Hiring Business Professionals as Nonprofit CEOs

A sign of the times in Southeast Michigan is the number of experienced business professionals in the midst of career transitioning. Some are taking the intrepid step of tackling the job of CEO at a charitable nonprofit organization. This is potentially a real gain for the nonprofit sector and an important step for improving professionalism in the management of charitable organizations, but it is not without potential pitfalls.

As director of the Center for Nonprofit Management in the College of Management at Lawrence Technological University, I have been involved in nonprofit career coaching for a growing number of highly experienced business professionals. I am impressed with their sincerity and courage. Most express motives of “giving back” or doing work that is “more meaningful” as drivers for their change. Such statements serve as indicators of potential success in crossing over to the nonprofit sector.

Some of these business professionals go on to take more proactive, career-search steps such as informational interviews with nonprofit CEOs and training or graduate education in nonprofit management. After getting a glimpse at the realities of working in the sector, most realize that it is not the right career move for them. I can help those individuals discover non-career options for meaningful service such as skill-based volunteering, board membership or mentoring. These valuable higher-order volunteer activities provide needed service to the community and meaningful connections for the individual.

Most experienced business professionals quickly discover that there are specific management and leadership attributes that clearly define nonprofit management. Unfortunately, some only discover this after they have taken the leap into a position.

In our graduate classes, students discover that effective nonprofit CEOs conduct a balancing act of executing strategy, managing available resources, seeking new resources and supporting their board’s leadership, all in the pursuit of the nonprofit’s mission. Many important aspects of these management competencies are not developed in for-profit business leadership. Peter Drucker recognized there are distinct differences between successfully managing a for-profit versus a charitable nonprofit enterprise, and some studies have quantified those differences.

My experience is that business managers, regardless of their experience and education, have critical blind spots as nonprofit managers. They have difficulty translating their for-profit background to the unique attributes of managing a charitable nonprofit organization.

In order to be successful as a nonprofit CEO, business persons need to transition their values, management thinking, and skill sets to the unique areas of effective nonprofit management, such as:

Mission-focused bottom line. Business professionals have limited appreciation and understanding of how to lead a culture which is primarily driven by a mission. They will often just try to adopt their management practices learned in the for-profit environment. This will cause immediate disruption and cause a dramatic, and many times unintended, shift away from mission.

Professional fund-raising and volunteer management. Many business professionals have little or no background in these two core nonprofit management competencies. They have difficulty understanding the necessary professional skill sets and how they are so integrally related to mission.

Evaluating program effectiveness. Program measurement and outcome assessment are critical to a nonprofit’s ability to fully assess how it is doing and communicate effectively with its stakeholders. Though several for-profit practices can be put to work here, there are other more sophisticated tools that most business persons have little experience with.

My advice to any business person -“ and nonprofit organization seeking a new CEO -“ is to take time to understand the specific management attributes of the nonprofit sector and the people that work in it.

For-profit managers can make truly effective nonprofit leaders, but they also can falter easily. For a successful transition, business professionals -“ and nonprofit board members -“ should keep in mind that some of the skill sets involved are unfamiliar to most business persons. It takes intentional effort -“ and time -“ to transfer business experience to the management challenges facing charitable nonprofits today.

Those business professionals who accomplish this career transition successfully can make a significant contribution to the nonprofit sector and develop a satisfying and sustainable new career.

Jerry Lindman is on the faculty of the College of Management of Lawrence Technological University in Southfield, Mich. and directs the Center for Nonprofit Management. The Center’s mission is to prepare individuals to improve communities, strengthen organizations and advance society through innovative and practical management education.