Episode 190: The Decreasing Tenure of a Nonprofit CEO - Why and How Philanthropy Offices Should Help
In this episode of Around with Randall, we put nonprofit CEOs on a slide, place them under the philanthropic microscope and examine the alarming trends of burnout and high turnover rates among our nonprofit leaders. We also talk about the importance of effective board engagement, community interaction, and strategic planning in bolstering CEO tenure and organizational stability.
Welcome to another edition of Around with Randall, your weekly podcast for making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett. I'm humbled that you would take a few minutes of your time to join me, Randall, on this edition of Around with Randall.
Today, we talked about the CEO position and some interesting data that has come out based on some pretty terrific surveying by the Chronicle of Philanthropy. Recently, they did a deep dive, statistical kind of analysis or surveying of up to 350 CEOs in the nonprofit area. And what they found out was the continuation of a trend where there is burnout and turnover at a higher rate is still continuing. And as a result, this is causing issues within our nonprofit community.
So let's talk a little bit about the survey that was done. And when it again, give credit, wasn't my survey, but it was reported out in a couple different places in particular, the Chronicle of Philanthropy in their publication. But what they looked at was from these 350 chief executives is that the first and foremost is that they love their job, that even though there were challenges in our challenges every day, that the benefits of what they do, the love of what their mission stand for, really override or overcome the challenges.
Challenges are increasing. And in fact, a third of them say that they're going to leave their job in the next two years because of all of the challenges. And most of those were not dealing with woman or retire. They just aren't going to deal with the pressures of that particular opportunity.
It also found that 60% of these chief executives are really concerned, this will be not a surprise to this host of the podcast, are really concerned about fundraising. And in fact, go a little bit further saying that it's getting harder and harder to find that money. And then in many ways, they're not prepared, which obviously aligns with the book that I wrote last year. Been very fortunate to be told it's in American College of Healthcare Executive Hamilton Award finalist. Maybe the first Philanthropy book to reach the finals into final review for the American College of Healthcare Executive is kind of the association for healthcare leaders. They're not ready for this. A lot of times. My book was very specific to healthcare, but it can cover all aspects of the nonprofit world. They're struggling with philanthropy. They don't quite know where to go and what to do.
They also indicate that the preparation in which they have isn't adequate enough, which is what the book release all about. And some people come to it more naturally. There are always those that come into particular jobs and their skill sets and their interests kind of align with, you know, in terms of a kind of a perfect start.
So this all leads to pressure in terms of financial stability. Two thirds of the individuals at CEOs in healthcare were indicating that the unfortunate divisiveness of our political culture in the nation is actually affecting what's going on in terms of their particular organization. And that retention of people and job dissatisfaction is an increasing issue. It's never something that we want to indicate that these outside issues are dominating the most of the great and for the most part, non-political, not philanthropic work that we want done. If you're a food bank, I mean, you can argue where the politics lie, but at the end of the day, people just want to get fed. And people want to feed others to make the world a better place.
So, but this political divisiveness is pushing into the organization and creating challenges internally with communication with teamwork and things of that nature. The other thing that came out of it and specifically talked about in my book as well, which was gratifying from an evidentiary standpoint, but frustrating from the process of what we need in nonprofit leadership was the conversation around in posture syndrome.
That many times, these CEOs, these leaders become the leader for the first time and to steal from at least one of my all time favorite shows in a particular episode, The West Wing, or Leo McGuyer, he tells the governor at the time soon to be president, just fake it till you make it. And in some ways, we're seeing, or at least there seems to be some conversation in this particular study that there are a lot of CEOs who walk into these positions and they don't actually know what they should know, or they aren't quite sure where they fit into the larger process. And they have in posture syndrome, meaning I should be knowledgeable. I've got to put on a good front. I've got to be good leader, but I don't have all the details about what that is.
All this is to say is that we're watching a deterioration of the tenure of the CEO is in the overall nonprofit world, depending on which stat you look like, look at. There's a lot of different stats, but they're all coming in the same ballpark. The average tenure of the nonprofit CEO is about five to six to years in a particular position. If you delve a little bit deeper and so we get into university CEOs, Chancellor's presidents and then into healthcare CEOs, there's a little bit better data in part because they have their own associations that can kind of monitor this.
But university CEO ten years Chancellor president, whatever title is down to under six years, we're in 2006. It was nearly nine. And in healthcare, it's down to under four years. So I want to spend just a second, juxtaposing all of this to the four-profit world.
And I want to write for a moment about one of my favorite podcasters. Clark Howard is a business or maybe personal financial guru. You may have seen my television. I listen to his podcast, watch the one TV who talks about personal finance, your own money, take control. And he recently had a rant that received several positive feedback follow-ups from listeners about the salaries of CEOs of hospitals in particular nonprofit hospitals.
And I don't normally disagree with Clark, but in this case, I'm driving down the road and saying, wait a minute, this is going to get to this tenure issue in just a moment. If you're a nonprofit hospital CEO and let's just take out hospital nonprofit CEO, you probably have the same issues that a for-profit CEO has of similar size. Financial sales, if you're in the for-profit world or philanthropy and service, if that's the nonprofit revenue stream. Certainly legal issues are going to be somewhat similar. You're going to have tax issues. It may look a little different from a nonprofit, but there are still issues involving tax. You're going to have, you know, from leadership issues to, you know, people not showing up to bad service, to bad marketing, bad media attention.
The reason I bring this up is that he was saying it's just not fair. These are non-profit CEOs that shouldn't be making this much money. And I'm like, wait a minute, a nonprofit CEO and a for-profit CEO have many of the exact same problems. The only reason you don't want them paid more or the same is because they're a nonprofit. They should take less. I just disagree with that. You pay someone based upon the work they do and whether it's nonprofit or for-profit really isn't relevant.
So how are non, how are for-profit CEOs doing when it comes to tenure? So we talked a few minutes ago if we have similar job responsibilities and we're watching a decreasing of seniority, tenure, engagement from CEOs in the nonprofit sectors. What's going on the for-profit sectors? The exact same thing. The average tenure for a for-profit CEO is about seven years. So it's not much more than the nonprofit. But it's down three years. It used to be 10 years and just after the turn of the century, 2002 or 2003.
All this to say is that getting to be and remaining a CEO is becoming more challenging, harder, more complicated. And as a result, the question becomes, what are we going to do about it? I'm going to spend a second or two talking about what they, the CEO can do. But if this is a nonprofit podcast, one of the questions is if you're a nonprofit leader, what can you do to make the CEO's job better, easier? My book is and a lot of the conversations I'm having now are positive or directed toward the CEOs and a really good friend of mine and an industry leader who I believe in made mention of a couple of things and I thought, you know, I haven't talked a lot about what our role is in this decreasing tenure of CEOs. I keep talking about what the CEO needs to be ready for and what a CEO probably is going to be more and more often, if I'm properly driven fundraiser.But I have failed to articulate what our responsibility is. So let's start with what they can do, meaning the CEOs, two big things.
Number one is work-life balance, fighting for finding a way to have work-life balance, where a CEO can get away into a, I'll call it a safe space, but I just mean get away from the office and have a chance to recuperate, to regenerate. And I think that's true of any good leader, any good employee, anybody who wants to be whole.
The second thing which is a little bit more unique to nonprofits is complete and utter alignment, engagement, alignment and engagement with the board. Because if you have a group of people that firmly back you for the right reasons and have the ability to support you from a public perspective, a private perspective, compensation perspective, and your perspective, contract perspective, there's a lot less pressure. Typically, if they're highly engaged in strategy, not operations, that there is a vision and that they see themselves as the owners of the nonprofit representative community with an incredible partnership with that CEO.
When I think about one of my mentors, Glenn Fosdick, he was at the medical center, the University of Mexico Medical Center for 11 and a half, 12 years. I think if I could get him to be honest, and he actually is honest, most times I've asked him, one of the reasons his tenure was longer was he had an amazing alignment with his board. The board was always pretty much in lockstep. That took a lot of work that did not come easily. This was an amazingly strong group of people. Fortune 500 CEOs, there were at least two if not three on the board of 12. The other board members were president CEOs and founders of large companies and huge medical practices. These are accomplished individuals, talented individuals. They had an amazing way of always being unified.
So from the CEOs perspective, two things that they can do is they can have work-life balance and they can create an amazing alignment and partnership with their board.
With that said, for those who are not CEOs and maybe we are, they had a philanthropy or part of the philanthropy area. We're trying to figure out how to support our bosses. Those were asking them to engage more in philanthropy in a more meaningful way. There are some tactical things we can do that we should own that we need to do to not only make the organization better, which should be our primary effort, to serve the community, which is another primary effort. But just shortly behind that a maybe a 1A, embrace, encourage and support our CEOs as they're dealing with a lot of stress as the head of the organization.
The first is more philosophical and it's being bold. Be honest, be respectful when you're honest and when you're bold. But be bold. Don't be afraid of accountability. Don't be afraid of improvement. Don't be afraid in and of itself of discomfort because sometimes our greatest improvements come from discomfort. Being bold appropriately so, respectfully so is a way in which we support that particular CEO.
I talk about it in my book, "Vibrant Vulnerability" about the fact that I always used to tell Glenn there are seven of us that report to you in the senior executives. But only one doesn't want to be a CEO. Me, because I can't be. I mean, I don't have the requisite skill set. One of the interests either. What we found in that conversation was that me being bold was respectfully and quietly behind closed doors, ensuring he knew that I was going to do everything possible to help him, particularly in philanthropy as he learned and he was great at the end of the end.
So being bold, a little more tactically. This comes directly from, I mentioned my friend and colleague who kind of got me to think about this from our perspective rather than just the CEO's perspective. We have a responsibility to have a really deep understanding of the business that we are in. And I know it's a nonprofit, but it's still a business. If you're in healthcare, education, social service, religion, whatever subsect orates, museums, zoos, it doesn't make any difference. You need to have a firm understanding of business and business planning, how that business runs. In part because you have responsibility as an executive to get to the wider mission of what we're trying to accomplish, which is going to be some level of business execution. But more importantly, it's helping to align with needs.
I've heard too often in multiple sectors, healthcare, education, social service, now into actually an association. Well, I don't know what to raise money for. I'm waiting for them to tell me. This is not leadership when it comes to philanthropy. I wouldn't even say what it is on this podcast. You have to, we have to have a better understanding of how what we do fits into what they're trying to accomplish. And that being bold is sticking your nose in and asking questions, at least in part, what is it, what are we trying to accomplish, what's our strategic vision? How does philanthropy fit into that? Let's talk about business planning. Here's what I need to do that. Here's the ROI I'm going to provide. I'm going to provide dashboards with statistical updates and efficiency updates that you can understand. All of those things are about business planning, business execution. It cannot be our job. It should not be our job to sit on the sidelines and wait for them to tell us what they need. If we do that, we are failing what we're trying to accomplish.
Number two is to support the idea of board engagement. That there is a philanthropic element, even if you have a fund your own foundation board, this the governance board, the organizational governance board has one as well. And supporting that CEO to ensure that we are supporting what they need in terms of that alignment, but also how philanthropy fits in is critically important.
Number three is to embrace the community. But out your duff, get out of your office and go see community leaders. If you're a gift officer, ask a million questions. What is it that the community thinks about our organization? What is it that we should be doing? What is it that we're not doing? What are the misnomers out there? One of the rumors. A feedback loop back to our CEO can better align him or her with where the organization needs to go and what their position is in that. But if you're just waiting for the community to comment, what you're doing is you're waiting for an article in the newspaper now online. That's not going to be any good. And so embrace the community. Get out there and ask questions. The higher level you are in philanthropy, the higher the level of the people you should be dealing with in the community in their organizations. Listening, asking questions. And then from a purely fundraising perspective, finding the connections to what. What we're doing that they want to support. But if nothing else, that information and feedback loop is important.
The last thing is to ensure that we are producing both goals and outcomes on paper. And they're not just the lagging indicators. Well, how much money do you raise? Giving more than that in healthcare and education, social service in all kinds of ways. Gasports and data are beginning to become more and more important in the strategic decisions that are being made. And if you're not in these areas, if you're not trying to engage in a meaningful way with data and outcomes and how philanthropy fits into that, you will not be helping to the level you should be.
So what are our responsibilities? Deep understanding of business planning and strategy. Number one, number two is engaging from the board's perspective in support of philanthropy. Both boards, one board does make a difference. Engaging in the community, getting out and listening and hearing what the community is thinking, where we fit into that. And lastly, the key of being and producing understanding metrics and dashboards for the data that shows our effectiveness and what we're trying to accomplish. All of these things are under the broader philosophical category being bold. We need more bold leadership to support our CEOs. Yes, I'm not going to move away from that I think our CEOs need to be much more embracing of philanthropy and the things that need to be done. But we also have responsibility in helping get there. And I don't want that to be forgotten because I talk about the other side a lot today and maybe a little bit more when I talk to hospital associations and a CHE and different CEOs. I'll also be talking to those CPUs and you know, certain places like AHP that say, hey, it's also our responsibility to be ready to go. We need longer CEO tenure. But to get there, we're going to have to make adjustments and help those in those positions make those adjustments that they can so that it's possible.
Don't forget, check out the blogs, 90 second reads, outflathaby.com, you get an RSS feedback to your inbox and if you'd like to reach out to me and make your own complaint like I did today about one of my favorites, Clark Howard, email me, tell me I'm crazy, tell me I'm not, tell me you disagree. I'm okay with that. But that's podcasts at howletflathaby.com. The world of nonprofits is becoming more and more important. We fill that gap somewhere between where the government interacts and tries to help and where corporations try to help to their certain degree or the kind of the free enterprise system and there's a whole, it's like to be is the gap that learned that there's a lot of people, a lot of things that need assistance that fall into that gap and that's why you're so important. Consider the work you do every day as an investment in your community and then people and things that are very important.
Remember, my all-time favorite saying: some people make things happen, some people watch things happen, then there are those who wondered what happened. Are your people who make things happen for and with the people in our community who also want to make things happen for the people and things that are wondering what happened. That's a pretty cool way to spend a life and a career. I hope you can wake up every morning, go to bed every night saying, I mean, not sometimes see all of it, but I'm making a difference. I may not know you specifically and if I do, I don't know what you did today, but I can guarantee you you did make a difference even though if you don't know it and realize how important that is. I'll look forward to seeing you next time right back here on the next edition of Around With Randall.
And don't forget, make it a great day.