December/January 2012 Cover Feature: The Good Leader
Written by Duncan Jefferies
Being a leader is never easy – as Martin Johnson, Rupert Murdoch and any number of politicians can attest. But for charity CEOs the past few years have proved particularly challenging. The financial crash and harsh government cuts have sapped confidence, eroded revenue streams and generally made life more difficult across the sector – all at a time when more people are turning to charities for help (an ACEVO and Charities Aid Foundation study found that 72% of charities are experiencing a rise in demand for services.)
Even taking into account the most optimistic economic forecasts, this perfect storm of reduced resources and increased need shows no sign of breaking. Charity leaders will need to draw upon a broad range of skills to steer their organisations through the tumultuous months – or even years – ahead. But are charities attracting the right people to meet these challenges?
The CEOs of the largest charities come from a variety of work environments. “Some have been in the sector for a long time, some have had a career in the public or private sector...so in that sense their backgrounds are quite diverse,”says Dan Corry, chief executive, New Philanthropy Capital.
However, Richard Doughty, chair of NCVO's Leadership 20:20 commission, believes the sector's leadership “doesn't reflect the diversity of civil society's constitutes” and claims more needs to be done to address this. “Considering the number of qualified people who work in our sector, and the fact that around 9,000 graduates join it every year, we have a very well experienced, very well qualified, very talented workforce,” he says. “But the majority of our leaders are still being imported.”
Dame Mary Marsh, director of the Clore Social Leadership Programme, agrees: “If you look at the big charities, the pool is probably too skewed to people from outside the sector. But we don't have people with a finance background and social sector experience who think of being chief executives; very few ex-charity finance directors are chief executives, as indeed are very few ex-fundraising directors.”
Leadership development is often not given the same level of attention in the third sector, as it is in the public and private sphere, partly because finding the money to support a fully-fledged training and development programme can prove difficult.
“As budgets shrink one of the first things that will be cut is, unfortunately, personal development for leaders in the organisation,” says Seb Elsworth, director of strategy, ACEVO. “But it’s a bit of a vicious circle if you're not investing in leadership development, as its going to be harder for the organisation to be able to get though some of the tough decisions that will be needed.”
In 2008, NCVO developed a new initiative, Leadership 20:20, which brought together a group of emerging leaders to discuss the challenges facing leaders in civil society. Over a course of two years, numerous meetings took place up-and-down the country, with the aim of finding sustainable ways for emerging
leaders to develop their skills. “We wanted to look at four specific areas,” notes
Doughty. These were: identifying pathways into civil society leadership; attracting and retaining the most influential leaders; connecting and developing emerging leaders; and addressing the challenges that future leaders will face.
The initial pilot group recommended that a formal commission be established, which was set up in April 2010 by NCVO, with commissioners chosen via a local
recruitment process. The commission, which is headed by Baroness Tanni Grey-
Thompson, then undertook an open consultation earlier this year. It is due to publish and launch its recommendations for developing future leaders in December.
Roles, responsibilities, relationships
Whether or not leaders come from inside, or outside, the sector, all charities want to ensure they have the best person for the job. So how should they go about attracting top talent? According to Oonagh Smyth, senior advisor (Governance and Collaboration) at NCVO, charities must be “very clear about the roles, responsibilities and relationships within the organisation.”
She also advises them to review job descriptions and personal specifications whenever there is an opportunity to do so, in order to ensure they are fit for purpose. “Bring someone from the outside in to give an objective view, benchmark with other charities and be realistic about what you want and would value.”
Marketing is important too if charities and trustees want to attract the most inspiring leaders; they need to consider how they appear to the outside world. “They should consider whether they are articulating their impact clearly enough and whether they are considered to be professional. Reputation is extremely important in attracting the right people to work for the charity,” says Smyth.
In other words, charities need to play to their strengths, as well as consider why people might be looking for a role with a not-for-profit. “People join the charity sector at various stages of their career – whether it's the first job, or something they come to later in life – because they're looking for something else,” says Doughty. “We should look for the best and most influential leaders from all sectors, including our own. And we shouldn't be afraid to talk about the values and the ethos of the person we're looking for.”
The economic downturn may provide opportunities to pick up high-caliber staff who have either been forced to leave positions in the private or public sector, or are looking for a career change – although tight charity budgets may limit the salary packages that organisations are able to offer. “There will be a lot of people at the moment who thought their whole career would be in the private or public sector whose jobs have disappeared,” says Corry. “There's the potential now for charities, when they're recruiting, to think about a much wider set of people who might be interested in the role.”
So what skills might these individuals be able to transfer over from their private and public sector roles to a charity environment? Well, Smyth says there may in fact “be an argument that we need to up-skill the sector as a whole in terms of building commercial skills, in order to compete for large scale contracts and diversify our funding. But we have fantastic and inspirational leaders within our sector that we can learn from, and there is not always a clear demarcation between the management styles in the different sectors.”
Research by Acevo suggests that movement between the sectors is already
greater than one might expect. “The largest proportion of our members actually began their career in the public sector,” says Elsworth. “But we also have a lot of movement from the private sector into the voluntary sector as well, so the majority of our members have experience of working in other areas. That definitely gives them breadth and knowledge.”
That is always useful for a CEO, for as Corry says: “It's a very difficult role. You've got to be much more strategic, you've got to work out how to use your
time, how much to interact with your senior management team, how to manage your trustees. There's probably not a lot of other jobs in the organisation that can really get you ready for that.”
He feels that it will be easier for someone who has worked in a number of charities over the course of their career to adapt to the demands of leadership.
“If you only know one organisation and one culture, then you're highly unlikely
to be able to think laterally about how you could do your chief executive job in a different way.”
So while there is clearly no “one-size-fits-all” approach to charity leadership – given the diverse nature of the sector – there are undoubtedly techniques that people transferring from a private or public sector CEO role can apply to charity management. “A lot of the tensions about the way the organisation needs to run are similar,” says Elsworth. “But I think charity leadership generally means you've
got to manage more relationships with stakeholders...it's potentially more complex, sometimes, running a charity.”
He also warns against making assumptions about the motivations behind decision making in the private and not-for-profit sector. “It's often said that the profit motive is the all governing drive for leaders in the private sector – that everything else is sacrificed for return of profit to shareholders. I think that's a bit simplistic in terms of what motivates leaders in the private sector; the need to provide excellent customer service relates well to how charities need to be providing excellent services for their beneficiaries.”
Meeting the challenges
Whether charity leader's backgrounds are in the private, public or third sector, they will often be facing similar challenges once they take the helm of a sector organisation. The economic situation has also created a raft of new pitfalls. “Focusing your leadership on reorganising and restricting, as well as finding ways to survive with less, means that CEOs may stop scanning the horizons for new opportunities,” says Smyth.
“Organisational survival is obviously an important objective but this is not why charities exist. Uppermost in all our minds should be renewing your organisational purpose and thinking about the best way to achieve your mission. It is essential that charities keep an eye on their organisational vision and beneficiaries.” The reduction in resources as a result of the current economic conditions means there is more of a need, particularly for single issue focused organisations, to collaborate with others in the sector, which can necessitate a different way of thinking and operating from a CEO – especially when there is a need to bring the board, staff and beneficiaries of their services round to the benefits of a new way of working.
“It might be that a partnership isn't actually about two charities doing very similar things joining up; it might be about two charities doing complementary things joining forces,” says Elsworth. “You might have a housing charity that teams up with an employment support organisation that helps the same group of people...you can create better value that way.”
Articulating the impact a charity is having, and how resources are being used, is also an important skill that charity leaders must master. “This is more important than ever when money is tight – what makes your organisation different, what difference do you make and how would the picture look if your organisation weren’t there?” says Smyth.
There are also challenges around navigating internal anxiety, and any leader or charity CEO will also need to be adept at identifying different sources of income. “It's not just nlooking for funding; it's looking at your business model and being strategic – deciding what it is you're trying to do, and what's the best way to do it, and where the revenue streams that will support that are,” says Marsh. “It's not
only about looking for new people to donate money to you, but how can you earn it as well. It's a very different way of constructing your thinking.”
The relationship between the board and the CEO is of paramount importance in
any organisation. Therefore, as well maintaining a clear overview of where their funding is coming from, charity leaders also need to be up to speed on important governance issues. “They bridge the gap between the staff and the board as the leaders of the organisation,” says Smyth.
“To do this effectively the CEO needs to be aware of the roles of trustees (and there are many), they need to help the trustees understand their role and
understand what the trustees need from the CEO.” With so many difficult decisions to be made at the moment, CEOs must ensure that the information they gather and present to the board is concise, accurate and meaningful.
“They should work in partnership with their board to move the organisation forward and above all, they should be honest, even when the messages they need to communicate are difficult,” Smyth adds. On the trustee side, Marsh says there needs to be “a much more transparent approach to how trustees are recruited, and much greater diversity in our trustee boards. It's very odd that we've been slower than some other parts of the world to make progress on that.
The significant changes that are beginning to take hold elsewhere. I appreciate that diversity on private sector boards is still an issue, but their procedures and their transparency has changed.” Ultimately, any good leader will have a clear vision of where they want to take the organisation, for as Smyth says: “Values are so important in our sector that an inspired leader who believes passionately in the values of the charity will make a real difference to the charity’s long term performance.”
Duncan Jefferies is a freelance journalist
Editor Matt Ritchie covers the final Budget for this Parliament, and the official start of the 2015 election campaign