Are you ready for the Leadership Shift?

Several Canadian studies have been released over the last the last decade predicting a wave of senior leadership retirements in the non-profit sector (see related resources at end). Peel Leadership Centre (PLC) asked us to analyze the data from their first survey of regional non-profit Executive Directors (ED) in the fall of 2013. The Peel Region numbers paint a clear picture of the change to come: more than 50% of EDs plan to leave their roles in the next 1-4 years. By comparison, the Ontario Nonprofit Network (ONN) found that 60% of leaders plan to leave their current role in the next 5 years (2013); and the HR Council of Canada reported that on a national level the number is 55% (2012). When it comes to change readiness, the numbers are even more disconcerting: only 27% of the Peel Region organizations surveyed reported having a succession plan in place.

This data is not new, but the time horizon for this huge leadership shift looms nearer. The 2008 economic downturn has led some leaders in the non-profit and for-profit sectors to delay retirement. Despite this reprieve, it appears few non-profit organizations and boards have engaged in productive conversations about the larger challenges and opportunities that this shift will bring.

Leadership TransitionThe loss of the collective wisdom of retirees over the next 5 years cannot be underestimated. Although some EDs who founded their organizations learned on the job, many long-standing EDs benefitted from professional development programs that were available. Today there are fewer opportunities for leadership development. One promising finding in the PLC survey was that many experienced leaders are mentoring their staff as well as newer EDs. In a recent meeting of supportive housing sector leaders, one newer ED commented how concerned she was about the impending retirement of mentors she has relied on since assuming her role.

The article “Exit Agreements for nonprofit CEOs” (see related resources below) highlights how one organization retained some of this knowledge and expertise by contracting with their former ED to stay involved as a part-time grant-writer after retirement. This arrangement was borne in part out of necessity – their dedicated ED was not financially able to retire after working many years on a low salary without a pension plan. Analysis of the PLC survey data found that many outgoing EDs predict their organizations will need to increase salaries and redesign their role to recruit a successor.

What then, are the opportunities for organizations in this transition? In parallel with the impending leadership transition, a variety of forces are driving change in the non-profit sector. In today’s lean economic times, the models under which many organizations have operated are no longer viable. Funders expect organizations to find efficiencies, deliver evidence-based services, demonstrate impact, engage externally with a range of stakeholders, and act as part of a larger system.

Questions for LeadersThese changes require thinking and acting differently on multiple levels – from how services are designed and delivered, to how charitable work is funded. Organizations need to be nimble and adaptable. This environment demands innovation and an ability to do and lead differently; to collaborate across sectors; and to share leadership internally and externally. A leadership transition is an opportunity to position the organization for this changing environment.

Many studies have pointed to the different values and expectations those from different generations bring to the workplace. Younger generations seek values alignment in their work, opportunities to make a difference, flexibility and greater work-life balance compared to their parents. Both the PLC and ONN survey findings revealed that these interests conflict with the way non-profit leadership roles are currently defined.

Ernst and Young’s (EY) 2013 survey of 1200 professionals in the US highlights some perceived generational strengths and weaknesses of leaders in the workplace. It will be of interest to those developing and recruiting future leaders:EY Generational Differences of Leaders

A Transition Toolbox                                                                                                         EDs and boards both have work to do to prepare and facilitate a smooth leadership transition – key tools include:

  • A succession plan – for the sudden or planned departure of your organization’s leader
  • An exit agreement – that enables your ED to retire at a time that is right for him/her and the organization
  • A development plan – for middle level managers to develop their leadership skills by giving them responsibility for some of the areas that EDs currently fulfill
  • A redesigned ED role – that recognizes and promotes shared leadership; the need for more external, system-level work; and the value of work-life balance

Related resources

  1. “Building leaderful organizations – Succession planning for nonprofits” Executive Transition Monograph Series, Volume 6, The Annie E. Casey Foundation, 2008. http://www.aecf.org/~/media/Pubs/Other/B/BuildingLeaderfulOrganizationsSuccessionPlann/Building%20Leaderful%20Organizations.pdf
  2. “Driving change: A national study of Canadian nonprofit executive leaders, The HR Council for the Nonprofit Sector, 2012. http://www.hrcouncil.ca/documents/driving_change.pdf
  3. “Exit Agreements for Nonprofit CEOs: A Guide for Boards and Executives”, by Tome Adams, Melanie Herman and Tim Wolfred, Nonprofit Quarterly, Fall/Winter 2013 http://nonprofitquarterly.org/governancevoice/23315-exit-agreements-for-nonprofit-ceos-a-guide-for-boards-and-executives.html
  4. “Next generation leaders: What they want and need from the workplace” by Terri Klass, Judy Lindenberger and Jean-Baptiste Marchais. Nonprofit Quarterly online July 19, 2011.  http://www.nonprofitquarterly.org/index.php?option=com_content&view=article&id=14156&catid=153&Itemid=336
  5.  “Shaping the Future: Leadership in Ontario’s Nonprofit Labour Force – Summary of Findings” Prepared by Elizabeth McIsaac, Stella Park, Lynne Toupin for The Ontario Nonprofit Network and the Mowat Centre, University of Toronto. http://mowatcentre.ca/pdfs/mowatResearch/88.pdf
  6.  “Who’s Leading Non-profits in Peel Region? A Snapshot of Executive Directors – 2013 ED Survey” prepared by Sandi Trillo and Ruth Armstrong for Peel Leadership Centre, September 2013.  http://www.peelleadershipcentre.org/wp-content/uploads/2013/09/PLC-ED-Survey-2013.pdf
  7. “Executive summary: Younger managers rise in the ranks” EY Survey, September 2013. http://www.multivu.com/assets/63068/documents/63068-Executive-Summary-Generations-Research-081913-SCORE-APPROVED-original.pdf

Sandi Trillo and Ruth Armstrong, VISION Management Services

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