US Not for Profit Leadership Still Growing

A new survey has found that the leadership gap is widening in the US Not for Profit sector at a far greater rate than predicted in 2006.

Bridgespan Group’s recent 2009 report, "Finding Leaders for America’s Nonprofits", commissioned by American Express Foundation, explores the nature and dimensions of the evolving Not for profit leadership deficit through interviews with 433 U.S. leaders of NFPs with $1 million or more in revenues, offering a perspective on organisations’ hiring needs and plans, what they find most valuable in candidates for senior leadership positions, and more. 

The Bridgespan survey found that the leadership gap is widening and may ultimately be greater than the Bridgespan Group had predicted. Specifically, respondents to the recent survey reported that actual senior job openings in 2008 totaled 77,000, or 43 percent above the leadership gap previously forecast in "The Nonprofit Sector’s Leadership Deficit". 

The report says that in the face of anticipated baby boomer retirements, many of those surveyed cited a need to fill roles with increasing management complexity, and they foresee challenges in finding candidates who are both qualified for the roles and who are cultural fits with their organisations. 

The report also reveals how managerial skills from the business sector can boost leadership capacity among NFPs and ways in which  organisations are filling their most critical senior leadership roles. 

The study data further indicates:

· In the next 12 months, 28 percent of NFP organisations with revenues of $1 million and above plan to make one or more senior management hires, translating to 24,000 vacancies in 2009.

· Projected vacancies are largely the result of retirement, since much of the existing leadership is comprised of boomers. Vacancies also stem from new roles being created due to an increase in organizational complexity based on growth in prior years. The need is especially acute in human services and arts organisations.

· Top barriers to finding suitable leaders included compensation and difficulty finding executives with specialized skills, as well as competition for the same in-sector talent pool and lack of resources to find or cultivate new leaders.

· The most important attributes recruiters are seeking include anticipated relevant experience as well as “cultural fit,” or shared passion for the mission (68 percent on average cite fit as a very important asset. That number climbs to 82 percent in the education field).

· 73 percent of respondents said that they value for-profit experience in a candidate.

· 53 percent of U.S. nonprofits surveyed have significant for-profit management experience represented on their senior management teams, including 20 percent in financial roles.

· Additionally, 42 percent of the Executive Directors surveyed had significant management experience in the private sector.

In addition, a series of messages emerged from the survey data, further highlighting key data and its implications in the hiring and recruiting plans of Not for Profit organisations. 

Message No. 1: The leadership deficit in nonprofit organizations remains large, and the gap includes “new–to-the-organization” positions as well as vacancies due to baby boomer retirements (a trend that may have slowed with the downturn, but certainly not abated). During the 18 months from January 2007 to December 2008 nonprofit organizations hired, on average, 1.1 senior managers. With 68,500 U.S. organizations with $1 million in revenues or more, this translates into an annualized 49,000 senior management openings per year. Extend the math to organizations greater than $250,000, assuming only half as many open positions per organization, and we are looking at 77,000 senior openings last year. Twenty-two percent of the positions filled in 2008 were newly created, largely based on growth in prior years and increasing organizational complexity. And as of January 2009, respondents projected that their need for senior talent to join their organizations would continue in the next 12 months, anticipating 24,000 job openings for senior managers. 

Message No. 2: Functional skills matter (and are transferable across sectors or domains).
Specific functional experience is the most highly rated criteria for hiring, with 79 percent of respondents rating it as “very important.” And according to respondents, 50 to 75 percent of the roles they will need to fill in the near future look to require traditional business skills (finance, general management, marketing/communications, planning, evaluation, operations, technology, and human resources). Not for Profit organisations clearly recognize the power of for-profit experience. Seventy-three percent of the survey’s 433 respondents affirmed that they value private sector skills. Forty-two percent of nonprofit CEOs surveyed reported that they, themselves, had significant for-profit management experience; 53 percent of organisations surveyed employ other senior leaders with significant for-profit management experience. 

Message No. 3: Cultural fit is the deal breaker.
While functional expertise is desired and relevant, Bridgespan’s study indicates that only cultural fit can seal the deal, and make the candidate successful once hired. While 79 percent of respondents cited functional experience as very important, 75 percent gave “fit with the culture of our organisation” the same high priority. 

Message 4: Job boards, networks, and search professionals most effectively connect talent to jobs.
For a sector that is notorious for relying on personal relationships, job boards surpassed external networking for first place as a way to reach candidates, with 49 percent of organisations using job boards versus 44 percent using external networking to identify their candidates. Thirty-eight percent of respondents also used general print advertising, but it was found to be among the least effective tools. Only 13 percent used executive search firms, but those that did found them highly effective. 

The full report can be downloaded at  www.bridgespan.org