Daring to Lead 2006 - Finding 5

The authors of Daring to Lead 2006 saved the best for last—at least as far as The Hourglass Blog is concerned. Their fifth and final finding—that bench strength, diversity, and competitive compensation are critical factors in finding future leaders—cuts right to the heart of the generational shift coming to the leadership of nonprofit organizations. Here's a quick excerpt:

Because the majority of current nonprofit executives are baby boomers, anticipation of wide scale retirement has intensified the anxiety around leadership transition across the sector. This research suggests that many older executives are not on a traditional retirement trajectory; nearly half of executives older than 60 say that something other than retirement is what they will do next. Still, the nonprofit sector—like the other sectors—will most certainly have a market response to the talent supply available as the generational handoff unfolds. Our data suggest several points of concern. First, only half of executives at mid-sized organizations (5-20 staff) are actively developing future executives. Second, the sector does not appear to be achieving greater diversity in its newer and younger executives. And third, executives believe that the next cohort of leaders will require higher salaries and more work-life balance, things that small and min-sized nonprofits may struggle to provide.

What I really want to focus on is their third point of concern, that executives believe that the next cohort of leaders will require higher salaries and more work-life balance. The study cites that 61% of executives surveyed believe that if they left, their organizations would have to pay the next executive more than they are currently making. The amount of increased compensation perceived to be needed varies by organization size, but the majority in all size catergories seemed to think it would require 11-20% more.

The study authors conducted focus groups in additional to the survey, and some of the quotes from those focus groups are priceless.

Some participants believe that younger executives will expect to be paid more than baby boomers have accepted and that further, they will want work life balance to an extent the founders never expected from the nonprofit executive role. One executive commented, "The young people who come in want balance tomorrow." Another said, "Young people have a lot of high expectations about salary and benefits and they actually read the employee handbook and want everything they are entitled to."

To me, this is more than just reflective of a changing priorities of one generation versus another. I think it also reflects the growing establishment of nonprofit management as a profession—now with business literature, certification programs, degree programs, and a growing cohort of professionally-trained practitioners all its own. Yes, GenX wants more work-life balance than Baby Boomers, and is more concerned with being compensated for its talents, but some of that perceived demand for higher salaries goes with the development of that professional cohort.

Please don't misinterpret. I am not suggesting that Baby Boomer executives are not professional. But it would also not surprise me if a greater number of them are not in nonprofit management for the money or for the career development opportunities it can present. One focus group participant said:

People that do nonprofit work, that came out of the activism of the '60s, have a really different view: that somehow money is bad, or it's a shameful thing to expect to be paid well.

The survey also cites that 21% of its reponders are the founders of their organizations. I thought that was a surprisingly high number, but it seems to support this point. It would be interesting to see how that statistic changes over the next couple of decades.