Monday, August 10, 2009

The Need for Professional Nonprofit Management

By Shiree Skinner





Nonprofit management is a niche profession. Nonprofit management professionals are a unique breed and the nonprofit sector needs their particular management abilities alongside their passion for their organizations. In an article in Strategy and Leadership Lynn Taliento, leader of the Nonprofit Practice area of global consulting firm McKinsey & Company partnered with Les Silverman, retired leader of McKinsey’s Nonprofit Practice and interviewed a dozen respected "crossover leaders" -- nonprofit leaders who have also held senior positions in for-profits (Taliento & Silverman, 2005). Founded in 1926, McKinsey & Company, is considered a firm of "management engineers" who are management consultants to the majority ofFortune magazine’s most admired list of companies” (McKinsey.com, 2009). Their interviews with the crossovers yielded that their roles as nonprofit leaders required more consensus-building; that measuring performance was much more complex; and that the scarcity of resources made building an effective organization a very difficult task.



Bill Novelli the president of AARP was one of the dozen interviewed. Novelli’s corporate experience was extensive including marketing with Unilever and building advertising firm, Porter Novelli, into an “industry powerhouse” (Taliento & Silverman, 2005). Novelli said it's harder to achieve goals in the nonprofit setting because they “tend to be behavioral” and “harder to measure” unlike industries like consumer goods and finance in comparison.



Taliento & Silverman also interviewed Peter Goldmark, a director with the Environmental Defense Fund who also served as president of the Rockefeller Foundation. Goldmark expressed a similar opinion, saying there isn’t “a simple financial metric” for measuring the “more squishy and intangible issues of social change or public attitudes and behavior." Goldmark thought that for-profit executives might be able to understand this difference theoretically but that the actual day-to-day leadership of a "measurement-resistant" organization is challenging (Taliento & Silverman, 2005).



The other facet of nonprofit management is that executive directors and their management team must balance overlapping roles (Werther, Berman, & Echols, 2005). The board of directors, its chair and executive director are the source of leadership. They lead the organization in its mission. The manager’s role involves making decisions around the use of financial, human, and other resources to reach the organization's goals and move it toward its mission. Both leaders and managers must also play role of administrators, balancing the conflicting needs of constituents: clients who need services; employees who want better benefits; donors, board members, and volunteers who seek recognition. This is tricky, since according to Werther et al (2005), for most managerial positions the making and executing of decisions is the measure of success. If nonprofit success is based on more intangibles, it means decision-making is not enough to be a successful manager. Werther goes on to say:



If an executive director stays stuck in the managerial role, the needed leadership vision will be lacking. Perhaps more noticeably, the executive director may fail to assume the administrative role when needed to balance constituents' conflicting demands. Similarly, an over-reliance on the role of leader or administrator has its shortfalls. The leader's focus on the organization's vision and mission is, ultimately, meaningless without execution.



Taliento & Silverman’s (2005) "crossover leaders" generally agree that nonprofit management is very complex and the complexity is not appreciated by business executives. After advising hundreds of nonprofits in recent years, Taliento thinks that “many well-meaning business people who move into leadership roles in nonprofits end up frustrated and ineffective.” In this regard nonprofit management seems a specialized skill garnered from time within the sector. An article in Leader to Leader mentions that nonprofit “leadership is ultimately developed through experience not in classrooms” (Krongold, 2006).



In concluding on the need for professional nonprofit management, for-profit leaders seem like a mismatch for running nonprofit organizations because unlike a for-profit business - which is focused on the bottom-line, as in making profits - the nonprofit’s main concern is with executing services or programs or changing behaviors or policies, etc. The money they make (whether by fundraising, cause related marketing, or selling something) is a means to their end. It is not the goal. For-profit companies measure their success in their profit margins, their market share, the return of dividends to stockholders, etc. Nonprofits measure their success by people they've touched, policies they've changed. It’s a completely different focus. So whether it’s the difficulty of measuring organizational achievements, an issue of transitioning a for-profit executive into the nonprofit world, or trying to balance overlapping roles, it is clear that nonprofit management is complex and requires a distinct skill set gained from experience in the sector. There is an obvious need for professional nonprofit managers.









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