Thursday, April 22, 2010

For-Profit Leaders can Learn Something from Non-Profit Leaders

Most of my posts are relevant for all types of organizational leadership, but this time I'm going to focus on a leadership skill more prevelant in the non-profit sector, which is leadership through influence. I contend that for-profit sector leaders could benefit greatly from honing this skill, which is often overlooked in the corporate world, which tends to focus more on motivation through power and position than influence.

One of the hallmarks of most businesses -- despite the lip-service given to having "flatter," matrix style organizational charts -- is heirarchy. You have the CEO at the top of the pyramid with progressively wider layers until you reach the wide base of line-level workers. What distinguishes non-profit from for-profit management is that there are, in fact, two heirarchies -- parallel pyramids, if you will.

One heirarchy is the staff, which matches the for-profit corporate structure just mentioned, and the other is a volunteer heirarchy. At the top of the volunteer pyramid is the elected board of directors, with progressively wider layers of committees, working groups and task forces with the wide bottom layer being the dues-paying members or contributors that support the organization but don't hold a volunteer role.

A unique aspect of non-profit leadership is that the customers (members), not the employees, "own" the organization - although they reap no direct financial benefit from ownership. Furthermore, the volunteer heirarchy is the ultimate authority and has the ability to hire and fire staff and even change the mission of the organization. Thus, staff are employed solely at the will of the volunteers.

The challenge of this structure is that it is staff that best understands the business of the organization, as they run it every day. And it is the staff that is held most accountable for the success of the organization. Yet, staff must follow the dictates of individuals whose leadership positions are part-time (i.e., they have a day job), usually unpaid and temporary -- generally no more than a 1- to 2-year term in a specific role.

And the volunteer leadership is elected, not hired, so there is no means for maintaining true accountability. If a volunteer "checks out," or is acting in a way that is truly harmful to the organization, in many cases, there is little if any recourse available. In some cases, the only course of action available is for the board to request that the individual voluntarily resign. Sometimes they will. Usually, they won't.

While the non-profit sector is perceived by some as a "lesser" profession than the for-profit corporate sector (the thought being the best and the brightest can only be attracted by high salaries and stock options), to be truly effective, I contend non-profit organizations require a much higher standard of staff leadership and management than for-profit entities.

Why?

Precisely because of the non-profit CEO's inability to use a paycheck or the ability to hire and fire as a form of motivation within the volunteer hierarchy. To enlist others in the peformance of a common task, non-profit CEOs cannot simply dictate organizational policy because their position is subordinate to the volunteer board of directors. A more nuanced form of leadership is required, where influence, rather then power and position, brings results.

Non-profit CEOs are the ultimate influencer leaders. President Ronald Reagan was famous for saying, "There's no limit to what you can accomplish as long as you don't care who gets the credit." Effective non-profit CEOs have that quote tatooed on their foreheads. They must be forever the Wizard of Oz behind the curtain. (I've had to bite my tongue more than once when a volunteer leader has taken credit for my idea, saying something like "This is one of the key objectives of my administration.")

This style of leadership requires consensus-building, being able to "sell" your ideas by providing the benefit of your knowledge and experience, building confidence among the volunteers that you have the best interest of the organization at heart and can "see the big picture." This is a form of leadership that is more difficult than handing down policy from the corner office knowing the footsoldiers have to implement it or find another job.

The command and control form of leadership may get results, but what it may not get is commitment and confidence. Leadership through influence, which comes from trust and relationship building gets results, but it also gets commitment and confidence.

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