Structural Leadership Gaps

Scan the group carefully if you ever find yourself in a meeting that includes chief executives of medium to large-sized established nonprofits. Chances are the age of most of the CEOs begins with a “6.”

This is hardly surprising. CEOs and other senior executives of nonprofits or even for-profit corporations tend to be older. That’s just a by-product of the hiring and promotion practices in most organizations.

When this pattern occurs in the woods, ecologists call it a “climax forest.” These are areas of natural growth that after years of stable conditions become stands of pole-sized trees that prevent the growth of generations of shoots. A narrow range of species become dominant in the climax forest. It effectively stops the diversity until some major event, such as a forest fire, restarts the cycle.

Some nonprofits are in danger of becoming climax forests. This is one of the two major sources of structural leadership gaps in nonprofits today. What makes this trend both different and difficult to deal with is that for many of those organizations the CEO has no internal successor. With no internal successor, an organization runs the risk of stumbling when the CEO decides to retire or leaves the job unexpectedly.

The CEO of a major national association passed away suddenly last year. Months later, to the outside eye at least, it appears that the organization barely missed a step. That’s because the late CEO and the board had worked out a succession plan and had actually begun implementing it years earlier.

How it happened

There are unique reasons why some nonprofits, where the CEO was born in or close to the same decade as the last World War, are unprepared for a leadership transition. Sometimes this lack of preparedness is stylistic, as with the founder of an organization who can’t bear to contemplate a future in which they’re separated from their “baby.” Sometimes it is simple unwillingness to seriously plan for the future.

A little-noticed set of circumstances has created for many CEOs and their organizations a structural leadership gap.

Start with demographics to understand this gap and its implications. Baby Boomers are generally considered those born between 1947 and 1962. This is because the early wave of Boomers came along when WWII soldiers returned from battle and began settling down after nearly a decade of social disruption caused by war mobilization. By all measures the Baby Boom generation pushed a record number of newborns through hospitals, schools, newly-enlarged suburbs, and from there, into the workforce.

The earliest of the Boomers started entering the workforce during the late 1960s and 1970s, a time of great idealism and dramatic social change.

Many of those Boomers took jobs in education, health, and human services. Some eventually started their own nonprofits where they remain to this day. New federal dollars flowed into health and human services nonprofits during this time. Meanwhile, the next generation — Generation X — was a baby bust by comparison. Any generation of Americans would have been smaller than the Boomers. Both generations were delayed by the double-dip recessions of the early 1980s, but Gen­eration X’ers would have suffered more than their predecessors who were already established in the workforce.

What does this generational hiccup mean for today’s nonprofits? In those same meetings from the first paragraph, you’re likely to find proportionately more nonprofit executives and managers whose ages begin with “4” than with “5.” Apart from stylistic preferences, this is usually why there is often no logical internal successor in these organizations. What this generational gap means is not that Generation X’ers are unprepared to assume leadership roles in their nonprofits. Leadership ability is not confined to selected generations, nor does it particularly respect age. The reason that early Gen X’ers are at a disadvantage is because most established organizations prefer a smooth age-related trajectory in their senior executives and 40-somethings still have a few years before they’re firmly in line for the top jobs.

How to Fix it

Unlike in a real climax forest, the sector’s shoots have been thriving. They just need to be given some openings. The Boomer-Gen X leadership gap is emerging just as larger environmental forces such as governmental retrenchment are delivering body blows to many nonprofits. Good leadership succession planning is still the best way to deal with leadership transitions. For organizations with this kind of gap, this would be a good time to start paying attention to those on the other side of it in order to make sure that as much of an orderly transition can occur as possible.

Mergers are another way of solving this dilemma outside of internal leadership transitions. This exact question was dealt with in an earlier issue of The NonProfit Times (“Don’t Replace, Merge,” December 2004). One of the best times to put two organizations together is when one is missing a CEO because a leading cause of merger failure is when there is a power struggle between the two bosses.

A third, unfortunate way of dealing with this leadership gap is also emerging: bankruptcy. More than a small number of nonprofits are surprisingly close to bankruptcy, and a good share of them are run by Boomer founder/CEOs who just can’t accept the fact that their life’s work is hanging by a thread. Needless to say, this choice is the bluntest of instruments. It is better to recognize and accept change than to be forced to capitulate to it.

The Second SLG

The second SLG in nonprofits is between the Millennials (Generation Y) and everyone else. This group, also known as the Echo Boomers because many of their parents were Baby Boomers, is the first generation of individuals in history with a near lifelong exposure to technology. This structural leadership gap for now is more cultural than demographic. Their leadership so far has been largely in technology because that is what they know better than any other generation. But it will only take a few more years of involvement in real organizational decision-making to change that. Here, too, the shoots are thriving.

This gap occurs because Gen Y is so thoroughly grounded in technology while boomers embrace it only in part or not much at all. What will exacerbate this gap eventually is when Gen Y consumers — not employees — begin demanding a technology-heavy experience. Nonprofits that have a mismatch between their Gen Y consumers and Gen X workforce will have the most difficult time adapting.

We have some time before this gap grows serious. But already a version of it has appeared in a disguised fashion. Signs of the triumph of the technologically qualified include outsourced accounting to India, the movement of information technology services to the cloud, and the rise of virtual executive offices. There are organizations where one or more key workers has never set foot in the headquarters because they don’t have to do so. All they need is a computer or a smartphone and access to the Internet.

Structural leadership gaps are often caused or made worse by external forces. Still, it is in organizations’ interests to ensure stable leadership at all times. Understanding the historic, demographic and economic forces that can create these gaps is the first step toward closing them.

Thomas A. McLaughlin is the founder of the consulting firm McLaughlin & Associates and a faculty member at the Heller School for Social Policy and Management at Brandeis University in Waltham, Mass. He is the author of “Moving Beyond Founder’s Syndrome to Nonprofit Success” (2008; BoardSource). His email is tamclaughlin@comcast.net