Nonprofits can’t keep ignoring talent development

 

Is your social venture losing its homegrown talent — often to other social ventures?

In the past two years, only 30% of open management positions in the nonprofit sector were filled by an internal candidate. And almost half of their replacements came from other nonprofits. This comes at a significant financial and productivity cost to all organizations, as demonstrated by research in corporate settings: Onboarding an external hire can cost up to twice the departing executive’s salary, and the time it takes for an external hire to become productive is twice as long as for someone hired from within.

A new study by The Bridgespan Group, based on a survey of more than 400 nonprofit executives and dozens of interviews, surfaced this surprising finding and addressed how this leadership development deficit can be handled. The survey also found that in the past two years, one in four leaders left her position, and nearly as many told us that they planned to do so in the next two years.

One solution to the turnover problem is to provide both stretch opportunities and mentorship to employees, as several of the organizations in our study do. DonorsChoose.org, which finances classroom-based projects, is a good model of success. As the organization has grown, chief executive Charles Best has encouraged senior executives to take on increasing responsibilities. For example, Cesar Bocanegra started as vice president for operations, then asked to take on human resources as well. He was promoted to chief operating officer within two years.

Even smaller organizations can implement effective professional development policies. Our research shows that skill development can often compensate for lack of upward trajectory. In fact, stretch opportunities abound in smaller organizations where everyone wears several hats. Building the most effective leaders possible is particularly critical for smaller organizations, where any weak link can hurt the entire chain. Bethesda Mission in Harrisburg, Pennsylvania, has a tiny staff and limited opportunities for growth, but executive director Chuck Wingate deliberately sends a younger member of his staff to represent his organization at an important annual conference.

Some leaders fear that their leadership development investments will walk out the door. But recent Corporate Executive Board research found that staff members who feel their organizations are supporting their growth stay longer than those who don’t, because they trust that their organizations will continue to invest in them over the long term.

Talent retention is a challenge at any organization. Social innovators who want their ventures to succeed beyond the tenure of a visionary founder should learn how to stretch and mentor employees into the next generation of leaders tackling society’s toughest challenges.

(Libbie Landles-Cobb is a manager with The Bridgespan Group in San Francisco. Kirk Kramer is a partner with The Bridgespan Group. Katie Smith Milway is a partner with The Bridgespan Group in Boston.)

© 2015 Harvard Business School Publishing Corp. Distributed by The New York Times Company 

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