The very first thing that grabbed me in this recently published McKinsey & Company article, entitled “What social-sector leaders need to succeed,” was its opening sentence: “It’s no secret that high-performing leadership is synonymous with private-sector success.” Now, perhaps I’m overly sensitive on this, but my first read finished that sentence for the authors with “and not nonprofits: they don’t have high-performing leaders.” Can you blame me? Look at the title of the article: it suggests rather clearly that nonprofit leaders aren’t currently high-performing and successful.
In 2013, McKenzie surveyed 200 executives in the “social sector”—which McKenzie alternately refers to as nonprofits and, more broadly, as “nonprofit organizations, foundations, social enterprises, and impact-investing funds”—asking them, first, to identify key attributes of successful leaders in the sector and then, second, to assess current leaders against those attributes. The results were, to say the least, deflating. More than half were between 40 and 60-years-old, and just under half had more than 20 years experience in the sector; the majority were leading organizations with the capacity to serve over 10,000 clients a year, while a quarter served over 1 million. So, these are not inexperienced folk leading organizations with limited capacity.
The second factor that grabbed me in this article was the following quote. Based on their research, the article authors have determined that “… chronic underinvestment in leadership development within the U.S. social sector, accompanied by 25 percent growth in the number of nonprofit organizations in the past decade, has opened a gap between demands on leaders and their ability to meet those needs [of the social sector].”
This is nothing we at The Nonprofit Center don’t already know, but it is nice to have someone else saying it. Sadly, though, it is a perfect example of nonprofits and, to be honest, some of their funders, not understanding ROI: the spending of money now that, in the case of nonprofits won’t produce an immediate impact on mission fulfillment but will, down the road, produce a very big bang. To invest any amount in leadership development demands using money currently in hand, or asking for money not for mission-related programs but for investing in the future ability to do an even better job at delivering on mission promises.
True, we do have to take this on faith; as the authors point out. There is no large-scale research in the nonprofit sector that looks at the correlation of well-developed leaders and organizational success. There is, however, a great deal of that research in the for-profit sector and it shows, categorically, the positive correlation between investing in leadership development and positive outcomes. Despite the fact that we may measure “positive outcomes” and “organizational success” differently, there is nothing to suggest that in this case what produces good for the for-profit sector won’t also produce good for the nonprofit sector.
The third thing that pulled me into reading this article was the survey finding that the respondents found themselves and their peers lacking in the very same leadership attributes they identified as central to leading a successful nonprofit now and into the immediate future. According to survey respondents, successful leaders of 21st century nonprofits must be:
- able to be innovative and to implement (cited by 58% of respondents);
- gifted at building strong teams (53%);
- proficient at forging collaborations (49%); and
- “managing to outcomes” (40%).
Slightly less than 1/3 of respondents rated themselves as strong in balancing innovation and implementation; they rated 39% of their peers as strong in this trait. On the remaining three traits, respondents were even less likely to rate themselves and their peers as strong. In other words, on the four attributes key to a successful leader, 2/3 or more of the respondents don’t consider themselves as having a strong command, and consider their peers not that much better.
What is interesting in that list of four, multi-faceted, desired talents is the question of, “So, now what?” How much of those four can be taught directly? How much results from, and is honed through, trial and error (which means experience)? How much can be coaxed, nudged and supported out of a person?
When respondents were asked what kind of leadership development opportunities they wanted, the responses were sabbaticals, time to experiment, cross-sector networks, and coaching, in descending order. While each of those suggestions is a really good one, the but comes exceedingly quickly: where will the money come from? who can afford the time?
If it is important, you make the time—that is, if you understand ROI. But the money question is a real one, and until funders are willing to invest, and invest seriously, in leadership development, there will be no money. (According to another McKinsey study that looked at 20 years of foundation giving, funders gave 1% to support leadership development. Based on other data, the authors say that whereas the for-profit sector spent $120/employee on leadership support and development in 2011, the nonprofit sector spent just $29/employee. Some will be chomping to say “you get what you pay for”) .
On so many levels, this is a disaster in the making: first, we are expecting less than ideally equipped leaders to push organizations forward and maximize their ability to serve clients, while, second, identifying and mentoring the future leaders of their organization and/or the larger sector.