Is your organization ready for the scale of the challenges ahead?
Based upon a number of studies, there are as many as one quarter of all nonprofit Executive Directors/CEO’s (“ED’s) who are planning to transition from their role within the next six months. As much as one-third of nonprofits have had two or more executives exit in the past five years. I’m sure you know some of these organizations.
According to the Annie Casey Foundation, nearly 75% of the nonprofit sector’s executives will reach retirement age before 2021. The number of transitions ahead presents a significant problem for the sector. Very few boards are prepared with succession plans or strategies of how to handle the transition when the leader moves on.
For many volunteer boards, the issue of leadership turnover is obscure and unaddressed, not something that receives a great deal of focus. The magnitude of the problem coupled with the complexity of the potential solutions are not well understood. Based upon available research, the average tenure of a nonprofit ED is four to six years. These results may be further skewed by the long-term and/or founders transition due to retirement.
So why is this a problem? Given the fiscal cycles most nonprofits are subject to, short tenures leave little time to introduce new programs, build effective teams, and secure financial viability and sustainability. Whatever progress effective leaders accomplish during this time is often undermined by rapid turnover which will prove to be costly and destabilizing to the organization. With eroding credibility and resources, each new start or re-set becomes more difficult then the previous one. It becomes a constant challenge to convince funders, staff, community partners, and board volunteers that “this time will be different”.
Make no mistake, the scale of this problem is growing. Take a look at the disproportionate number of nonprofits that are currently led by baby boomers who will be retiring in the next ten years. Nationally this represents tens of thousands of transitions. According to Bridgespan, the nonprofit sector will need to add an average of 80,000 new senior managers every year to meet the demand. Where will these managers come from? How will they be selected and trained? To what extent will competition for talent effect the quality of the human capital pool?
In short, the labor, staffing and leadership challenges facing the nonprofit sector over the next ten to fifteen years is critical. As the need for social services continues to grow, and national, state and local governments restrict or reduce funding, the social sector will have to fill the gaps. Finding and attracting experienced leaders to take on this challenge will be difficult. Each and every leadership transition will be critical to get right. Poor transitions and flailing organizations will only exacerbate the already critical situation. This is a problem we need to solve.