Social Sector Leadership Deficit - Report

"Deficient" leadership is the consequence of a fast growing social sector coupled with underinvestment in leadership development, according to a new report.

Multinational management consulting firm McKinsey surveyed nearly 200 social sector CEOs and other top managers leading Not for Profit organisations, foundations, social enterprises, and impact investing funds in the US.

Leaders were asked to identify the critical attributes for leadership success and to rate the performance of leaders in their sector against each attribute.

Across every category—including balancing innovation with implementation, building top executive teams, and collaborating to achieve outcomes—leaders labelled themselves, and their peers, as deficient.

“The findings suggest that chronic underinvestment within the US social sector, accompanied by 25 percent growth in the number of Not for Profit organisations in the past decade, has opened a gap between demands on leaders and their ability to meet those needs,” according to researchers.

Some 59 per cent of respondents said the lack of an effective top team, for example, a CEO, chief operating officer, chief financial officer, and chief information officer, undermined the effectiveness of individual social-sector organisations and the sector more broadly.

“In our view, what lies behind this response is a growing belief that there is a gap in leadership talent and capability between the CEO and other managers,” researchers said.

“There is no deficit of committed, talented people in the social sector. What they lack is training, support, and opportunities to grow in their roles.

“A gap in talent at the top, where too much of the leadership burden rests with one or two professionals, may limit what a social sector organisation can accomplish.

“The time to act is now. The next generation of mission-driven professionals is considering social-sector careers. They expect mentoring, professional-development opportunities, and increasing responsibility. Funders (including foundations, individuals, and impact investors), government, and business have important roles in addressing the leadership opportunity in this critical sector,” the report said.

“A number of sector leaders tell us they’re concerned that the sector’s priorities are at risk if the organisations lack leadership teams with the capabilities to fulfill emerging missions effectively and to adapt to fast-changing demands.”

There was strong consensus around four key leadership skills in the study. Some 58 percent said leaders must to be able to both innovate and implement; 53 percent said effective leaders must surround themselves with talented teams; 49 percent said leaders must be skilled collaborators, experienced at bringing multiple stakeholders together; and 40 percent said leaders must manage to outcomes and be committed to quality improvements.

Researchers identified three primary areas where they said there was the most need for attention to leadership development: the strength or even existence of top executive teams within social-sector organisations, the performance of sector leaders in critical leadership attributes, and adequate funding and other structural support for leadership development.

They said that without greater investment in leadership, a continuing deficit could also complicate succession planning – of particular concern given research suggests nearly 70 percent of US charities lack succession plans.

“Without them, and a “talent bench” at the senior-most level, organisations losing a leader must find a replacement from another social-sector group, elevate a manager unprepared for the role, or recruit a leader from business or government who will face a significant learning curve. In these circumstances, a leader’s exit can reduce the organisation’s effectiveness,” researchers said.

Read the full report here.