46% of recruitment ads for non-profit community services management positions request for-profit experience, reports Jenny Green. What do not-for-profits want in their CEOs, and what does it mean for the sector?
In a study undertaken at the UTS Cosmopolitan Civil Societies Research Centre, Jenny Green looked at 700 recruitment advertisements for non-profit community services jobs from 2002 to 2008. She wanted to find out what organisations were looking for in management and CEOs.
Since the emergence of the New Public Management in the 1980s and 1990s, many not-for-profit organisations and charities – the so-called ‘third sector’ – have looked for managers with corporate backgrounds.
Researchers at the CCSRC have been analysing trends and their implications – particularly the challenge of creeping commercialisation in organisations that often grew out of collective, grassroots social movements.
There are many drivers of change:
- Marketisation of human services: where organisations receive funding based on the quantity of people they serve (rather than the quality / appropriateness of the service);
- ‘New Public Management’: the idea that public and non-profit organisations can be better operated along commercial lines, prioritising competition and efficiency;
- Changing funding models: non-profits no longer receive grants, but project / contract-based funding. They also rely on government money (rather than philanthropy);
- Changing accountability: ‘upward accountability’ and micromanagement requiring nonprofits to subscribe to government approaches, and to behave like quasi-government agencies
Another significant factor – both a driver and a result – is changing employment profiles, as not-for-profit organisations take on leaders with for-profit backgrounds.
What do non-profit organisations look for in managers?
Of the 700 advertisements, 46% requested corporate / for profit business experience, reflecting a continued interest in commercial experience for non-profit managers. In contrast, only 20% of advertisements specifically asked for experience in the non-profit sector.
83% requested management experience, and only 3% management qualifications. 62% required industry experience (either in the same or similar areas such as aged care, healthcare, education or youth services) and 26% asked for industry qualifications.
69% of entry level management positions in the sector requested management experience. This suggests that non-profit organisations are not ‘growing’ their own experience, but are looking to import it.
Only 24% of advertisements requested values alignment, a strikingly low figure when considering the importance that non-profit / community services organisations place on their values in terms of donors and volunteers. One risk, if leaders don’t share the core values of the organisation, is that ‘mission drift’ may occur as the organisation moves away from its core purpose.
Chairs seek CEOs with similar backgrounds
The study looked closely at eleven non-profit organisations, and interviewed the chairperson of the board selection committee to learn why they chose the types of CEOs they did. In all cases, the chairs sought to employ CEOs with similar backgrounds:
- For-profit chairs seeking for-profit background in CEO: A typical chair said, ‘unless a manager can run a charitable organisation in a commercial way, it would basically go out of business … it would be inefficient … The commercial side is very important.’
- Government or non-profit / community services chairs seeking ‘content’ in CEOs: These chairs sought CEOs who had experience in the sector, and who shared the core principles and philosophies of the organisation or sector.
- ‘Once bitten twice shy’ chairs seeking ‘safe’ candidates who knew the organisation: Chairs who had previously employed a CEO with a for-profit background – but who had not worked out – chose candidates with sector experience and shared values.
Researchers then interviewed the eleven CEOs about their motivations. Those who had moved from for-profit organisations were often motivated by a desire to switch from the intensity of the corporate world, and to ‘do something with meaning’. Some had begun in voluntary work – in childcare organisations, Councils etc – before moving to a career in the sector. A common theme was upward spiralling career paths between government and non-profit organisations.
All were tertiary qualified, and nine held postgraduate qualifications in business administration or management. Despite the perception that people need to work in the for-profit sector to develop financial acumen, almost all had postgraduate business qualifications. It’s a myth to think that non-profit CEOs lack financial skills.
With the difference in remuneration, non-profit CEOs are driven by other factors: a commitment to the purpose of the organisation; the prospect of adventure and working in an organisation that is breaking new ground; the possibility of influencing government policy; the challenge of the work; and often a personal connection to the organisation.
Implications for the sector
The current employment climate is complex and demanding, requiring highly developed skills and judgement, and a comprehensive knowledge of people management, organisational administration and the non-profit sector. Prior to the 1990s, there was some movement between government and non-profit sectors, but little from the corporate sector to the not-for-profit. As funding models have changed, NFPs are taking a more commercial approach.
But there are risks in hiring management from a corporate background: the risk that the organisation may lose direction; and that the new leader may not understand the context or culture of the organisation or sector. The drivers for a more corporatized model of service delivery are creating real tension for civil society organisations trying to maintain their role as agents of democracy.
