March 1, 2005

Let the Search for Solutions Begin in Earnest

In this commentary on the 2005 Bridgespan Group report, "The Nonprofit Sector's Leadership Deficit," Jon Schnur, CEO and co-founder of New Leaders for New Schools, says time is of the essence when considering the leadership deficit and proposes recommendations on addressing it based on his experience working with fast-growing social enterprises.

A commentary on The Nonprofit Sector's Leadership Deficit

Tom Tierney has correctly identified the most significant problem to be solved— and opportunity to be seized—in the nonprofit sector: the creation of a whole new generation of top-notch leadership and management teams capable of managerial excellence and high performance at scale. I offer actionable solutions below for each category of solution outlined by Tierney.

My focus is on social enterprises that are growing quickly and taking proven or promising ideas to scale. While Tierney's paper speaks of the need for 640,000 managers, my focus is on the star senior leadership and management team members who can take 50 high performing social enterprises to great scale and change America and the world. We can use the looming "shortage" as an opportunity to transform the way high-performing nonprofits can be managed and led to scale.

Here are a few initial recommendations for addressing Tierney's important findings. These are grounded in my perspective as Chief Executive Officer of one of the fastest growing social enterprises in the U.S.—already serving more than 100,000 children and aiming to recruit and train 2,000 outstanding school principals serving 1 million children annually by 2014.

Tierney recommends investing in leadership (and I would add management) capacity. He recommends increasing management compensation. And he recommends expanding recruiting horizons while fostering individual career mobility. Tierney is right on all fronts.

Tierney says the sector under-invests time and money in leadership and management. He rightly says that "no business looking to deliver strong results would intentionally under-invest in the leadership team accountable for delivering those results." And yet, many nonprofits and philanthropists make it difficult for nonprofits to do even the most basic management time needed even for the basics of great management—including "performance reviews, mentoring, training, succession planning, recruiting, and other human resource functions that are critical to effective management."

What can we do? Lots. And fast.

  1. Find and fund five of the nation's best human resource and organization design professionals to spend a year analyzing high-performing and promising social enterprises. They would be tasked with developing specific recommendations for what leadership team structures, job descriptions, and salaries would be needed to take these enterprises to scale.
  2. Create and pilot a new approach to defining "overhead" in several social enterprises. Tierney rightly says that the philanthropic sector's definition and approach to overhead provides a serious disincentive from paying competitive salaries for top managers. And it reinforces the nonprofit sector's focus on "programming" at the expense of smart organizational development. For example, it took us five years and some courage for New Leaders for New Schools to do what smart companies do nationwide—increase our "overhead" by hiring a brilliant new Chief People Development Officer from the corporate world.
  3. Launch a fellowship program to recruit and train the next generation of outstanding leaders and managers for social enterprises. The Broad Foundation smartly created this kind of program recently for leaders for school districts. But social enterprises like New Leaders, Teach for America, and others can't access this program because we are nonprofits not government school systems.
  4. Pilot innovative approaches to attracting the best, most experienced managers in the nation to social enterprise. The problem: these individuals often earn five to 10 times what they would be paid by a nonprofit. Possible solutions? Companies could offer paid board seats to the absolutely finest top managers who take on social enterprise CEO and COO roles. Or companies could create stock funds that would supplement the base salaries paid by non-profits to their top executives. The difference of $20,000 salary annually might make a difference—but imagine the impact if a top-notch executive could get a board seat at FedEx or stock at Google.
  5. Create a new $500 million foundation dedicated solely for the purpose of helping the top, scalable nonprofits attract, train and retain top executives. Get a passionate corporate titan to chair this board and a top social entrepreneur to run it. And let's all help them change America and the world.

Time is of the essence. Let's start responding to Tierney's challenge today.

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