Charities Face Mounting Challenges in Hiring and Retaining Executives

When researchers at the Support Center for Nonprofit Management, in San Francisco,

ALSO SEE:

Managing Turnover at the Top

asked a group of 91 first-time executive directors how many of their predecessors had gone on to another non-profit leadership job, they were stunned by the response.

Only 14 per cent had done so, a fact that prompted the researchers to worry about a talent drain among Bay Area charity executives.

And when the Neighborhood Reinvestment Corporation, a network of 184 neighborhood-rehabilitation groups, surveyed its affiliates to find out how long the executive directors were staying in their jobs, network leaders were equally shocked.

They found that the median tenure was just three years. The high turnover was causing turmoil among individual groups, preventing them from raising funds, and hampering their efforts to build low-cost housing and make other improvements to poor neighborhoods.

While there are no large-scale, comprehensive studies of leadership changes at non-profit organizations, those two small studies highlight the mounting challenges that charities face in hiring and keeping chief executive officers.

They also help to explain why a growing number of non-profit organizations are putting more effort and resources into how to prepare for and survive leadership changes, and how to recruit new executives who will stay put.

“If you’re clear about what kind of transition it is, what’s going on in this organization, and what’s needed for it to succeed, you have a higher likelihood of finding the right person to lead it,” says Tom Adams, a non-profit management consultant who led the study of leadership changes at neighborhood-revitalization groups.

The Neighborhood Reinvestment Corporation first turned its attention to executive transitions in 1991, after the organization determined that 40 per cent of the executives of its affiliates had been on the job for less than two years, and that the median tenure for an executive was less than three years.

In 1992, following the survey, the corporation embarked on a research project, financed by $947,000 from the W. K. Kellogg Foundation, to determine why local organizations were having trouble keeping executives, and to come up with solutions to help the groups conduct better leadership searches and transitions.

Among other things, the study found that executives were leaving because they felt misled about the job or how well the organization was doing. Many also disagreed with the board about the group’s goals and missions.

The study also found that low salaries and a lack of benefits were limiting the pool of candidates for executive positions at local neighborhood-revitalization groups.

Working closely with several dozen of the local organizations, Mr. Adams and other researchers came up with an array of solutions, including raising executive salaries to an average of $50,000, and providing retirement benefits.

They also developed a menu of executive-transition services to help the groups conduct more-professional leadership searches. The services include conducting a review of a group’s mission and goals, putting together a transition committee, dealing with a departing executive, and deciding what qualities a new director should possess.

Over the last several years, says Mr. Adams, the compensation incentives and new transition practices have helped the Neighborhood Reinvestment Corporation’s local affiliates increase median tenure from three to six years.

The group, in collaboration with the National Center for Nonprofit Boards, also published a handbook earlier this year, titled “Managing Executive Transitions,” that offers general advice on how to deal with leadership changes and how to recruit a new executive.

While high executive turnover was a major concern for the neighborhood groups, it emerged only as a secondary concern in the Support Center’s study of San Francisco-area charities.

The study, conducted last year, surveyed 137 non-profit executive directors, including 91 first-time directors.

It found that they stayed in their jobs for an average of nearly six years, with a median tenure of about four years.

The big surprise, says Jan Masaoka, the Support Center’s director, was that for many of the executive directors being a non-profit leader was a one-time gig.

Nearly two-thirds of those who responded to the survey were first-time executive directors, and just 20 per cent of those responded that they would want their next job to be as an executive director.

“That says a lot about how we hire, how we support, and how we train executives,” Ms. Masaoka says.

Many of the directors who responded to the survey said that their commitment to an organization’s mission led them to take the job, but high levels of stress, burnout, and better opportunities to advance their careers were all factors that might drive them from the non-profit world.

The study recommended that non-profit boards, which often begin searches expecting to hire an experienced director, broaden their search to include people who are considering entering the field for the first time.

It also recommended that organizations work harder to retain executives by offering them incentives such as retirement benefits. And it suggested that grant makers consider setting aside funds to assist their grantees in transitions.

Says Ms. Masaoka: “We need to be building career paths and the infrastructure that supports those career paths.”

Copies of “Leadership Lost: A Study on Executive Director Tenure and Experience” are available for $14.85 apiece from the Support Center for Nonprofit Management, 706 Mission Street, Fifth Floor, San Francisco 94103; fax (415) 541-7708; http://www.supportcenter.org/sf/publications/index.html.

Copies of “Managing Executive Transitions” are available for $8 apiece from the National Center for Nonprofit Boards, 1828 L Street, N.W., Suite 900, Washington 20036-5104; (800) 883-6262.