October Feature: Investing in leaders

David Adams looks at the importance of leadership in the sector, asks whether there is a crisis in this regard, and whether senior management training in the sector is up to scratch

We've now had two years of depressing news stories about job losses in charities, plummeting public donations and inevitable public spending cuts. The current generation of charity chief executives and trustees face exceptionally difficult challenges over the next few years.

But is their ability to overcome those problems being undermined - by the sector's relationship with statutory bodies, by the way a growing number of charities now behave more like private sector organisations and by a lack of investment in younger managers within the sector?

These are some of the concerns expressed by Debra Allcock-Tyler, chief executive at the Directory for Social Change (DSC), who warned delegates at an NCVO conference earlier this year that charity leadership is facing a crisis. Her fear is that the move from grant to contract-based funding has forced voluntary sector leaders to fix their organisations' sights on short-term goals and may have helped change the way some leaders in larger charities now view the purpose of their organisation.

"There are some very good leaders in large charities, but in smaller charities people have a greater concept of their place in the wider world," she says. "They are more likely to cooperate with other charities, whereas we're seeing some larger organisations ruthlessly competing with smaller charities, thinking that because they're larger they're better."

Capable CEOs
She quotes an article written by Adam Sampson, former chief executive of Shelter, for The Guardian in June, in which he described his unease over the sector's move into contract-based public service delivery and at changing attitudes among managers in charities. "Sitting on a train in my suit, surrounded by other middle-aged men tapping away at their laptops ... it was difficult to remember exactly why what I was doing was meant to be so different," Sampson wrote.

But others in the sector are more positive about leaders in charities.
"If you look at the calibre of people taking up chief executive positions, they're enormously capable," says Seb Elsworth, director of strategy at ACEVO. "If you look across our membership you see a hugely skilled group of people who could be earning more elsewhere."

That may be so, but it does often seem to be the case that many charities fail to nurture the talent of younger managers, preferring to recruit senior managers from the private or public sector. "Charities could be investing more in terms of how they develop all the staff and volunteers, including leaders," agrees Ben Kernighan, deputy chief executive at the NCVO.

He doesn't believe that doing this would cost the earth either. He's recently been shadowed by a younger manager working for another organisation. "While that took a lot of their time and a little of my time, it didn't cost anything," he notes. "If you're a young leader and you want to find a mentor, phone them up. Most people will be flattered and it doesn't take a penny out of your training budget."

Leadership training
But ACEVO has expressed concern about the fact that charity organisations invest much less in leadership training (on average, less than one per cent of organisational turnover) than either the public or private sectors (each of which invest about three per cent of turnover).

"It's a difficult thing to justify to donors, but more effective leaders are going to help create more effective organisations," says Seb Elsworth. "Perhaps we need to be more up front with the public, to say 'Here's what we're doing and here's why it works'."

But Joe Saxton, founder at not-for-profit research consultancy nfpSynergy, worries that some of the training that is available is not as effective as it should be. "If someone said to me 'what training should I get if I was interested in a leadership role at a charity?' I'd probably say go and do an MBA. We've got all this training which is all about just working with other not-for-profit people: it's too narrow. If you only work with other people in the charity sector you don't get the breadth of stimulation and challenges to your way of looking at things."

There are also serious concerns about the quality of trustees. In the current, hostile economic climate, there is often a drive to recruit talented trustees from outside, but perhaps the most pressing issue is the need to improve the expertise of those already on the board. "As the amount of money in the sector drops, charities have got to be more professional," says Neal Gilmore, charities principal at accountancy firm HW Fisher, which works closely with a number of charity clients.

"With a lot of smaller charities we would say that there is room for improvement. Problems are going to hit them in a few years' time and they're not going to be prepared. Those charities that are able to deal with the problems of the current economic climate are the ones that have been addressing governance in a wide-ranging way.

"A couple of clients spring to mind where the chief executive has driven it through - a lot of the time you find they are initiators of that kind of change and often they come from outside the sector."

Private sector learning
Tesse Akpeki, former head of the trustee and governance team at the NCVO,
and now a freelance consultant on governance and leadership for various charities, foundations and public sector bodies, feels that charity leaders could learn more from some private sector organisations in terms of developing
a flexible approach to where an organisation fits into the world in which
it operates.

"I feel there are lots of opportunities for voluntary sector organisations to take the best they can be from each sector and craft a unique identity for themselves," she says. "I sometimes feel there's not a depth of leadership thinking. What do we want to deliver, what do we want to be? You need a USP that you can bring to the table."

But Allcock-Tyler remains unimpressed at the implication that charities need to be 'corrected' to fall in line with the working methods of other sectors. "Some small charities are way better run than most businesses," she asserts, pointing out that many are already very familiar with the challenges of operating on the tightest budgets and asking "What is 'professionalism' anyway: a 60 page annual report?"

"Charities do not need to professionalise if that means running themselves like businesses," she continues. "I don't think you're any better suited to work for a charity if you were the financial director of BT - there are so many different issues you need to deal with, like the SORP: you have to learn a whole new set of skills.

"That's not to say that we shouldn't take any people into the sector who were not born and bred in this sector - most of us weren't. It's the presumption that we're not very good that I disagree with. I would say that some of the most competent leaders in the UK run charities. I think the private sector and the public sector have a hell of a lot more to learn from us than we have to learn from them."

Job complexities
Nor does she accept the view that this is the world in which charities now operate and they have to change their ways in order to survive. "Charities exist because people don't like the world we're in, so they try to change it," she says, quoting George Bernard Shaw: 'The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.'

The NCVO's Ben Kernighan is a little more conciliatory. "There are ways in which all the sectors can learn from each other, but I certainly don't think there should be a presumption that people from the voluntary sector are not as good" he says.

"If you think of the complexities of the job, the range of stakeholders you have to engage - I think people who can lead well in the third sector can lead well anywhere. There are great people running charities of all sizes and the sector should do more to develop leadership talent and to attract more talent into the sector."

No-one could argue with that - but perhaps Allcock-Tyler is right to make us think about that Shaw quote: surely one unifying characteristic of the best leaders in the sector is that they do have some element of the unreasonable man inside them, pushing to make a difference.

How to be a better leader

Dame Mary Marsh, director of Clore Social Leadership Programme, gives her ten top tips for leadership in the third sector

Leaders are needed throughout all organisations not just at the
top and this is particularly true in the third sector. These are my top tips developed from my thinking about what are key issues for us to consider with the first cohort of Clore Social Fellows whose appointment was announced recently.

1 Know yourself
As a leader you need to be ready to be honest with yourself about your strengths and how you need to develop to be more effective. This includes recognising qualities and capabilities that are better sought in others around you to ensure critical aspects of leadership for your organisation are covered. In the third sector, commitment to the cause is critical and you will have real passion
for this. Resonance between your values and those of the organisation is also important. You need to know what
drives you.

2 Be yourself

Living by those values is vital so that trust is built in you as someone believed to be authentic, open and honest. Some control is needed to ensure
that any extremes of mood and reaction do not surface too unpredictably.
So being reasonably consistent helps, including sufficient humility and confidence to admit inadequacies and mistakes, at the very least
to yourself.

3 Look after yourself

As leaders take trouble to care for others around them they sometimes forget to look after themselves. So make sure you give yourself time and space for the things that help you to reflect and get energised. Your physical and emotional resilience is critical to how you will be able to lead, and this is all the more the case the nearer you are to the lonely position at the top as director or
chief executive. So make sure you have support maybe from a coach
or mentor too.

4 Know where you are
Understanding the context you are in is key. Collect all the evidence you
can and keep improving the sources of it whether that is about the finances, the delivery of outcomes, the needs and views of beneficiaries, the views of employees, volunteers, trustees and external stakeholders. And make sure you are in touch with the external world and the issues that are emerging.

5 Be focussed about where you are going

So much easier said than done, but do everything you can to have a clear sense of purpose and strategy to deliver always with focus. The biggest challenge of all can be stopping doing some things while investing more in others. If you don't, you may miss the opportunity to strengthen your capacity to deliver much more effectively.

6 Keep checking the context
Don't just take stock at the beginning. Situation sensing is a key skill to develop and use it actively all the time. What are the external dynamics? What
is changing? Test some scenarios and their potential consequences.
And how is the organisation responding to the changes you are implementing. Keep checking have you got the direction, focus and tactics right.
If they are not working, be ready to shift in a timely and effective way.
Don't get stuck in a dead end because you missed what was coming. Good performance management and evaluation built in from the beginning
will help.

7 Never stop communicating
Be clear about your key messages and then keep on using them consistently. Explain 'why' as well as telling 'what'. Think carefully about your audiences and find different ways of presenting what you want to be heard, understood and remembered. And then check that this worked. Being open and direct is nearly always the right thing to do.

8 Grow your people

Most people have potential to develop given the right support, direction and challenge. The best reward is to see someone rise to this, excel and surpass your expectations. But don't fudge the people issues. Tackle the difficult issues. You must get the right people working with you in the right way if you are going to be able to deliver the outcomes you are seeking.

9 Manage up as well as down and sideways
Issues of management are too often seen only in one dimension.
The responsibility for those who report to you is always a significant one and needs to be both challenging as well as developmental. But the need to think actively about those you report to and work alongside is also important and those relationships need managing too, especially so between chief executive and trustees. For the latter we need another set of top 10 tips.

10 Have a restless search for improvement

Never be satisfied that anything is good enough. Nearly everything you do can be better. If you do not strive to improve it is more than likely that things will slip back. So be ready to watch, listen, question, challenge and learn constantly. This is why you need so much drive, energy and resilience to succeed.

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