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Investing in Talent: What's Good for Business is Essential for Philanthropy

 “The team with thebest players wins.”  Jack Welch

If you ask the most successful business leaders in the worldto list the most important reasons for their business success, nearly all willlist talent management in their top five.Some, like Jack Welch former Chairman and CEO of General Electric,believe that managing people is not only the most important role of a businessleader, but also the one that provides the most definitive competitiveadvantage.  And it’s not just talk.  By one estimate, American businesses spendmore than $14 billon annually on leadership development (Source:  “Leadership Development Factbook 2012:Benchmarks and Trends in U.S. Leadership Development” by Karen O’Leonard andLaci (Barb) Loew).

Leadership development is only becoming more important asthe pace of change in our society continues to accelerate.  Leadership expert John Kotter of HarvardBusiness School notes that “We know that leadership is very much related tochange.  As the pace of changeaccelerates, there is naturally a greater need for effective leadership.” 

So if it is widely accepted in the private sector thatleadership is critical in an environment of accelerating change and that leadershipdevelopment is key to business success, why does the nonprofit sector spendonly 0.03% on leadership development? 

A recent series in the Stanford Social Innovation Reviewcalled Investing in Talent (see links below to several articles in the series) has been grappling with the nonprofit world’s woefulunderinvestment in leadership development.Not surprisingly, the themes that surface in the series echo some of thecomments that we have been hearing from nonprofit leaders across our community.

Nonprofit professionals are feeling overwhelmed with theever accelerating pace of change and the increasingly sophisticated operationaldemands of running a complex nonprofit organization.  What’s more, two constraints placed onnonprofits make it nearly impossible for them to improve the abilities of theirleaders: resource limitations and a culture that considers investing in talentas unnecessary overhead. 

And what of our next generation of leaders?  How can we be prepared for the inevitable transitionof long standing community leaders if we have no professional developmentprograms for those highly talented middle managers that we hope will one daylead our organizations? 

No private sector investor in their right mind would putmoney into a business that had no plan for developing and retaining theirstrongest talent, but we assume that it’s unnecessary overhead in theorganizations that conduct society’s most important social service work.  It’s time for this attitude to change.

As Ira Hirschfield from the Evelyn and Walter Haas, Jr. Fundrecently said, “Leaders who have the opportunity to reflect on their strategiesand hone their skills make better choices, develop innovative solutions andforge stronger collaborations.“ (“Investing in Leadership to AcceleratePhilanthropic Impact”, Stanford Social Innovation Review September 11, 2014).

Another writer in the Talent Matters series put it well:“Investing in leadership development isn’t a distraction from programs, it’show you ensure that your organization achieves its potential impact.”

As our social problems grow more complex and interconnected,how are we going to develop, train and retain our next generation of leaders ifwe aren’t putting resources into their growth and development? 

As part of our ongoing thinking about how to build thecapacity of our community’s nonprofits, the Foundation has begun to consider ifand how an investment in professional development could have an importantstrategic impact for our nonprofit partners and for the community as a whole.  Studies of nonprofits, for-profit andgovernmental organizations alike show that investing in professionaldevelopment is likely to pay for itself.To put it another way, investing in professional development may offerone of the highest returns on investment for our dollars.  

What’s clear is that the philanthropic world isunderinvesting in talent.  We’d like tosee a nationwide philanthropic commitment to increasing our investment insenior and mid-level professional nonprofit development programs.

What if every funder in the nation dedicated just 1% oftheir annual grant making to leadership development efforts?   Here at JCF that would translate intoapproximately $40,000 per year.   It’s probably not enough, but it would be astart. 

What do you think about the 1% idea?

Additional Links from Talent Matters:

http://www.ssireview.org/blog/entry/the_business_case_for_investing_in_talent

http://www.ssireview.org/talent_matters/entry/investing_in_leadership_to_accelerate_philanthropic_impact

http://www.ssireview.org/talent_matters/entry/investing_in_people_pays_big_dividends

http://www.ssireview.org/blog/entry/leadership_development_five_things_all_nonprofits_should_know

http://www.ssireview.org/blog/entry/building_values_based_results_driven_leaders



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