Revisiting Leadership Development in the Context of McKinseys’ 2014 Expose - and doing so from the Perspective of Nonprofit Organisations

In January 2014, an article appeared in the McKinsey Quarterly entitled “Why leadership-development programs fail.” They identified a number of shortcomings in current programs, including:

• the fact that many of these programs overlook context by working on the invalid assumption that one size fits all;
• the fact that reflection is decoupled from real work, underpinning the absence of real-life application of acquired theoretical knowledge
• the fact that the need to change mind-sets which requires an associated change in behaviours is often overlooked, and finally
• the fact that such programs tend to overlook the Return-on-Investment aspect associated with the cost of such programs.

Alternatives do exist utilising an Action Learning framework. Action Learning as an approach for driving performance was originally proposed by Professor Reg Revans in the 1940s and over the years has led to significant international successes, especially in the NFP sector where the central focus on mission and values enables participants to develop relevant work-based solutions in their own organisations, whilst furthering their own personal and professional development. By doing so, the Action Learning process successfully addresses the shortcomings that McKinsey and Co has identified in existing leadership development programs.

In 2014, OPTIMUM NFP participated in the development of the Not-for-Profit Leadership Survey which identified that 52% of respondent NFP CEO’s believed that whilst their management teams had strong technical capabilities, they lacked the leadership skills needed for the future. The survey suggested that traditionally, managers were promoted or appointed into their roles for their technical or professional skills and they learnt to manage a team through trial and error. As suggested in the report, the high costs of staff turnover and the need to develop staff to achieve organisational goals meant that managers needed to have highly developed leadership skills more so than technical skills.

Emotional Intelligence, or EI as it is usually referred to, is very often seen as a necessity in leadership roles, especially when leaders are focusing on the implementation of change programs, where appropriate engagement with all staff is not only necessary, but also fundamental to the success of the change program. EI has many facets including emotional self-awareness, emotional awareness of others, emotional self-management and control, emotional management of others, emotional reasoning, and expression.

Some authors suggest EI cannot be taught. Managers either have this skill or they don’t. Others suggest that whilst an innate leaning towards effective EI traits is prevalent amongst successful leaders, exposure to appropriate leadership and personnel development can either improve existing EI capabilities or at least expose potential leaders to a wide range of EI related attributes where, in the right environment, and with the right mentoring, can, over time, refine EI type skills.

In a potentially correlated issue, the Survey also found that 52% of respondents believed that their NFP’s inability to adapt to change was a risk to the sustainability of their organisation. A broader issue appeared to be the extent to which these organisations were change ready from a cultural perspective as well as from a technical preparedness level. In this regard the challenge for leaders is to understand what stage their organisation is at with regards its readiness to react to, and absorb change, identify the gaps, and then look to address them with a myriad of suitable approaches before change is implemented. Of course when we talk organisational culture, be it for change readiness purposes or for general performance purposes, a leader’s EI becomes of paramount importance, given the role that the leader plays in both these issues.

Seeing the above issues in context, it becomes clear that leadership development training may become critical in addressing the challenging issues that face this sector into the future. Whilst historical issues and challenges do exist with leadership development programs, approaches that incorporate Action Learning, are providing worthwhile benefits, and evidence does point to these addressing the shortcomings identified in the McKinsey article.

Additionally, Australian non-profits are experiencing a huge amount of change, brought about by a combination of internal organisational issues as well as a disproportionate amount of external environmental challenges. The former resulting directly from employees wanting more from their organisations in a climate of uncertainty around both employment and service delivery, whilst the latter resulting directly from a changing political landscape that is failing to underpin service delivery stability, let alone expansion, and a financial imperative that sees government policy more mindful of perceived budgetary imperatives than community well-being. The political focus on predominant economy-wide cost-reduction, without a corresponding increased focus on economy-wide revenue-generation, will continue to challenge activities within the non-profit sector.

So in this challenging context, what skills and expertise is required by managers of non-profit organisations into the future and to what extent does a skills gap currently exists?

A timeline of management developments over the last 50 years or so reflects a dual focus on organisational strategy as well as organisational leadership. This was evident in the works of Kanter, Porter, Peters & Waterman, Greenleaf, Covey, Hammer, Kaplan & Norton and many more. As the understanding of managing change came more and more to the fore, a focus on the individual in organisations as distinct to the organisational processes themselves became more prevalent. Management research and the associated academic research journals have become increasingly awash with such an emphasis, although the success of change management continues to elude many organisations.

The non-profit sector is not immune to these environmental events. Experiences in the commercial sector tends to mirror, or at least influence, events in the management of non-profit organisations, or at the very least there is a strong association which NFP leaders need to be cognisant of in their own deliberations.

So what are the attributes that are needed of leaders in the non-profit sector into the future? Based on my own Doctoral research and further informed through my consulting work with over 50 nonprofit organisations, I suggest that the sought-after attributes fall into two broad categories which I have labelled as ‘Thinking’ on the one hand and ‘Relationships’ on the other. Seems overly simplistic, but let me explain further.

Thinking involves lateral and medial thinking. The former is closely aligned to strategic thinking and is characterised by how well the leader can see the broader picture and incorporate ideas from a wide range of sources, not just what is in front of them at a particular point in time. In order to be effective at this type of thinking, leaders need very broad experience, not just in their own organisation or their own industry, but be able to incorporate broader experience to add value to the current challenge. 

Medial thinking focuses attention on the detailed issues necessary to bring scope and context to lateral thinking. Effectively it becomes the ‘How to?” of the “What if?” Here the leaders are focused on detail and the ability to actually deliver ideas and concepts to a point where their organisation can in fact function and respond to organisational and environmental challenges.

Related to ‘Thinking’ is the attribute of ‘Relationships’. I stress that this is related and not stand-alone. Without the ability to relate to a wide range of organisational stakeholders, whose complexities are well documented in the non-profit sector, ‘Thinking’ becomes redundant, at both levels. The key characteristics of ‘Relationships’ involve:

• the ability to effectively communicate at all levels of the organisation as well as to all stakeholders, 
• the ability to transcend limiting organisational structures where necessary and build effective in-house teams to resolve problems and challenges
• the ability to harness individual and collective organisational skills to achieve strategic and operational outcomes
• the ability to strengthen organisational capacity and individual capability

Consider your own organisation in the context of the above and where your leaders sit in this paradigm of Thinking and Relationships. What happens within your organisation to ensure these attributes exist and are being reinforced for both current and future leaders? How is learning accommodated for in this environmental context?

In the above context, there is a clear linkage between the attributes of Action Learning and the need to fill nonprofit organisational skills gaps, including the development of current and future leaders. As an experiential process of engagement Action Learning is premised on the following key characteristics:

1. Being evidence based and grounded in a proven theoretical practice based discipline;
2. A way of thinking about how one learns
3. Driven by organisational and business needs
4. Meeting the needs of the individual and the organisation
5. Designed for tackling current problems
6. Being action focused, and
7. Having a learning focus at individual, team and organisational levels.

OPTIMUM NFP runs numerous programs that support organisational learning and skills development across all levels of leadership and management, as well as programs that support organisational change. Further details can be obtained at the OPTIMUM NFP web site at https://www.optimumnfp.com.au/programs.html Alternatively, bespoke programs that respond directly to the unique requirements of your own organisation have also been developed and further information on these can be obtained by contacting David Rosenbaum at drosenbaum@optimumnfp.com.au or by ringing 0411-744-911

Developing leaders, expanding skills and coping with organisational change. These are interrelated activities and all fundamental to your organisation's future sustainability. Act now.