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| Posted by: Borge Andreassen

Succession Management - How Beyond Profits can Maximise Leadership Talent

There is often talk of a leadership deficit in beyond profit organisations, and most executives or trustees within the sector are likely to have experienced difficulties attracting and recruiting to key positions. But how much time is truly spent on growing leaders within organisations? More than 700,000 people work in the UK beyond profit sector, so there should be plenty of potential.

I don’t believe that the commercial sector is ‘better’ than beyond profit. However, there is evidence to suggest businesses have more success developing their own leaders. Many companies focus strongly on talent and a 75-80% internal hire rate is often the expectation. According to research from the US, in the beyond profit sector the internal hire rate is around 30% for executive positions.  Based on conversations we have had with some of the larger charities in the UK, and Prospectus’ experience of leading a significant number of searches for executive hires across the full beyond profit spectrum, I believe that figure reflects reality here too.

There are many explanations as to why beyond profit organisations appear less successful developing talent and making internal hires to key roles than their commercial counterparts. One obvious factor is that many organisations are small and do not have adequate resources to dedicate to leadership development. This also results in people moving from organisation to organisation quite frequently to continue learning and developing. Chief Executives and managers often avoid discussing issues of professional development, preferring instead to focus on what is perceived as more pressing business. Another factor can be how organisations are funded, and the role of the Chief Executive in developing and managing the relationships with funders and other key stakeholders. There is simply not enough time to dedicate to internal issues, including people, because they need to be so focused on what happens externally. Also, many charities are organised along strict functional lines, meaning that people do not get enough exposure in areas outside their specialism, and their development suffers as a result.

So what can Beyond Profit organisations do to further professional development and increase the ratio of internal promotions to key leadership roles?

  1. Provide managers and leaders with more opportunities to perform different tasks and get involved in projects outside their functional areas. Why not let a rising star in operations spend some time in fundraising? Or a finance person in external affairs? Stretch is critical; challenge people with unfamiliar tasks, and ensure learning at every opportunity and thinking outside the box is encouraged. Not only will this increase understanding for the challenges colleagues across the charity are facing, it should also develop skills and support a move to executive leadership when the time is right.
  2. Every senior leader should get a mentor outside the organisation. To have a highly experienced individual to talk through issues with and to help challenge your thinking, ideally someone who is accomplished in another field but with general leadership experience, can be invaluable as someone begins and continues their leadership journey.
  3. Provide constant feedback. Value the truth more than superficial politeness. Whether it is through 360 reviews or other less formal feedback mechanisms, people should always know how well they are performing and where to improve.
  4. Why not consider the 70-20-10 approach to developing people? 70 per cent of development and learning is on the job, 20 per cent through coaching (internal) and mentoring (external) and 10 per cent is formal training outside of the work setting.
  5. Be aware of the organisation’s current and future leadership requirements, and compare these with the skills, experience and talent on the current team. Where are the gaps?
  6. Leadership development and talent pipeline should be a top priority for the Chief Executive and Leadership Team. Set aside time to discuss these issues and hold people to account for developing leaders across the organisation. It has to be a key part of organisational KPIs.

At Prospectus, very few of our search mandates conclude with an internal hire. In some aspects this can be seen as a success for us – we were able to find better qualified candidates than those already working for our clients. However, in my view, a thorough executive search followed by appropriate selection and assessment, where an internal candidate is promoted and appointed, is usually just as much of an achievement for everyone involved as when someone from the outside is recruited.

Succession management is different from succession planning, which is of course very important too and you can read more about this here; in essence it’s about moving away from a ‘replacement’ mind-set to an organisational performance culture where developing people’s skills and leadership credentials and constantly challenging ourselves to learn, become part of an organisation’s DNA.

As far as possible, beyond profit organisations should prioritise investing in the development of their managers and leaders. Doing so isn’t a luxury; on the contrary, it will ensure increased impact.