Evans’ resignation was due to coordination and communication issues with the board of governors. Friction with the board was cited as a reason for Healy’s departure.

Some of the most effective fine-tuning at the ARC during the past decade has been accomplished by interim leaders. Dyson overhauled an organization in disarray, and with a senior staff that a management report described as “dysfunctional.” Bullock went in and, within a restrictive seven-month period, tackled multiple initiatives that, according to Bullock, are to this day regarded highly by staff at the ARC. Decker revamped the image of an organization that was tarnished in the eyes of the media, the public and Congress. 

Considering the success the organization has had hiring interim presidents from within, why does the ARC continually look elsewhere for its permanent appointment?

“It seems to me, (the board) kind of wants somebody who is well-known, who can get in the doors of various organizations,” said Dyson, who cautioned that he never sat on the board’s selection committee, and that the committee does not share its criteria for selecting ARC presidents.

Added Dyson, “When they hire somebody like that, the first thing we say is, ‘oh —-,’ and the next thing we say is, ‘hey, hey, let’s make it work.  Congratulations!’  Because we’re so gung-ho for this organization that we’ll support whomever they hire.  My thought is, I’m going to do everything I can to make this successful.” 

The criteria for selecting a Red Cross CEO, said Bullock, should include having “some sense of how to work with a volunteer board,” something he said is unique to the nonprofit world. “I understood that, and I understood that because I’d been doing that for most of my career.” According to Bullock, he would like to see the ARC hire a permanent president from within the organization.

“I think it makes a lot of difference in the acceptance of the organization by the organization,” mirrored Dyson. By hiring a Red Crosser, he added, “it gives them the one-up on what to do in the future, based on their knowledge of where we’ve been in the past.”

One of their own

“I was what they called a Red Crosser when I went in, so the organization had high expectations. It wasn’t like, ‘Who’s this guy?’,” said Dyson. The now-retired Duluth, Ga., resident, once listed among the state’s 100 most powerful people, joined the organization in 1981, becoming chairman of his local Red Cross chapter in Atlanta. In 1991, he was awarded the Red Cross Harriman Award for distinguished volunteer service, the highest recognition the ARC bestows on a volunteer. This year he celebrated his 25th anniversary of ARC service.

Dyson served on the charity’s national board of governors for six years, three of which he was vice chairman, the highest position a volunteer can attain. “When they called me to be interim president, it wasn’t like it was a strange, new world to me. I was used to the nonprofit-volunteer style of staff and volunteers.”

According to Dyson, he was asked to run things at national, not just be there as a figurehead, or, as McGuire recently articulated, “a caretaker interim.”

While on the board, Dyson chaired a committee that broke new ground at the organization: “We defined what a Red Cross chapter should be.”  Termed “SD-21,” or “Service and Delivery in the 21st century,” the long-range planning project, said Dyson, “was very controversial, because people don’t like change too much. They fought and they yelled, but it turned out to be the best thing that’s ever happened because now it was a consistent Red

Cross all across America.”

Then, when he stepped in as interim, Dyson “realized that we had not aligned the national headquarters to serve the chapters on what we had told them they had to do.” Dyson ordered a “terrible, big re-engineering of the national staff,” and retained accounting firm KPMG LLP to examine the way that the ARC functions. The result was a three-inch thick report that portrayed the organization as a badly-run business with no coherent alignment of its operations.

Among the recommendations, the Dyson-inspired KPMG report suggested the organization hire both a chief financial officer (CFO) and a chief operating officer (COO). “So one of my many recommendations in re-engineering national was to have one accounting system,” said Dyson. A CFO was appointed, and not long after the organization hired a COO.

“I had a very successful interimship,” added Dyson. “I wanted to get the re-engineering completed by the time I left, and I effectively did so.”

Red Crosser for life

A self-described “Red Crosser for life,” Bullock went into the interim position with a background similar to Dyson’s: close to 40 years of volunteer service with the ARC. However, according to the first and only African-American to lead the organization since its founding in 1881, “(Dyson) came to the position from the board. I was, of course, staff.”

When Bullock assumed the office he prepared a 100-day plan. “I believed that we needed to do some organizational development internally, because we had focused a lot externally — which we needed to do — but I thought we needed to pay more attention to internal relationships.”

Bullock assigned a staff at headquarters. He also brought in outside help from the Greater Cleveland chapter, of which he’d been chief executive officer. “We launched several initiatives,” said Bullock. Among them were:

• Appreciative Inquiry, a process where the organization determined and articulated its strengths, and sought to build on those.

• Chapter Development, which was directed at making sure the organization had all the resources, training and planning in place to effectively deliver services with heavy focus on disaster planning, disaster response and fundraising. “It’s what we do,” explained Bullock. “It’s a matter of making sure we’re performing at an excellent level.”

• Strengthen International Relationships, in particular, said Bullock, with Magen David Adom (MDA), the Israeli arm of the International Red Cross. “We attempted to develop relationships with the International Red Cross people in Geneva, and made some progress there,” he added. According to the organization’s Web site, the MDA has been denied full voting membership in the International Red Cross and Red Crescent Movement for the past 50 years because it uses the Red Star of David as its emblem. Under the Geneva conventions only the Red Cross and Red Crescent are accepted symbols. It was again denied membership in November, 2005.

• Blood Services, a troubled division at the ARC, Bullock worked toward “taking the steps necessary to have the consent decree lifted. We weren’t trying politically to get it done.” The Federal Drug Administration in 1993 placed the ARC’s Biomedical Services division under consent decree in response to “deficiencies in their tracking and procedures for ensuring the safety of the blood supply.”

Fines were levied in the millions of dollars. The division remains under a consent decree.

Bullock returned to Cleveland in 2000 and founded The Bullock Group, a small management consulting company. What at first was supposed to be a part-time position has matured into a full-time one, said Bullock. He also teaches a course on nonprofit leadership at Case Western Reserve University in Ohio, and has plans to write a couple of books.

Communication is key

When Decker took the job on Oct. 30, 2001, the ARC was fending off accusations that it had mishandled some of the $547 million the public donated for the 9/11 Liberty Disaster Fund. Healy’s resignation sparked myriad conspiracy theories, including that she was to blame for the money mismanagement, and that her endorsement of MDA was not the consensus at the ARC. Regardless of the reason, the board reportedly voted 27-5 saying it had lost confidence in her leadership and Healy resigned.

“Typically an interim president takes office in a time of crisis,” said Decker. “Many interim CEOs are importuned to assume interim positions because the organization has been allowed to go on what I call ‘Mission Drift,’ i.e., the organization has lost sight of their purpose. The mission of the interim is often to bring the organization back on its mission.”

In a memo sent to staff at the ARC in 2001, Decker said that his mission was “to streamline our corporate structure and best enable the American Red Cross to address new challenges and changing priorities.” Decker brought in KPMG to audit the Liberty Fund, and took steps to assure the public that the ARC would continue to hold those funds in a separate account, not to be commingled with any other Red Cross accounts.

In association with New York State Attorney General Eliot Spitzer and the City of New York, other relief agencies and other charities, Decker worked “to reduce duplication, fill any voids and tap the full range of experiences and talents that all of these parties bring,” said Decker.

In response to the harsh criticisms against the ARC, Decker brought in outside staff to assist in the organization’s assessment of its “critical communications functions.” Decker hired Frank Donaghue, then-chief executive officer of the Southeastern Pennsylvania chapter, to temporarily assist the organization with the changes to its communications efforts.

“An organization must communicate with the public, often through the media,” said Decker in an email sent to The NonProfit Times. “The public is the chief constituency in almost any situation, and if your message is not coming across properly you must find either a new course of action, a new way to present your current actions, or both.”

Decker was general counsel at the national headquarters when he was appointed interim. He now resides in Michigan and is a principal in the law firm of Miller, Canfield, Paddock and Stone, representing pharmaceutical and biotechnology companies.

The new guy

On Dec. 13, 2005, the ARC board appointed Jack McGuire its latest interim president and CEO. McGuire will not leave his post as executive vice president of the Biomedical Services division of ARC, which he assumed in March 2004. This led some to question how he would handle these dual roles.

According to McGuire, responding via email, “While I am very familiar with the Biomedical Services arena of the American Red Cross, I have been a member of the senior leadership team at the organization for almost two years.” McGuire noted that during that time, he gained a general understanding and appreciation of the organization’s mission and is “now taking time to obtain a greater understanding of this organization at all levels.”

McGuire said he will address the issues surrounding the ARC’s response to Hurricane Katrina, which has come under heavy fire by the media, and review by Congress.

“My goal is to gain a consensus within the organization on lessons learned from the 2005 hurricanes, implement changes based on these lessons, and engaging stakeholders, including members of the communities we serve, other nonprofits, donors, members of Congress, private sector, and the media, to inform all parties of our progress,” he wrote in the email.

So why were none of the interims tapped to be permanent presidents?

Speculated Dyson, “One of the criteria you might have to pick an interim is to pick one that won’t then go after the job.” According to Dyson, “I would have loved to have been president. But that wasn’t my deal. My deal was for one year, and I accepted it.”  NPT