Q&A talks about the world of nonprofit executives with Jim Williamson, president of the Community Foundation of Greater New Britain. The foundation, established in 1941, serves Berlin, New Britain, Plainville and Southington by raising resources and developing partnerships that make a measurable improvement in the quality of life.
Q: The down economy hurts nonprofit revenues. How does it affect the hiring of nonprofit executives?
A: In 2006, two national studies predicted that up to 75 percent of nonprofit executives planned to retire within five years, creating the specter of a “leadership vacuum” within the sector. The 2008 stock market downturn changed a lot of those plans, creating a “good news — bad news” scenario: nonprofits are retaining experienced leadership longer to help them transition to whatever the “new normal” of the future nonprofit business model will be, but at the same time, has created a “bottleneck” for talented, upcoming leaders. Salary freezes and budget cuts are likely to encourage these future leaders to look elsewhere for the growth opportunities now denied them. Astute boards facing these transitions need to recognize these situations as they emerge, and act with creativity and sensitivity to assure their nonprofits are not left with an even deeper leadership hole to fill.
Q: Has there been a trend of people trying to move over from the for-profit world to become nonprofit executives?
A: Competition for these positions has been accelerating since the ‘80s and Corporate America’s virtual elimination of its middle management layer. The recession has merely enhanced this trend. Nonprofit boards must be extremely diligent in their executive search process to assure the right fit between the organization’s leadership needs and the skills and motivations of candidates. Clarity of expectation between candidates and boards on issues such as salary and benefits, working conditions, organizational goals and the skill transfer required to attain them is more critical than ever now.
Q: Does a for-profit background help prepare people for becoming a nonprofit executive?
A: For-profit and non-profits share the same essential business process, so it has long been common for people to make a successful transition between the two worlds. That said, candidates have to understand and accept the very real difference between the management authority accorded a for-profit CEO versus the non-profit CEO. Where transitions fail are in frustration over slow decision-making by boards, interference in daily management, and a lack of attention to a clear differentiation between the board’s and CEO’s respective responsibilities.
Q: What misconceptions do people have about working as a nonprofit executive? Is it possible to make a healthy living as a nonprofit executive?
A: Nonprofit executives often have to accept a “life in a glass bubble” and the limitations that puts on their other interests, especially local politics. Evening meetings and weekend events can restrict family time, while the conflicting demands of boards, staff, clients and funders often creates stresses not normally experienced in the for-profit arena. A lack of clear success metrics, i.e. profit vs. loss, in favor of the nonprofit’s less-measurable “social benefit” can also be frustrating to someone moving from one world to the next. Nonprofit salaries, particularly at the executive level among larger organizations, are experiencing growing scrutiny, even when most are not competitive with comparably sized for-profit businesses. The lack of bonus programs, profit-sharing, stock option or deferred compensation opportunities, common in the for-profit world, is also overlooked as a key difference in nonprofit executive compensation.
Q: When it comes to hiring, do most nonprofits do thorough searches? Do they adapt for-profit methods or is hiring largely done through word-of-mouth methods and/or newspaper advertisements?
A: Hiring a CEO is typically the one thing most nonprofit boards have the least experience with. In the present buyer’s market, they can run the risk of opting for a quick hire instead of taking the time to assure the right fit of skills and experience for the challenges the nonprofit faces. A good executive search should always be preceded by a board retreat to update the nonprofit’s strategic plan and determine the specific skills that the nonprofit needs the new CEO to have. The CEO job description should be updated, and research done on salary and benefits paid within the nonprofit’s field and among comparably sized organizations. A search budget should also be set, including advertising and interview costs, and authority for its use established. Regardless of size, there is a definite correlation between the time spent to assure that the project is carefully planned and thoroughly organized and its end result.
