For the last decade, researchers and economists have warned of the impending mass exodus of public sector workers as an entire generation of government employees (particularly those working at the federal level) reach retirement age. However, a similar trend has begun to manifest in the third sector as nonprofit employees, and more specifically nonprofit leaders, have started to retire en masse. But unlike public organizations and agencies that usually have some kind of bureaucratic structure that allows for a logical progression process to take place, many nonprofit organizations — especially smaller, less structured outfits — do not have a built-in succession process to implement when leaders retire. This can leave organizations in a vulnerable state.
The looming deficit of nonprofit leaders, senior administrators, and managers is troubling and could lead to less-than-optimal facilitation of organization objectives, negatively affecting the populations that third sector organizations serve. Indeed, according to The Bridgespan Group, a philanthropic advising and consulting organization, among nonprofit organizations with annual revenues of more than $250,000, approximately 80,000 new senior managers will be needed to replace retiring employees each year, beginning in 2016. Although this great need may appear to be a problem, it also represents great opportunity for both those looking to get started in the third sector, as well as for current nonprofit professionals that are looking to make the leap to executive or senior management levels. Here are concepts that will be increasingly important and prevalent as the situation continues to unfold.
Hurdle 1: Lack of Concrete Succession Plans
As mentioned above, most third sector organizations do not have a formal succession plan in place to guide themselves through shifts in executive leadership. While this reality can be intimidating to outsiders and to those interested in moving up in their organizations, the lack of an ironclad plan can represent opportunity.
Make the Leap: Without a formal plan, everyone theoretically has a chance to move up! Prospective leadership candidates can also inquire about succession plans while also expressing their interest in soon-to-open positions. Such interest may be just what frustrated managers are looking for!
Hurdle 2: Respecting Grant Guidelines
Grants are, in many cases, the lifeblood to third sector organizations. Whether they are used to fund general operations or are utilized to fund a specific activity, grants are universally viewed as blessings for organizations that are able to secure them. However, in times when organization leadership is in transition, grant guidelines can create tricky situations for existing leaders and prospective candidates. Grant funds are oftentimes linked directly to the creation of a certain position on a nonprofit organization’s staff and are not intended to cover outside duties or responsibilities. When existing staff members are pegged for promotion to executive levels, finance managers must review grant guidelines very carefully to ensure that grant stipulations are not being violated by internal ascension.
Make the Leap: With careful planning, organizations can reallocate certain grant-specific duties in order to remain in compliance, an activity that may have been long overdue anyways! Another possibility is that adequate funds are available to support the promoted staff member’s position while leaving their vacated position open to qualified replacement candidates.
Hurdle 3: Interim Directors . . . ?
For prospective nonprofit leaders, the term “interim director” may seem like obvious foreshadowing, and it is perfectly reasonable to question how realistic the chances are that someone other than the interim leader would ultimately fill the role. However, in recent years, appointing interim directors or other equivalent organization leaders has become increasingly popular in the third sector … and for good reason. Interim directors can help organizations to “weather the storm” during tumultuous and confusing transition periods. Also, many interim directors are hired from outside of the organization, which can help to limit potential biases in the permanent leadership search and hiring process.
Make the Leap: Since interim leaders are usually not candidates for permanent leadership appointments, they can focus on managing day-to-day operations while assisting with the hiring decisions and searches. As the retirements continue to occur at an exponential rate, the prevalence of interim leaders will rise in tandem. Thankfully, this will most likely not result in less opportunities for non-interim-leadership-position seekers!
What a time to be involved in the third sector! As unsettling as the changes on the horizon are, the opportunities that they will provide are incredibly exciting. In the meantime, preparing for roles in leadership, management, and administration positions is of utmost importance and acquiring the “tools of the trade” will create the best substructure. Consider acquiring these “tools” with the Johnson & Wales University College of Online Master’s in Nonprofit Management degree program.