I. Executive Summary
This article explores the recent change in the attitudes of nonprofit chief executive officers and those of their potential successors. Initially, a discussion of what most employees desire from their employers in terms of job satisfaction is held to establish the norm here in the United States. Next, the results of two national surveys conducted within a 10-year period are examined for prominent themes and trends in the nonprofit sector. Although these data are considered qualitative in nature, the evidence is clear that many nonprofit CEOs suffer from job burnout, and to compound the issue further, are not retiring due to the lack of interest from the younger generation to step up and fill their positions. Finally the role of boards of directors is explored along with how the dynamics between the board and the CEO impacts the overall performance of the organization. The studies’ results also include job satisfaction among, not only the nonprofit CEOs, but also emerging leaders within the organization. The conclusion offers specific tools and tactics that could be utilized by nonprofit organizations to improve CEO attitudes, strengthen and clarify the board’s role, and encourage the staff to continue the important work of the nonprofit sector and even possibly consider a CEO position in the future.
A 2009 survey conducted by the Society for Human Resource Management found that employees in general identified the following as the 10 most important factors in regard to job satisfaction.
1. Job security
2. Benefits
3. Compensation
4. Opportunities to use skills and abilities
5. Feeling safe in the work environment
6. Relationship with immediate supervisor
7. Management recognition of employee job performance
8. Communication between employees and senior management
9. The work itself
10. Autonomy and independence
These factors seem reasonable to most people and therefore, will be used as benchmarks for expectations and establish the norm for this discussion. Exploring job satisfaction further, Elizabeth Scott’s February 22, 2010 posting on About.com's Stress Management website, the following features tend to cause more stress, taking more of a toll on workers. Alongside each one of these conditions are examples of what the nonprofit chief executive officer (CEO), or oftentimes known as the executive director, may encounter as part of her daily responsibilities.
Unclear Requirements
Many times the CEO’s job description is not current – especially if the board members have not provided annual performance reviews. Unlike most job scenarios, the CEO often must remind the board of their role in conducting her review. This process provides the CEO with the opportunity to receive praise, constructive criticism, direction and the opportunity for compensation review. For the board members, the review helps them understand how the CEO is doing in terms of not only their job duties, but also her overall life/work balance.
High-Stress Times with No “Down” Times
Most jobs have “crunch times,” where workers must work longer hours and handle a more intense workload for a time. In the nonprofit sector, this often takes the form of a special event and/or fundraiser. This time of banding together can be extremely positive for the CEO and her staff members, volunteers, and the board members. The danger of burnout can occur when either there are too many of these meetings in close proximately each year or if there are frequent over-scheduling problems, which typically translate to a management problem. All employees need some down time throughout the year and the knowledge of when that will take place. Many nonprofits have a July 1 – June 30 fiscal year and utilize the months of May or June to plan the upcoming year. This operations planning typically will include scheduling all special events, fundraising efforts, programs, board activities, and budgets.
Lack of Recognition
It is difficult to work hard and never be recognized for one’s accomplishments. Awards, public praise, bonuses, and other tokens of appreciation and recognition of accomplishment go a long way in keeping morale high. The Generation Y and Millennial employees tend to need even more recognition than their Generation X counterparts. In taking on the top position of any institution, most Baby Boomers know that it can be lonely at that level and are prepared for that reality.
Poor Communication
Poor communication in a company can cause or exacerbate problems, like unclear job expectations or little recognition. The CEO of a nonprofit is constantly communicating. Examples include staff meetings, board committee meetings, discussions with donors and foundations, professional organizations, communicating with the media, and general networking for the organization. With all of these demands on the CEOs time, quite often she may not be adequately communicating with her staff.
Insufficient Compensation
Depending on the size of the nonprofit and its annual budget, there are salary ranges that should correlate. Most mid-sized to larger cities offer nonprofit-employee-compensation-survey results through a center for nonprofits. This information is especially important to access today, because the IRS 990 nonprofit tax form requires that the organization provide a method for determining the CEO’s salary, based on comparables in their community. This data also provides a mechanism for determining the rest of the organization’s staff members’ compensation. As discussed earlier, the annual performance review is an ideal time to review the CEO’s compensation.
Poor Leadership
Company leadership can go a long way toward preventing or contributing to burnout. Depending on the quality of leadership, employees can feel recognized for their achievements, supported when they have difficulties, valued for their contributions, and maintain enjoyment of their daily work. The nonprofit CEO who is a poor leader will most likely feel frustrated, and the organization will suffer. Poor leadership can also be on the part of the board of directors. When this happens it is usually an indicator of a poor choice in the board chairperson and/or board members do not understand their role. Thomas Wolf (1999) in his book Managing a Nonprofit Organization outlines the following:
Six Areas of Board Members Responsibility
1. Develop and execute long-range plans
2. Establish fiscal policy and controls
3. Provide adequate financial resources through personal contributions and fundraising
4. Select, evaluate, and if necessary, terminate the chief executive officer
5. Maintain a communication link to the community promoting the nonprofit’s work
It is important to note that Mr. Wolf also lists three duties that are “equally important to understand [in terms of] what these responsibilities do not include” (page 48):
1. Engage in the day-to-day operation of the organization
2. Hire staff other than the chief executive
3. Make programmatic decisions without discussing with the staff
Many problems can be avoided when the volunteer board of directors is clear about their role in the nonprofit organization.
III. Attitudes Among Nonprofit CEOs
CompassPoint Nonprofit Services and The Meyer Foundation (2006) conducted Daring to Lead 2006: A National Study of Nonprofit Executive Leadership, which illustrates growing trends among nonprofit CEOs. Five management support organizations and two foundations distributed the survey, resulting in 1,932 respondents from eight cities: Boston, Chicago, Dallas, Los Angeles, Minneapolis/St. Paul, Sacramento, San Francisco, and Washington D.C. This report was organized to highlight CEO attitudes in four different areas.
1. Executives plan to leave their jobs – but not the nonprofit sector – within five years
- 75% plan to leave their jobs within the next five years;
- 9% were already in the process of leaving;
- Less than 30% had a succession plan;
- Small organizations with fewer than 10 paid staff are more likely to experience transition in the next five years than larger, more established nonprofits.
2. Boards of directors and funders contribute to executive burnout
- 45% of execs say that board members do not understand their job;
- 33% of execs say that board members do not understand their job;
- Although 65% of executives feel personally supported by their boards, most are not experiencing a strong strategic partnership;
- 73% identified fundraising as the most desired area of board improvement;
- Increased general operating support and multi-year support were cited as the two actions that would help executive directors most.
3. Executives believe they make significant financial sacrifices to lead nonprofits
- 30% were dissatisfied with their compensation;
- Despite dissatisfaction with compensation, only 26% of executives have ever requested an increase in pay;
- 61% believe that if they left today, their organizations would have to pay their successor more;
- Women, who are twice as likely as men to lead a nonprofit, lead less than half of nonprofits with budgets greater than $10 million and make less than their male counterparts in nonprofits of every size.
4. Concerned with organizational sustainability, executives seek new skills and strategies
- Executive directors recognize the need for new sources of income, improved fundraising, and financial management, and long-term sustainability;
- Executives cited fundraising and finance as their least favorite aspects of their job AND the areas in which they most needed to build their skills;
- 47% surveyed did not have senior staff in finance;
- 60% surveyed did not have senior staff in fundraising;
- 90% of executives are accessing professional development of some kind. Nearly one in five have enrolled in a nonprofit management degree or certificate program, and 25% said
they have paid an executive coach.
Although this study is qualitative in nature, the number of participating CEOs was an adequate sample size to serve as a reliable indicator of attitudes regarding job satisfaction. Data validity was advanced further by the diversity of geographic locations represented. The themes included: a high level of CEO burnout; board of directors contributing to frustrations; low compensation is a major issue and the need for consistent professional development opportunities. Interestingly, when compared to for profit CEO job satisfaction, the themes are consistent throughout with the exception of compensation issues. Salary was less of a breaking point in the for-profit sector with the exception of women’s pay being less than their male counterparts.
IV. Attitudes Among the Next Generation
Ready to Lead 2001: Next Generation Leaders Speak Out, conducted by CompassPoint Nonprofit Services, The Meyer Foundation, Idealist.org and the Annie E. Casey Foundation (2001) plus similar studies conducted recently suggest that the nonprofit sector will be increasingly drawn into an all-out “war for talent” with the government and business sectors. This is the prediction according to Thomas J. Tierney in his 2006 article, The Nonprofit Sector’s Leadership Deficit.
As the Baby Boomer generation retires from their nonprofit CEO positions, will the Gen X /Ys apply for those positions? This is essentially what the 36-question survey was designed to explore. Approximately 6,000 emerging nonprofit leaders were asked whether or not they aspired to become nonprofit CEOs one day. If not, what might change their minds and what drew them to the sector in the first place.
1. Do you want to be a nonprofit CEO someday?
Maybe 38%
Probably yes 20%
Probably no 19%
Definitely yes 12%
Definitely no 11%
“My executive director (CEO) is insane…is that where I’m going to be in 30-40 years? Is that where I’m headed, to be burnt out and working long hours and not seeing my kids grow up?”
2. Significant barriers to pursuing nonprofit executive leadership positions
- Long hours and compromised personal lives
- Nonprofit salaries
- Lack of mentorship
- Inherent nonprofit structural limitations and obscure career advancement
- The prevailing CEO job description is unappealing
“Is there space for my leadership within the organization, given its current structure?”
3. Top five reasons not to pursue a CEO position
41% Don’t want the fundraising responsibilities
40% Would have to sacrifice work-life balance
27% Not the ideal way to impact my community/field of interest
26% Cannot have the kind of family life I want
25% Skills/interests are better suited towards other work
Based on these results and those of other recent studies, the numbers of retiring CEOs will not be met with enough new applicants. However despite the barriers, there is enthusiasm among next generation leaders for redefining the job description of the nonprofit CEO. In Next Shift: Beyond the Nonprofit Leadership Crisis, Corvington, Frances and Kunreuther (2007), argue that we are limited in our ability to change current structure by framing the situation using crisis terminology that is articulated from the biased perspective of Baby Boomers. By looking at the situation from the emerging leaders’ perspective there may hope after all. As one participant said, “The emerging generation of leaders is a product of a new landscape where the organization finds itself. They have to have their fingers on the pulse of something that’s shifted in a way that I think the current leadership needs and is looking for.”(p.6)
IV. Conclusion: Recommendations for Change
Building on the recommendations from both surveys, change needs to happen quickly and strategically. Current CEOs who are burned out are not only miserable, but they are also setting an extremely poor model for recruiting future nonprofit leaders. For most people, change is something that is feared – even if it will be for the better. To ease this anxiety and ensure that some changes will be made, these changes must be adopted by the following groups in this order:
1. Funders – granting entities, foundations, major donors
2. Boards of Directors – with the understanding that their roles will also be changing
3. CEOs
4. Senior staff
5. Support staff
Funders
Using the family as an analogy, the funders are like the parents and nonprofit organizations are like the children. In many cases, a newly born nonprofit will get its ‘big break’ with a significant gift from a foundation or a major donor. This begins a long, and many times complex, relationship between the two. In addition to foundations, there are federal and other private granting organizations. Historically, these types of entities have evaluated the success of nonprofit management on how administratively lean it is. Programs, after all, are what fulfill the mission of the nonprofit. The conundrum is that programs cost money and all require administrative support. In fact each and every program requires marketing, fundraising, budgeting, and reporting. Most grants typically do not include funding for administrative support – only for the program costs such as materials, instructors, and travel.
This current reality puts a drain on the entire organization, because when a program is running on grant funding, the nonprofit is absorbing those administrative costs. This is why the CEOs and emerging leaders in both surveys discussed earlier are asking for access to institutional capital. The funding could continue to be associated with a particular program, but should include a line item for overhead costs. Better yet, respondents would like to see more unrestricted funding and multi-year support. This idea is tied to the seasoned CEOs who were especially vocal about institutional funders’ shifting interests every few years. Specific funds requested were for professional development, transition management, and succession planning.
Boards of Directors
One of the top recommendations made in the Daring to Lead (2006) was for board members to take responsibility for the board, and for board chairs and officers to take personal responsibility for the efficacy of the board. Taking this further, board members need to understand what they are really responsible for and how to execute those duties in collaboration with the staff.
Board members’ primary responsibility includes the adherence to mission and by-laws, long-range planning, fiscal health, community outreach, and support to the CEO. Many times the board wants to design or revise programs – this is not their area of responsibility. If they believe that a program is adversely affecting the mission, then a conversation needs to be had with the CEO who will take it up with the staff.
A CEO will be much more willing to give the board access to the staff if she knows that the board members understand their role. This brings us to the emerging leaders desire to be recognized by the board as capable decision-makers and professionals in their fields. In addition, they may consider stepping up into a CEO role if they are able to have healthy interactions with board members throughout the year.
Many boards participate in an annual new board member orientation. This is typically planned by the CEO and serves as a way to review the board member’s role and responsibilities. For new board members, the activity serves as an orientation to the nonprofit organization. It is suggested that the CEO and board member succession plan be reviewed during that annual meeting. The succession plan, if designed well, should contain most aspects of the nonprofit institution. By developing this code of transparency and annual tradition, the topic of succession is much more approachable. It is also an excellent way of reviewing policies, salaries, and benefits to ensure those are in line with other comparable nonprofits as well as compliant with yearly IRS requirements.
Lastly, but so very importantly, the board of directors must ensure that the staff (not just the CEO) are paid reasonable salaries and have benefits. Compensation studies are available to create salary ranges for each staff position in a nonprofit organization. The younger generation will not settle for poor wages – they will find another avenue to fulfill their desire to contribute the “community good.” In order to do this, additional funds may need to be raised, programs may need to be cut or combined, but in the end there will be less staff turnover and higher morale.
Staff Members: CEOs, Senior Staff and Support Staff
In the spirit of a less hierarchical structure, the suggestions for staff change are combined to include all staff members. In addition, putting each generation in their own silo is just perpetuating the issues facing nonprofits. Rather than continuing to point out the differences, it may be more productive to identify the similarities. Most staff members could agree that the idea of working for a nonprofit is a type of calling – after all most people could make more money in the corporate sector. That shared value of wanting to make their community a better place in which to live could be identified as common ground.
It is also important to approach changes in staff attitudes as if the before-mentioned funders and board members are in agreement to doing things differently. The impact of both funders and the board of directors cannot be overemphasized. When those support mechanisms are not in place morale and productivity go down quickly. For these purposes, it will be assumed that the funders and board members are “on board’ to make some of the changes mentioned above.
As the saying goes, it all starts with top management. Current CEOs need to be good role models. As recommended in Ready to Lead (2001), “Current executive directors can help change the perception that leadership necessarily entails an unhealthy work-life balance – and lessen their own potential for burnout – by modeling healthier behavior.” And continued, “…80-hour work weeks and round-the-clock emails influence organizational culture and create the impression that these work habits are essential for advancement or executive leadership” (p. 26). This change of behavior does two things: promotes a healthy work/life balance for current CEOs with the potential to even thwart potential burn out and sets a much more appealing example to emerging leaders who may reconsider becoming a CEO someday.
As a team, discuss how the CEO can delegate some of the tasks that were traditionally done by her. This distribution should be done strategically to promote areas where emerging leaders need to grow, such as development of external networks, working with the board, and professional development. For example, assign staff members to serve as the staff representative for the organization’s board committees. A young staff member should also be encouraged to serve on an external board or attend community meetings representing the organization. This not only takes this task off the CEO’s schedule, but also is a way to serve as a professional development activity for the emerging leader.
Additional changes that were requested by emerging leaders in the survey were for current CEOs to lighten up on the hierarchical structure, improve communication, and incorporate more transparency with staff members. An example of how to implement this could be for the CEO to review the budget with the staff and ask that they help identify some ways to either increase revenues or decrease expenses by 10 percent over the next 12 months. This type of activity helps the emerging leaders understand the challenges faced by the CEO and also provides them with a way to help steer the direction of the organization.
Conclusion
The overarching need, even beyond more funding and higher salaries, is a change of attitude about how nonprofit organizations are viewed and the role that they serve in their communities. Competition for funds, duplication of services, lack of innovation, and poor delivery are issues cited by community leaders as being problematic in the nonprofit sector. Yet the needs that they address are real and growing. Board members want nonprofit CEOs with business experience to serve, however the salaries are not attractive enough to retain them.
In addition, board members frequently do not understand their roles and responsibilities. Emerging leaders have witnessed these disconnects and are not so eager to follow in their burned out CEOs footsteps. Some changes have been offered, but how much are the nonprofit sector members willing to change? In the best interest of the nonprofit sector, these changes need to happen sooner than later.
The recent recession could prove to buy us some time by creating the need for current CEOs to work a little longer in order to recoup their retirement losses. This factor could provide the sector with some productive transition time. How and when the sector changes will be in the hands of the funders, board members, current CEOs, and the emerging leaders.
References
CompassPoint Nonprofit Services and The Meyer Foundation. (2006). Daring to lead 2006: A national study of nonprofit executive leadership. Retrieved from http://www.meyerfoundation.org/newsroom/meyer_publications/ready_to_lead
CompassPoint Nonprofit Services, The Meyer Foundation, Idealist.org, and the Annie E. Casey Foundation. (2001). Ready to lead 2001: Next generation leaders speak out. Retrieved from http://www.meyerfoundation.org/newsroom/meyer_publications/ready_to_lead
Corvington, Frances and Kunreuther. (2007).
Next shift: Beyond the nonprofit crisis.Generational Monograph Series: Vol. 2. New York, NY: A. E. Casey Foundation. Retrieved from http://www.aecf.org/KnowledgeCenter/Publications.aspx?pubguid={5A026EAE-421A-4CC2-8BEE-046FFD275B9E}
Society for Human Resource Management. (2009). Employee benefits: Examining employee
benefits in a fiscally challenging economy. Retrieved from http://www.shrm.org/Research/SurveyFindings/Articles/Pages/2009EmployeeBenefitsSurveyReport.aspx
Scott, Elizabeth. (2010). What are your burnout risk factors? Retrieved from http://stress.about.com/u/ua/readerresponses/burnout_risk.htm
Tierney, Thomas, J. (2006). The nonprofit sector’s leadership deficit commentaries. Retrieved from http://www.bridgespan.org/learningcenter/resourcedetail.aspx?id=946
Wolf, Thomas. (1999). Managing a nonprofit organization in the twenty-first century (p. 48). New York, NY: Fireside Simon & Schuster.
