DRG president David Edell with activist and fundraiser Dan Pallotta at the Spertus Institute for Jewish Learning and Leadership on Nov. 20, 2016 in Chicago, IL. Photo courtesy of Spertus Institute for Jewish Learning and Leadership. Photo by Dan Rest.
Toward the end of last year, I was a speaker at two events. The first was a seminar whose participants were board members, executives and Foundation professionals of Jewish organizations. The second was a symposium at the Spertus Institute for Jewish Learning and Leadership in Chicago, IL where I joined a panel to respond to a presentation by activist and fundraiser Dan Pallotta, the author of “Uncharitable: How Restraints on Nonprofits Undermine Their Potential.” Pallotta argues that nonprofit organizations hold themselves back from significant success when they focus more on keeping expenses low than investing in growth.
In both speaking engagements, I was asked to discuss what organizations are seeking in today’s professional leaders. Because of my work as president of a national executive search firm specializing in the nonprofit sector, I am in the room when search committees are discussing what they are looking for in a new CEO, giving me a unique vantage point.
As I was preparing for these panel discussions, I realized that there were four consistent themes that appeared in most of the job descriptions of some of the organizations that my firm has worked with. They include:
- Vision and inspiration
- Change management
- Business acumen and entrepreneurship
- Technical skills (such as fundraising, staff management and working with a volunteer board)
Each of these themes often means something different in every organization and to different people on each search committee. The differences between the aspirations outlined in job descriptions, the expectations of the individuals who have identified them, the practical challenges of changing culture and achieving new goals with limited resources, are often the variables that ultimately lead to board-CEO tensions. The lack of clarity, search committees’ failure to ensure that the entire leadership is committed to those themes before the search and/or reverting back to old assumptions and behaviors at the conclusion of a search, all have the capacity to undermine the very goals organizations say they want to achieve.
Vision and Leading Change
Transitions provide an opportunity for change. When search committees and boards are asked to discuss the changes they want to implement to help their organizations grow, they focus on things that need to be fixed, which are usually the issues that have led to the transition. However, it’s harder for them to think more broadly about what they need to do to advance their agenda into the future. This is understandable when you consider how complicated operations and funding has become over the years. Many organizations are in a changing environment with new rules and new priorities. Thus, volunteer leadership is often more dependent on finding executives who can bring vision and expertise to an organization in a discussion about what it can strive to achieve in its “next phase.”
As we engage the leadership in conversations about vision and change, many search committees and boards may outline an aggressive list of things they desire as their “next phase.” The list often includes a new strategic plan, changing staff, improving resources and technology, increasing visibility for their work, and of course, increasing funding. But in discussions with candidates, there is sometimes an obvious tension between the aspirations of the “next phase” and the sense that it is the board’s responsibility to keep expenses to a “respectable” level. Search committees and boards rarely have a response to the question asked by candidates about the resources and funds available to implement the changes they desire.
In the best circumstances, we have seen boards that have considered this question in advance. Some have considered a one-time use of funds from their reserves or an increase in the draw of their endowment. Others have made arrangements with funders or foundations that provide capacity funding and a few have gone around the table to raise a discretionary fund to support change. Most often, search committees haven’t even considered these questions or prepared options to invest in the types of changes they want their new leaders to implement. The expectations of a new CEO are to figure out how to “do more with less” and/or raise the money required to fund growth.
Business Acumen and Entrepreneurship
There is a lot of talk these days about the need for nonprofit CEOs who have business acumen and are entrepreneurial. This is another area where words have different meanings to different people. One could argue that if boards and search committees wanted people to run their nonprofits like a business, nonprofits would be spending considerably more of their budgets on marketing, research, innovation and talent to drive significant increases in revenue to support their work (as Dan Pallotta discussed in his TED talk).
In contrast, our discussions with nonprofit clients who are seeking candidates with business acumen focus more on monitoring finance, driving performance, accountability and management effectiveness. When search committees say they want a business-focused CEO, they often mean that they want a professional who will get more out of staff, and find creative ways to do more with less while working to increase revenue. The result of this approach is often ongoing tension and frustration, incremental growth and gradual steps towards addressing growing problems.
Search consultants may discover several contradictions about an organization’s desire and readiness for change. We are told that the leadership is prepared for change and that they want to meet candidates that have led organizations through change. However, when candidates discuss with the search committee, the kinds of change that they brought to other organizations or their approach to change strategy and implementation, some committee members become protective of their organization’s history and culture. They become hesitant to support the change that they outlined as critical in their initial discussions.
Finalists and board leadership must “contract” with each other or adhere to an agreement about the changes required and the strategy for implementation. Equally important is that they commit to support each other through the process so that the leadership and funders’ agreement about new directions is evident to the entire organization.
Recruiting and Retaining Talent
Successful transitions can’t be accomplished without addressing the issue of talent recruitment and retention. If nonprofit organizations want to inspire professionals to work in nonprofit rather than the private sector, they must be prepared to invest in staff salaries, benefits, incentives, career growth, professional development and a positive organizational culture. Like many businesses, too many of our own nonprofit organizations do not meet the basic standards of “best places to work.”
High turnover has a significant impact on the quality of services and an organization’s bottom line. This is one of the reasons why CEOs and volunteer boards have a responsibility to consider the variables that both attract talent and inspire them to stay with an organization.
In their search for a new CEO, search committees and boards must be clear about what the new CEO must accomplish and then provide them with the support and resources to get it done. Without expanding the resources available or motivating and retaining talent, the best and the brightest will ultimately turn away from the sector. Constraints on resources and talent lead to less innovation and research and therefore slow growth and limited impact. As search committees and boards begin to think about the organizational changes their organizations need to advance in the sector, they need to also be prepared to support and invest in the changes they desire.