A new report on nonprofit executive leadership, jointly produced by CompassPoint Nonprofit Services and the Meyer Foundation, is receiving significant attention in the sector. Nonprofit leadership is a crucial issue, of course, and the report raises many vital questions. But I wonder whether the reports’ authors – as well as the trade press coverage – have in some cases extrapolated too far from the results? The Chronicle of Philanthropy’s coverage of the study, Daring to Lead 2011, begins:
“Despite years of warnings, nonprofit groups are unprepared to handle the wave of executive turnover about to hit them hard, according to a new survey of charity leaders. And with many organizations already shaken up by the recession, the stakes of a botched leadership changeover are high.”
I feel like we have been hearing about a “wave” of impending transitions in leadership in the sector for the past decade. Perhaps that’s because we have! Previous iterations of this study, Daring to Lead 2001 and Daring to Lead 2006 issued similar warnings.
In fact, the proportion of leaders saying they will leave their posts in the next five years has actually declined – from 75 percent in the 2006 and 2001 Daring to Lead reports to 67 percent in this latest one. Of course, even 67 percent is a high number, but experience seems to suggest a significant gap between the survey results for this particular question and what actually happens.
Where Will You Be In Five Years?
It seems (if I am drawing the right conclusion from looking at the three reports together) that among the most important findings of this research effort may be this one: surveys – while good for many things (they’re a huge part of what we do at CEP) – are not particularly useful for predicting behavior five years hence. In other words, many people, when asked, say they plan to leave their post within five years but then don’t. Many baby boomers are pushing off retirement, for a whole host of reasons – both financial and other. In addition, as the report notes (although it comes across as a grudging admission), many nonprofit leaders are very happy in their jobs! So it’s not surprising that many elect to stay. The fact is, most of us are not especially good at knowing where we’ll be in five years. Yet the study’s authors build many of their findings and implications around the answers to this question.
Written Succession Plans
In discussing the “high rates” of projected turnover, Daring to Lead 2011 smacks nonprofit boards hard – perhaps, as Curtis Chang of Consulting Within Reach, has argued, too hard. I agree that the report, which warns that “many boards of directors are under-prepared to select and support new leaders,” may be overstating its case. The report takes aim at boards for paying insufficient attention to executive transitions, citing as evidence that “just 17 percent of organizations have a documented succession plan.” But, I wonder, is a “documented succession plan” necessarily a good thing to have? Should a board be discussing succession? Absolutely. Boards and CEOs should talk regularly about whether there are strong internal candidates and how they are developing. They should also have the awkward discussion – as the CEP board did with me at a recent board dinner – of what the board would do if the CEO suddenly died or became incapacitated. But, with a normal departure, a board may well want the flexibility to consider a transition in the context of the moment. Furthermore, if there are multiple potential internal successors, the smartest move may be for a board not to choose until it has to – with the benefit of all possible accumulated knowledge and experience (and an understanding of the particular moment in time). So, while it may (or may not) be that boards are dropping the ball when it comes to thinking about transitions, the fact that most don’t have a “documented succession plan” is not going to keep me up at night.
Board Assessment of CEOs
Among the report’s other findings on boards is that 45 percent of executives indicated that they did not have a performance evaluation within the past year. This is indeed concerning. I believe CEO performance reviews should be annual, but knowing that some nonprofits assess CEOs every other year, I would have been interested to see the data if the question had been asked with a longer time frame. (CEP Board’s assesses me every year, without fail, but also conducts more in-depth, extensive reviews that capture several dozen internal and external perspectives on my performance every few years.) The authors of the study also point to rather startling data indicating that “Thirty-three percent (33%) of current executives followed a leader who was fired or forced to resign, indicating the frequency of mishires and unclear expectations between boards and executives across the sector.” But another interpretation of this statistic would be that nonprofit boards are holding nonprofit leaders to high standards of performance. It suggests boards are not afraid to make a change when it’s warranted and that they are, in fact, assessing CEO performance — and often determining that it is falling short. This interpretation, if plausible, is important because it runs counter to the common misperception that nonprofit jobs come with a lifetime guarantee.
More Than One Interpretation
There aren’t many, perhaps any, more important topics in the sector than nonprofit leadership, and so I commend the authors and funders of this report for drawing attention to the issue. But I’d like to see a little more debate and discussion about what the survey results really mean. For a study like this, I’d also like to see more transparency about the methodology. While the sample of respondents is a large one – more than 3,000 – I could find no information on the methodology section of the report Web site about the response rate. Overall, the report mixes reporting on survey results with interpretation, extrapolation, and recommendation in a way that may not serve its audience well. At least to this reader, there seem often to be plausible alternate interpretations to the ones provided. Given the importance of this topic, I would hope we see more discussion about what the data might really mean in the weeks and months ahead.
Phil Buchanan is President of CEP.
