TSNE Executive Director Jonathan Spack was invited by a group of Japanese nonprofit leaders to meet with colleagues there and present at symposia in Osaka and Nagoya in late 2007. Subsequently, he was asked to share his thoughts and perspectives about nonprofit leadership with Japanese NPO colleagues in an article written for the NPO Journal vol.21, issued by Kansai NPO Alliance (KNA). Following is an excerpt from the piece submitted to the journal's editors.
Over the past several years, there has been a great deal written about an impending leadership gap in the U.S. nonprofit sector. The anticipated retirement of many older generation leaders plus the explosive growth in the number of nonprofit organizations in recent years have some observers predicting a shortage of tens, perhaps even hundreds, of thousands of nonprofit leaders and managers over the next decade.
In 2006, The Meyer Foundation and CompassPoint Nonprofit Services reported that three out of four executive directors planned to leave their jobs within five years. Furthermore, many next-generation leaders, observing the long hours, below-market compensation and compromised personal lives of executives, voiced serious doubts about taking on those jobs.
I am not convinced, however, that the situation is as dire as some people believe. Previous studies by CompassPoint and the Annie E. Casey Foundation contained similar data about tenure, and to date the actual turnover rate has remained manageably lower.
Apparently, a stated intention to depart in the near future doesn’t necessarily translate into actually stepping down from the top job. Moreover, markets adapt to changed circumstances, a point acknowledged by the 2008 survey Ready to Lead? Next Generation Leaders Speak Out by Meyer, CompassPoint, Casey and Idealist.org. Nearly 6,000 non-executive nonprofit staff took part in the survey.
The Next Generation of Leaders
The likelihood is that more executive-level openings will attract more qualified candidates to the field. Greater demand will force organizations – and their funders – to offer better pay and benefits, address life-balance issues, and create training programs and incentives.
Indeed, nearly a third of respondents to the 2008 CompassPoint survey said they aspired to become an executive director. One respondent is quoted as saying, “Where is this supposed lack of leadership? We’re all here. And we’re ready … to take over when you’re ready to retire. I wonder if it’s more of a disconnect between generations and a difference in leadership styles than a lack of leadership”.
Frances Kunreuther, director of the Building Movement Project in New York, who has written extensively on generational change in the nonprofit sector, agrees. She says, “Younger people talk much less about a crisis in people retiring. Younger leaders think the crisis is that existing organizations are getting stale.”
Our Sustained Attention
Even if there isn’t a leadership crisis, though, there is no denying that recruiting and retaining top talent for the nonprofit sector demands sustained attention. Even accounting for market forces, the problem will not fix itself.
That is because while the U.S. nonprofit sector is relatively advanced in relationship to many parts of the world, the sector – and those of us who work in it – are still greatly undervalued. It is undervalued by those inside as well as outside of its boundaries. In Ready to Lead?, the authors report that:
“Even those of us who should know better sometimes fall prey to the notion that important charitable work can and should happen at a discount. This same idea animates the view that professionals who toil at nonprofits ought to work longer hours and for less pay than their for-profit counterparts. … The archetype of the charitable act includes a generous donor and a grateful supplicant. It leaves little room for the people who do the very hard work of delivering nonprofit services.”
Leading Sector for the 21st Century
It is not surprising that in a capitalist system money is equated by most people with intrinsic value. Unfortunately, this means that nonprofits, which tend to be severely undercapitalized, are relegated to lower-level status in the minds of most Americans.
Even my own organization’s name reflects this accepted order. Why should we think of ourselves as the “third” sector? Do business and government really deserve higher billing simply because they have more money?
I believe it is the responsibility of nonprofit leaders to push back against this nearly universal assumption, which has been internalized by much of the U.S. nonprofit sector. After all, it’s the social sector that defines our culture and binds our communities together, especially in this age of globalization and increasingly dominant and faceless multinational companies.
Peter Drucker of the Leader to Leader Institute envisions a major change in the sectoral pecking order the coming years:
"The 21st century will be the century of the social sector organization. The more economy, money, and information become global, the more community will matter. And only the social sector nonprofit organization performs in the community, exploits its opportunities, mobilizes its local resources, solves its problems. The leadership, competence, and management of the social sector nonprofit organization will thus largely determine the values, the vision, the cohesion, and the performance of the 21st century society."
If Drucker is right and the third sector is destined to be first, then we need to recruit, train and support leaders who are not only prepared to run their own organizations effectively but who also understand – and embrace – their larger responsibility to their communities.
Leadership Change on the Operational Level
At TSNE MissionWorks we are intensely interested in the issue of leadership in general and in supporting emerging nonprofit leaders in particular. Leadership was the theme of our most recent conference, the 2007 Nonprofit Workout, and we have some initiatives in the planning stages aimed at next generation leaders. We also operate our region’s largest and most comprehensive Executive Transitions Program.
Since 2004, we have served nonprofits in the states of Massachusetts, Rhode Island and Connecticut that are experiencing or planning for a change in leadership. The TSNE Executive Transitions Program is one of four in the United States modeled on the groundbreaking work of Tom Adams, much of it funded by the Annie E. Casey Foundation.
TransitionGuides in Baltimore, CompassPoint in San Francisco, and the Support Center for Nonprofit Management in New York City are the others. The Casey Foundation has published a series of excellent papers on nonprofit executive transitions, all of which are available from their website.
This model uses a 3-phase process.
- Prepare: The organization hires a transition consultant and, if necessary, an interim executive director, (selected from groups of consultants trained by TSNE) to assure that operations are stabilized and to help plan the search for a new leader and for the transition itself. The transition consultant conducts an organizational assessment that identifies priority areas to address during the transition, clarifies the strategic direction of the organization and develops the search profile.
- Pivot: With the consultant’s help, the nonprofit conducts a diligent outreach and recruitment process, a thorough screening and interview process, and selects a new leader.
- Thrive: The organization welcomes the new executive, and the board and executive get clarity about their roles and expectations as well as the kind of professional development support the executive needs. A 12- to 18-month leadership agenda with priorities is created.
The result of this comprehensive process is a positive, forward-looking relationship between an executive who fits the current and future leadership needs of the organization and an organization (and board) that is prepared to work with the talented new leader. Compared to the cost of a typical executive search, this model is less expensive and offers a more comprehensive set of assessment, search, capacity building and post-hire support services.
At TSNE, we have supplemented this framework by adding Learning Circles for transition consultants and interim directors to share their experiences and learn from one another. We are committed to further developing the model by incorporating the knowledge that emerges from these groups into a next-generation executive transitions model.
What’s Different about Nonprofit Leadership
In his best-selling 2001 book Good to Great, Jim Collins found that primary among the leadership qualities associated with sustained high-level organization performance, which he calls Level 5 leadership, is humility, including the ability to recruit and nurture talented staff and groom successors.
In a subsequent monograph on how Good to Great principles apply in the nonprofit sector, he stressed the importance of “legislative” Level 5 leadership. This approach is needed because the limitations on nonprofit executive power imposed by funders, boards of directors and constituents require successful leaders in our sector to seek out and listen to the input of others. Level 5 leaders also respect process and influence stakeholders by inspiration and persuasion rather than by the exercise of raw power.
“Getting the right people on the bus”, as Collins puts it, is a fundamental requirement of organizational greatness. In a 2007 presentation, Collins pointed out that this challenge is more difficult in the nonprofit sector because of the “wider, more complicated set of … skills needed for leaders” in this arena.
But keeping the right people on the bus may be even a greater challenge for nonprofits, given the negative impact of infrastructure, compensation, benefits and lifestyle issues cited by respondents to the 2008 CompassPoint survey. In the social sector, success is measured in terms of achievement of mission-related goals, not just financial performance. This “double bottom line”, plus the need to satisfy public and private donors as well as recipients of service, makes our jobs especially challenging.
We are challenged also by the “mental model” many nonprofit staff members have that we should all be honored and grateful to receive any kind of financial compensation to do this work. That kind of thinking may have been enough for those of us who began our nonprofit careers in the 1960s and 70s, and it may still be sufficiently appealing to keep the pipeline full of new recruits. However, it will not keep enough of them on the bus for the long term to enable the social sector to assume its rightful place.
We must do more to establish nonprofit work as a desirable career. The recommendations in Ready to Lead? are an excellent starting point. They include calls for better pay and benefits, funding for mentoring and peer support, inclusion in decision-making, and being open to new organizational structures.