Many social enterprises start small and grow fast. This puts a premium on the need to develop, or recruit, talented people who can take on evolving roles and responsibilities. Yet planning for future leadership needs falls between the cracks at most social enterprises. Leaders plead lack of time and money to make development a priority. If you are among them, be aware that neither excuse holds up under close scrutiny. What you really need is a change in mindset.
That change begins with answering three key questions:
- What is your organization's strategy for the near term, and how will you fulfill it?
- What kinds of people do you need to make the strategy a reality?
- How do you develop, or hire, the staff you will need?
You are far from alone if your organization hasn't grappled with these questions. Only 37% of respondents to The Bridgespan Group's Leadership Diagnostic Survey said they have "a clear understanding" of the leadership skills, roles, and number of individuals needed over the next three to five years to achieve their strategic goals. Only 39% indicated that they had identified potential successors for key positions.
Taking a hard look at strategy and figuring out how it impacts staffing needs — answering the first two questions — is something every organization, large or small, can and should do. But it's critically important if yours is a fast-growing organization. For example, if you are planning to add new sites, you'll probably need to develop a cadre of site directors, and possibly a vice president for field operations. If you plan a strategy shift to greater focus on community engagement, you may need to enhance the skills involved in working effectively with community leaders.
Once you've mapped your organization's near-term talent needs, you're ready to assess whether members of your current staff have the potential to grow into those new roles.
In our survey, about half the respondents say they consider staff potential as part of their evaluation process, but we found that few actually have tools or approaches that help them do this systematically.
Here's where a simple tool called a Performance-Potential Matrix comes in handy. The matrix draws on past performance, plotted on the horizontal axis, and judgments about an employee's potential to take on more responsibility, plotted on the vertical axis. The upper-right quadrant — high performance and high potential— is the sweet spot for future leaders. Using the tool, you can plot current and future leaders on one page and determine whether you are likely to have the internal talent to meet your needs.
Year Up, a nonprofit that helps urban young adults to develop professional careers and pursue higher education, began using the matrix when it had only one site, a small staff, and annual revenue around $1 million. But it was growing fast. Today, Year Up is a $30 million organization with multiple sites, and it still uses the matrix.
Now that you have identified employee strengths and weaknesses, it's time to craft individual development plans. This is where capital-constrained enterprises feel the pinch of time and money most severely. We heard comments from nonprofit leaders like: "In order to lead, you need time to lead," and "[We have] inadequate financial resources to cover training and development costs."
Leadership development doesn't need to be a separate initiative or an expensive training program added on to the organization's core work. In fact, research by the Center for Creative Leadership has shown that leadership is best learned on the job. The Center's 70-20-10 model, now widely used in the corporate world, calls for 70% on-the-job learning, 20% coaching and mentoring, and 10% formal training. It's a model gaining appeal among nonprofits of all sizes.
The performance-potential matrix and the 70-20-10 model are simple, straightforward tools to break through the falsely perceived time and money barriers. The potential payoff is huge. By developing a cadre of up-and-coming leaders, you can delegate more, which frees up time you need to focus on strategic priorities. More importantly, by changing your organization's leadership development mindset, you can create the momentum needed to build a talent pipeline that will keep your organization strong as you grow, and grow fast.
Insights from HBR and The Bridgespan Group