Non-profit Leadership Development in Canada
Non-profit Leadership Development in Canada
Introduction
The purpose of this report is to survey the current state of leadership development in the non-profit sector in Canada: identify the gaps, if any, articulate the challenges and issues, and comment on the current and future leadership development needs of the sector. The report was originally developed to support Non-profit Leaders of Tomorrow Canada (NLTC), a new leadership development program being advanced by Canadian and international sector leaders. The program will be modeled after the successful CEE Leaders of Tomorrow currently operating in English under the auspices of the Slovak Fundraising Centre, and recently expanded to Germany for German speaking participants.
For discussion purposes, leadership is defined as follows:
“Leadership is about setting direction. It is about creating a vision, empowering and inspiring people to want to achieve the vision, and enabling them to do so with energy and speed through an effective strategy. In its most basic sense, leadership is about mobilizing a group of people to jump into a better future.” - John P. Kotter
The concept of leadership extends beyond the “C” suite to front line workers. It is not only those in the front office or the C suite who have a responsibility to lead.
In recent years, much noise has been made in the media and elsewhere about a leadership ‘crisis.’ A lack of leadership quality and quantity in the non-profit sector currently prevails: supply simply cannot meet present and future demand. A leadership deficit is indeed worrisome, because, more than any other factor, leadership affects the success or failure of an enterprise. Non-profits must have access to a steady pipeline of proficient leaders to achieve their goals and embrace the future with confidence.
Developing and retaining talent is a perennial issue for non-profits and NGOs around the globe. It is a source of concern for many as they carefully monitor employee turnover. The ability to develop leaders is inextricably linked to retaining them: over 40 percent of voluntary turnover among non-profits is due to “lack of opportunity for upward mobility/career growth,” according to a Non-profit HR survey.
Acknowledging there is a problem, however, is only the first step. We must move beyond denouncing and despairing to finding solutions.
Fresh Development Options Required
Leadership is crucial to the success of any entity. A great leader, regardless of where they sit in an organization, can take an average group and bring it to excellence. A bad leader can ruin a great group. Yet we mostly leave leadership emergence and development to chance. Like a rare gem, quality leadership is extremely precious.
In order to ensure an abundant supply of capable leaders in the Canadian non-profit sector we must strategically generate a critical leadership mass. Leadership development is a major enterprise, not a casual undertaking. Sending someone on a two-day training program simply won’t do; time, caring, and respect for the uniqueness of each individual are required.
As baby boomers retire en masse, a vacuum is created. Non-profits and society in general are looking for established leaders and for effective ways to prepare future leaders. Producing larger quantities of capable leaders will require more comprehensive approaches and reaching out to younger generations. The sector requires a Canada-wide non-profit leadership strategy to make leadership a priority, to stress the importance of competence, and the imperative to invest in this crucial resource.
All Canadians will benefit from expanding the non-profit leadership talent pool. Leadership is like a chain, a flexible series of joined links, used to pull or transmit power. As leaders continue to grow and develop, they add links to their chain and expand their leadership capacity.
The Need
According to the Center for Creative Leadership (CCL), crucial leadership skills in today’s non-profit organizations are insufficient for meeting current and future needs and many managers are voicing their fears that the talent they have is not the talent they need. Indeed, with the growing shortage of non-profit managers and leaders, many professionals in organizations find themselves thrust into managerial and leadership positions without the knowledge and skills necessary to be effective.
The future leadership of Canada’s non-profit organizations should not be left in the hands of one executive director or a charismatic figure. The sector is under a tremendous amount of stress. Along with financial challenges, more citizens require assistance from non-profits with increasingly complex problems. The sector also faces challenges recruiting and retaining employees and qualified board members, and often do not provide funds for ongoing training or professional development. As baby boomers leave non-profits, donors, employees, volunteers, board members, and service recipients will all feel the effects of leaderless organizations. A lack of succession plans and suitable replacements, burn-out, an aging leadership population, a dwindling pool of support workers, and core funding issues have all come together to pose serious risks for the entire sector. Without effective leadership, non-profit organizations flounder, they operate in survival mode, trying to keep the organization afloat instead of effectively providing service.
Research for this report found little evidence that non-profits are presently “stewarding” their leaders. While some development opportunities are available, there seems an unfortunate emphasis on conferences and seminars. While recognizing the importance of these opportunities for networking and mutual support afforded by events of this nature, more rigorous forms of development are those most commonly associated with meaningful enhancements to performance. A recent survey by the Concord Leadership Group found that few non-profit organizations currently make leadership training or mentoring/coaching available to their leaders and the qualitative comments offered in the survey speak to the genuine hunger there is for new professional development opportunities. It is important to recognize, though, that simply making such opportunities available is not enough. Concomitant with the requisite financial resources must come a genuine commitment to helping the leader make the most of the opportunity. Many of the non-profit leaders in Concord’s sample were frustrated by their inability to take advantage of what was already available because of the pressures of work. The leaders also lamented that leadership training, mentoring, and coaching are the key development needs that are currently going unmet.
The survey also found that only 2.3% of non-profit leaders indicated that a formal succession plan exists for their own or other senior leadership positions. Few appeared to have given the matter serious consideration or to have approached succession in a rigorous manner, assessing the skills and attributes that might ultimately be desired. Given the enhanced demand for non-profit leaders noted earlier, this is certainly a facet of governance that boards should be paying greater attention to. Investment in leadership is low, oversight of leadership is weak, and succession planning for key leadership roles in many organizations is notable only by its absence.
Another study by the CCL found that non-profit leaders are not adequately prepared for the future and that today’s leadership capacity is insufficient to meet future leadership requirements. Four of the most important leadership skills — inspiring commitment, leading employees, strategic planning, and change management — are among the weakest competencies for today’s leaders. The leadership gap appears notably in high-priority, high-stakes areas. Other areas where there is a significant gap between the needed and existing skill levels are employee development and self-awareness.
The CCL study surfaced six key leadership trends that are statistically significant regarding the leadership skills gap:
1. Outdated leadership styles continue through current selection, development, and reward practices.
2. Leaders are resistant to changing their leadership style.
3. Leadership development is an underinvested component in organizations.
4. Current business challenges require a different style of leadership.
5. A democratic leadership style is needed for innovation.
6. Many employees are not interested in developing leadership skills.
These results clearly suggest that organizations and leaders could benefit from investing in leadership development. Of course, for organizations to prevent a system-wide leadership gap, they need to create a cohesive approach to leadership development. Unfortunately, many organizations lack a coherent sense of what needs to be developed and how to go about it.
While some of the requisite talent does already exist, competition for that talent is intense, leading to high levels of executive turnover, particularly in smaller non-profits that often lack the resources to compete for the better players. It appears that many leaders feel under-valued or under-invested in, and, as a consequence, leave to seek better opportunities elsewhere – often in the for-profit world. Given the positive return on leadership investment that has been evidenced in the for-profit sector, it would seem reasonable to conclude that a more systematic focus on, and investment in, leadership development in the non-profit sector is badly needed. Evidence suggests that this could pay off both in terms of more effective delivery of social interventions and the attraction of the additional resources to make that more effective delivery a reality.
A more formal approach to leadership development is also an opportunity for non-profits to advance goals of diversity, equity, and inclusion. The systems they use to assess and develop talent are what Race Forward, a non-profit racial justice organization, terms “choice points” that either accelerate or block the path to a more inclusive and equitable workplace. The leaders who will take missions forward tomorrow can’t be a carbon copy of today, not if organizations hope to bring the best of their teams and communities to bear in the work. A leadership development system can drive professional growth for a more diverse set of leaders in an organization, considering race, ethnicity, gender, caste, and other markers of identity that have historically excluded talent or created “ceilings” for advancement.
Experience tells us that leadership development is an ongoing process. Effective leadership development programs like that being offered by the NLTC are emergent, experiential, and bespoke. The process is highly personal and enhances individual leadership development in the context of the NGO sector. It is geared to developing personal confidence as well as creating the new mindsets needed by those in leadership positions. It is a creative and catalytic process that effects change. It is also a highly sensitive (at times confidential) process that is facilitated by experienced sector leaders supported with time and commitment. Leadership development should be based around a structured and systematic program of activities that focuses on the personal and practical priorities of those involved and reflects the cultural and institutional environment in which they work.
The Case for Succession Planning
At the most basic level, succession planning is a sound risk management practice. It is critical to ensuring the viability of an agency in the event of a key manager’s unplanned absence. If an organization is large enough to develop a deep talent pool, it can sustain services through the temporary loss of one or more administrators due to sickness or emergency. But beyond that, an organization that gives ongoing attention to talent-focused succession planning can be nimbler and more flexible, having the skills and capacity at hand to meet whatever challenges may arise. In turn, the executive’s job becomes more “doable” because leadership is shared. Finally, succession planning can both energize and reassure a board by providing the occasion for high-level strategy development and demonstrating that staff leadership is broadly shared and backed up. Leaders, boards, and organizations who can overcome initial reservations about succession planning ultimately find that this work generates unforeseen opportunities and excitement for the future.
Leadership is a role that will eventually be inherited by another employee in the future. Employees working under a leader will soak up the experiences and challenges their current leader faces. This will ultimately set the stage for keen employees to step up to the plate for future leadership roles. While not every staff member is cut out to be a leader, being exposed to a great leader can drastically improve the confidence of future leaders in an organization. Training current leaders well is a way to prepare future leaders to take over prominent positions.
Planning for succession in a single agency may also benefit the entire network of non-profits so important to the health of communities. As staff develop their skills and ambitions, some will migrate to job opportunities in other agencies, while those same agencies will return the courtesy with potential leaders from their own staffs. As leadership development and succession planning take root as standard practice, the entire non-profit sector will become that much stronger and more effective in pursuing its community impact aims.
The Importance of Investing in Leadership Development During Economic Downturn and Recession
Most economists agree that there’s a high likelihood of a recession within the next twelve months. Increasing global inflation and anemic growth forecasts suggest worrisome conditions ahead. Many countries are close to, or already slipping into recession, and a full recovery doesn’t appear likely for many months.
Previously during difficult times, many organizations would rely on cost-cutting measures that impacted talent, such as pay cuts, furloughs, and even layoffs. Some have also historically looked at other areas where they might be able to cut expenses in their budgets for the next fiscal year, and one of the biggest areas for budget cuts has often been training and development. While such cuts can result in short-term expense savings, reducing training and development — especially leadership development — can have negative long-term effects, especially given the challenges of leading in the new hybrid workplace environment at many organizations.
A resilient jobs market with unemployment rates near half-century lows have made talent shortages very real for many organizations. As a result, layoffs will likely be a tactic of last resort in poor economic times for most organizations who are already struggling to find and keep the talent they need. Additionally, top talent powers an organization’s growth both during and after an economic downturn, and non-profits need to ensure they have the skills and competencies to survive and thrive. Developing and retaining top-performing employees is essential in any business strategy, and especially during a time of economic uncertainty.
Development opportunities are also one of the biggest proven drivers of employee recruitment, engagement, and retention, so providing access to leadership development even during downturns will not only help an organization keep the leaders it already has, it will also help the organization weather the economic storms and position it for success as it navigates out of the recession and back into growth. Organizations that continue to make leadership development a priority will find it gives them a competitive advantage, helps them achieve their strategy, and improves their ability to attain their goals. Because leadership development is so closely linked to an organization’s success, investments should continue to be made in good times and in bad.
Return on Investment
Investing time, human capital, and budget to developing leaders creates a return on investment (ROI) in many critical ways.
Better Leaders Have Greater Impact and are More Productive
The first way leadership development programs create a ROI is by increasing the performance of individual leaders. Programs do so by improving a leader’s productivity as well as that of their team. By learning how to manage time more effectively, by prioritizing and spending time on the most important tasks and focusing on output and not just time spent on tasks, leaders become more productive. In an era of lean organizations where incremental budget and headcount is hard to come by, increasing productivity is a necessity given many non-profit employees are already working more strenuously than ever. The key is to work smarter, not harder.
Further, leadership development programs that equip leaders and managers to better manage conflict can directly impact the bottom line through greater productivity, as well as increase collaboration and innovation. Leaders and managers can learn to better prevent and manage conflict through greater awareness of individual motives, strengths, and personality differences. Leaders can also learn to communicate in a manner that is better received and leads to less conflict.
Better Leaders Build Better Teams
Investing in leadership development also creates a ROI by improving team effectiveness. Specifically, leadership development focused on the effectiveness of leadership teams increases ROI through higher levels of trust, lower conflict, stronger communication, increased collaboration, better and faster decision making, and more accountability.
At its most basic level, the success of teams starts with greater understanding of individual and group personalities and preferences as well as an ability to communicate and collaborate with different types of people. Leadership development efforts that support greater awareness of motives and strengths and the adoption of new communication styles will lead to higher performing teams. Given teams are where real work gets done, investing in the improvement of team performance yields a ROI from leadership development efforts.
Higher Employee and Volunteer Engagement
Developing leaders who can inspire, empower, and build up their team members will directly impact employee and volunteer engagement. Efforts to improve these key relationships will also provide both short and long term benefits. After all, people don’t quit jobs, they quit managers. Higher employee engagement will ultimately lead to lower attrition and support hiring and recruitment efforts – one of the biggest challenges in the current non-profit sector.
Increase Success in Managing Change
Managing organizational change is complicated. Leaders must align people to the reason for the change, often working against long-standing habits and beliefs. Organizations are more likely to succeed when they plan change initiatives proactively and leaders engage employees before, during, and after the change. Leadership development increases people’s ability to lead in a disruptive world. When organizations look beyond developing senior executives and high potentials to unlock the full capabilities of their talent pools, agility is magnified.
Avoiding the Costs of Unwanted Executive Turnover
Some level of turnover at an organization is inevitable — in fact, it can be healthy — and all organizations need to have recruiting and onboarding practices in place to deal with it. Undesired turnover, however, whether voluntary or involuntary, can exact a significant price to the organization. The transaction costs alone of finding and attracting a new employee, particularly at the senior level, can be as high as half of her annual salary. But the costs to an organization in productivity, fundraising, and distraction (as members of the board and senior team turn to recruiting and onboarding critical staff positions) can add up to tens or even hundreds of thousands of dollars more. One study by Penelope Burk, author of Donor-Centered Leadership, suggests that losing a star performer in a senior development role costs nine times her annual salary to replace.
Key elements of the cost of unwanted executive turnover include:
Financial Costs
· Recruiting (e.g. advertising, search fees)
· Hiring inducements (e.g. relocation)
· New hire orientation (e.g. training, “road shows,” coaching)
· Payout of accrued time off for exiting executive
Productivity Costs
· Management/HR time spent recruiting/managing exiting executive’s transition
· Productivity loss due to unfilled positions and time for new hire to ramp up
· Lost expertise, institutional knowledge, or cultural capital of exiting executive
· Lost relationships (e.g. funders, constituents, partners)
· Disruption to strategic direction/momentum
· Other key talent may leave or have lower morale
Given these high costs in dollars, productivity, and effectiveness, non-profits should have enormous incentive to attack the root causes of turnover. Staff members who feel their organizations are supporting their growth stay longer than those who don’t because they trust that their organizations will continue to invest in them over time. A major cause of leadership turnover — non-profits’ failure to cultivate homegrown talent, which drives staff to leave for growth opportunities elsewhere — is addressable but the solution requires the skill and will on the part of senior leaders, boards, funders, and others in the sector to increase opportunities for leadership development.
Harnesses Diversity
Canada is becoming more diverse. But the composition of non-profit executives, boards, donors, and staff is not keeping pace with this reality. Lack of attention to these trends impedes the ability of non-profits to maximize their community impact. In order for non-profits to be responsive to the community, remain relevant, and achieve their desired impact, they need leadership and staff to not only reflect the diversity of the population but also to embrace equity and inclusion.
Advances Long-Term Sustainability
Today’s premier corporations and thought leaders believe that investment in employees is essential to both financial viability and to achieving their mission over the long term. The non-profit sector, however, has been slow to adopt this view. Yet now, more than ever, the high demand for non-profit services presents an opportunity to establish value, make the case for investing in talent, and build a platform for best practices.
Expands the Non-profit Workforce’s Value to Society
Non-profits are formidable job-creators. Its workers produce immeasurable benefits for the public good. Investing in the performance, impact, and sustainability of non-profit professionals fuels the economic and social health of society.
Ultimately, an organization that fails to develop its people will find it more difficult to effectively achieve its goals. Watching talented people walk out the door causes tremendous expense for organizations, from morale, advertising, recruitment, and relocation costs to time spent training new employees. Investments in leadership development are an important driver of success for any organization. Good leaders make for better and happier employees, which not only increases morale but ensures higher retention and productivity. When organizations invest in developing talent, people are better at their jobs, people stay with their employers longer, and others will consider working for these organizations in the first place because they see growth potential. Investing in an organization’s human capital management and leadership development capabilities pays for itself and continues to produce tangible benefits that far exceed the costs.
Conclusion
The work of investing in future leaders is vital to most organizations’ futures and the missions they pursue. At its best, this investment supports a virtuous cycle — people of all backgrounds become better at their jobs, they are more likely to stay with their organization when they see and experience growth, and organizations with great talent are able to push a more inclusive organization forward in pursuing its mission.
Businesses, government agencies, non-profits, and educational organizations need leaders who can effectively navigate complex, changing situations and get the job done. The questions that need to be asked at the organizational level are “Who do we have?,” “What do they need to do?,” and “Are they equipped to do it?”
Numerous studies indicate that organizations today are experiencing a current leadership deficit and can expect a leadership gap in the future. A current deficit of needed non-profit leadership skills is a problem; a gap between current leadership bench strength and future leadership demands is a serious liability. The sooner organizations understand the reality of their leadership situation, the quicker they can move to adapt by refocusing leadership development efforts and rethinking recruitment and retention priorities.
The health of the non-profit sector is dependent upon equipping emerging leaders with key managerial and leadership skills. Funders are increasingly pressuring organizations to hire professionally certified human service administrators with leadership skills. Nevertheless, few non-profit organizations provide in-house leadership training for their staff, and while the number of non-profit management degree and training programs has increased in the last decade, leadership development specific to non-profit organizations has lagged behind. For instance, despite the critical need for preparing students in human services graduate programs to develop management and leadership skills that will make them more marketable and competitive in securing administrative positions in human service agencies, related degree programs (i.e., Social Work, Nursing, Public Health) are lagging in their approach to both management and leadership education, thus preparing an inadequate number of non-profit workers to become future administrators or leaders.
After several years in practice, many non-profit professionals do access continuing education courses in leadership to improve their skills in this area. While these programs can be useful, most are not as rigorous nor as comprehensive as a professionally grounded, intensive curriculum custom designed to personally support development over an extended period of time, led by internationally respected expert mentors and coaches.
Non-profit boards and executives need to uncover and attack the root causes of turnover, broadening their focus from recruiting new leaders to fill recurring gaps, to prioritizing growing and retaining the talent they already have. To do this effectively, the executive team need to define the organization’s future leadership requirements, identify promising internal candidates, and provide the right doses of stretch assignments, mentoring, formal training, and performance assessment to grow their capabilities. Executives also should be candid about their need for grants to help build the skills and capacity of the organization to do talent management well and to have the resources to supplement on-the-job learning and mentorship with high-quality training and support.
There are significant opportunities for improvement in non-profit leadership development and the time for that improvement is now. In the coming years, non-profits will face increasing competition for leadership talent. Experienced leaders from the baby boom generation are moving into retirement and the non-profit sector will not have the same allure for mission driven professionals as it once did. New forms of organization blurring the business/social divide and the rise of social agendas in the business domain will inevitably deflect talent from entering (or staying in) the non-profit space. To compete successfully for talent, we need to begin thinking now about the needs of these future leaders. Comparisons will be drawn with other opportunities, and they will increasingly expect mentoring, professional development activities, time/space to grow as leaders, and an organizational culture that takes an active interest in their wellbeing and performance. The scarcity of prominent, robust, nation-wide program offerings (outside of academia) in Canada creates a serious deficit in leadership support that should concern us all. If non-profits are to survive and flourish in the current environment of tight budgets and increased competition, they must have a stable corps of talented leaders.
References
Center for Creative Leadership. “The Leadership Gap: What You Need and Still Don’t Have When It Comes to Leadership Talent.” 2020. Available at https://cclinnovation.org/wp-content/uploads/2020/03/leadership-gap-what-you-need.pdf. Accessed 2 March 2023.
Garry, Joan. Joan Garry’s Guide to Non-profit Leadership: Because the World is Counting on You. Wiley, 2020.
Hailey, John and Rick James. “Trees Die from the Top: International Perspectives on NGO Leadership Development.” International Journal of Voluntary and Non-profit Organizations. Vol. 15, No. 4. Available at https://www.researchgate.net/profile/Rick-James-4/publication/227286368_Trees_Die_From_the_Top_International_Perspectives_on_NGO_Leadership_Development/links/5cc036e7a6fdcc1d49aa8bc1/Trees-Die-From-the-Top-International-Perspectives-on-NGO-Leadership-Development.pdf. Accessed 2 March 2023.
HR Council for the Non-profit Sector. “The State of Leadership Development: An Exploratory Study of Social Service Charities in Alberta and Saskatchewan.” May 2010. Available at https://muttart.org/wp-content/uploads/2015/11/HR-Report-Exploratory-Study-on-the-State-of-Leadership.pdf. Accessed 16 March 2023.
- While somewhat dated now, this study provides some interesting perspectives on the topic. Plus ça change, plus c'est la même chose.
Kotter, John. “Accelerate: Building Strategic Agility for a Faster-Moving World.” Harvard Business Review Press. April 2014.
Landles-Cobb, Libbie, et al. “The Non-profit Leadership Development Deficit.” Stanford Social Innovation Review. October 2015. Available at https://ssir.org/articles/entry/the_non-profit_leadership_development_deficit. Accessed 14 March 2023.
Linscott, Kristin G. "Filling the Leadership Pipeline: Driving Forces and Their Effect on the Next Generation of Non-profit Leaders," SPNHA Review. Vol. 7, Iss. 1, Article 4. 2011. Available at https://scholarworks.gvsu.edu/cgi/viewcontent.cgi?article=1012&context=spnhareview. Accessed 2 March 2023.
Sargeant, Adrian and Harriet Day. A Study of Non-profit Leadership in the US and Its Impending Crisis. Concord Leadership Group, 2018. Available at https://concordleadershipgroup.com/!WakeUpCall_Report.pdf. Accessed 14 March 2023.
Waldron, Lindsey, et al. “How Non-profit Leadership Development Sustains Organizations and Their Teams.” Bridgespan Group, January 2023. Available at https://search.issuelab.org/resource/how-non-profit-leadership-development-sustains-organizations-and-their-teams.html. Accessed 15 March 2023.
Weiss, David and Vince Molinaro. The Leadership Gap: Building Leadership Capacity for Competitive Advantage. Jossey Bass, 2005.
Wolfred, T. Building Leaderful Organizations: Succession Planning for Non-profits. Available at https://capacitycanada.ca/wp-content/uploads/2014/09/Building-Leaderful-Organizations.pdf. Accessed 2 March 2023.
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