There is often talk of a leadership deficit in beyond profit organisations, and most executives or trustees within the sector are likely to have experienced difficulties attracting and recruiting to key positions. But how much time is truly spent on growing leaders within organisations? More than 700,000 people work in the UK beyond profit sector, so there should be plenty of potential.
I don’t believe that the commercial sector is ‘better’ than beyond profit. However, there is evidence to suggest businesses have more success developing their own leaders. Many companies focus strongly on talent and a 75-80% internal hire rate is often the expectation. According to research from the US, in the beyond profit sector the internal hire rate is around 30% for executive positions. Based on conversations we have had with some of the larger charities in the UK, and Prospectus’ experience of leading a significant number of searches for executive hires across the full beyond profit spectrum, I believe that figure reflects reality here too.
There are many explanations as to why beyond profit organisations appear less successful developing talent and making internal hires to key roles than their commercial counterparts. One obvious factor is that many organisations are small and do not have adequate resources to dedicate to leadership development. This also results in people moving from organisation to organisation quite frequently to continue learning and developing. Chief Executives and managers often avoid discussing issues of professional development, preferring instead to focus on what is perceived as more pressing business. Another factor can be how organisations are funded, and the role of the Chief Executive in developing and managing the relationships with funders and other key stakeholders. There is simply not enough time to dedicate to internal issues, including people, because they need to be so focused on what happens externally. Also, many charities are organised along strict functional lines, meaning that people do not get enough exposure in areas outside their specialism, and their development suffers as a result.
So what can Beyond Profit organisations do to further professional development and increase the ratio of internal promotions to key leadership roles?
At Prospectus, very few of our search mandates conclude with an internal hire. In some aspects this can be seen as a success for us – we were able to find better qualified candidates than those already working for our clients. However, in my view, a thorough executive search followed by appropriate selection and assessment, where an internal candidate is promoted and appointed, is usually just as much of an achievement for everyone involved as when someone from the outside is recruited.
Succession management is different from succession planning, which is of course very important too and you can read more about this here; in essence it’s about moving away from a ‘replacement’ mind-set to an organisational performance culture where developing people’s skills and leadership credentials and constantly challenging ourselves to learn, become part of an organisation’s DNA.
As far as possible, beyond profit organisations should prioritise investing in the development of their managers and leaders. Doing so isn’t a luxury; on the contrary, it will ensure increased impact.