Successful executives in the private sector often reach a point in life where they feel moved to “give back” and decide to get philanthropically involved in community and social needs. While some only go as far as charitable donations, many choose to go the extra mile and share their intellectual as well as financial capital. At first glance the motive is an admirable one, an individual whose know-how and vision have generated profits for their company wanting to share those same skills with a non-profit organization that may not be able to afford the same type of talent on the payroll. Soon enough though, many of these good Samaritans become frustrated with what they judge to be close-minded organizations short on entrepreneurship and long on kumbaya. While their experience is certainly valid, their perspective may be a long way off center. They have yet to learn that crossing over from the private to the social sector is about more than just good business ideas, it is about learning nuanced leadership in cultures built around the values dividend.
When a corporate executive does a feasibility study on implementing large scale changes in the company, it seems obvious they would look at what implications those might have on incentives and compensation structures for critical employees. What happens to the bonus structure when two divisions are merged? How will implementing software to increase customer to employee ratios change how productivity is measured and rewarded? Considerations like these are considered due diligence as part of the business planning cycle. Yet for many talented private sector leaders looking to help nonprofits, there is a fundamental ignorance about the incentive structure that makes the entire sector feasible in the first place, largely because it looks nothing like their own.
Many charitable organizations depend on two sources of cost-saving human capital in order to make their service model viable given their comparatively low levels of operating capital, volunteers and non-profit professionals. In fact, at the local food bank if they were to restructure 100 percent of their workforce to match the paid human resource structure and wages of say, a for-profit food distribution company, the payroll costs alone would bankrupt that non-profit to say nothing of benefits and health insurance costs. How is it then that non-profits manage to attract committed and capable talent to do jobs that range from the back breaking to the professionally complex for fractions of what their private sector counterparts get paid and in the case of volunteers, for free? The entire sector’s existence, 1.5 million registered organizations deep according to the National Center for Charitable Statistics, depends upon a compensation and incentive model that does not operate by the same rules or logic as the for-profit world.
People who seek out volunteer and employment opportunities with non-profits are often altruistically motivated individuals for whom service satisfies an identity level need to demonstrate their core beliefs through action. When given the opportunity to do so the psychological payoff in intrinsic rewards can be considered a values dividend that is as real and substantive a form of compensation to them as a quarterly sales bonus might be to a business development executive. When proposed or enacted changes to non-profit organizations are perceived by the “faithful” to alter, reduce or threaten the noble narrative that generates their values dividend, it is no less objectionable to that workforce than an across the board 40 percent reduction in pay would be to a corporation’s employees. Successful crossover leaders understand this difference. They take the time to learn any new organization’s culture in order to artfully utilize and employ the psychological & emotional incentives that produce desired performance when they are trying to make change in non-profits they are working to help.
To be effective as a cross sector change champion does not mean that the executive should coddle poor business practices or accommodate resistance to change in the name of tradition. Instead, what they do is undertake a thorough and focused effort to “map” the culture and values of the non-profit. By taking the trainings offered, seeking out long time “trustee” leaders for lunch and coffee conversations, and doing background reading on the organization and its origins any executive can begin to build a working mental picture of the symbols, stories and imperatives that shape the world view of its workforce. Equipped with such powerful insights then, these leaders work to design the means of incorporating powerful private sector innovations into the non-profit in a way that “fits” the collective identity of the organization’s faithful. When done well, volunteers and staff see the new practices as a necessary and honorable evolution of the organization’s mission and become zealous adopters of the new business plan.
So why isn’t this the norm? Why do so many business leaders sympathetically roll their eyes when a colleague describes their frustration at trying to help a non-profit whose board they serve on? Enter the Drive-By Do-Gooder. The DBDG is too busy for details; they’ve forgotten that success in penetrating any new market segment back at their company has always relied on thorough market research. The DBDG expects to have their suggestions granted authority status by the staff at the non-profit despite the absence of due diligence. DBDG’s often fail to consider that the private sector strategies they are proposing depend on high cost infrastructure and on-staff specialists like data & research ninjas that the non-profit won’t have access to. Compounding all of the above, the DBDG’s lack of familiarity with the organization’s culture and values means they may unwittingly push changes that “cut the salaries” of the workforce by harming the values dividend. The alienation of the workforce now complete, the withdrawal of support and engagement from the staff leads the DBDG to throw their hands up in resignation and drive away.
Achieving big change for non-profits that need their energy and ideas is possible for crossover executives; they just need to look before they lead.
Francisco A. Gónima is an executive coach, strategist & social sector entrepreneur based in San Antonio. Franciso helps executives get their teams, work & life to a higher level.
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