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Recruiting key executives:the expanding NGO sector

Malcolm Duncan

IRC Global Executive Search Partners

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Western democracies are increasingly outsourcing Human Services (HS) to Non-GovernmentOrganizations (NGOs), Not-For-Prots (NFPs), and Faith-Based Organizations (FBOs). Increasingly,however, the leaders of these organisations are not executives from the NGO sector, but rather executivesfrom the private sector, with a deep understanding of the commercial drivers, as well as the social andpolitical challenges of running an NGO.

These key executives must be able to position their organizations to inuence government policy anddecision making and, equally important, put the right architecture around their business to attract thefunding from the end consumer.

Australia provides a unique window on the challenges of leading the rapidlydeveloping and changing NGO sector. Malcolm Duncan, co-founder andDirector ofThe Insight Group IRC Australia (an Australian-owned executivesearch and talent advisory rm with ofces in Sydney and Melbourne), is also amember of the Executive Board ofIRC Global Executive Search Partners (IRC),with deep experience in global recruiting for this challenging sector.

In this article, he examines the sectors development, current and futureprospects, and describes the ideal (and rare) prole of those extraordinary chiefexecutives who have the ability to lead NGOs into a successful future.

Why is the NGO sector expanding so rapidly?Malcolm explains how economic challenges are creating the increased need for effective NGOs, andresults-driven key executives.

Providing for human services, for most Western democracies, has turned into a nancial black hole,he says. Now that all Western democracies are under budgetary pressure trying to bring in balancedbudgets and/or draw down decit budgets one way to lighten the pressure is to remove those largesocial/service obligations from government balance sheets.

Governments increasingly realise that these NGOs, NFPs and FBOs are much more effective in the deliveryof targeted, on the ground services. Malcolm adds: Governments also realise theres no votes in failing tosatisfy the insatiable needs of our communities for cradle to grave services. The Baby Boomers are leading

that demand for better, more exclusive and comprehensive services in areas such as aged-care, with theirchildren wanting increasing quality built into childcare. Since the mid 1970s, incredible increases in wealthhave created a layered, non-egalitarian society and thats showing in the desire for stratied services,from basic to gold-plated.

Wheres the money coming from and will it get less?Government redistributes funds to the service providers or the end users.Basically, the government then says were going to allow these organisations to deliver our policy on theground and, for the most part, it is up to those organisations to appeal to the end consumer to spend theirdollar with them, explains Malcolm.

Recruiting key executives to lead the expanding NGO sectorCEOs must navigate diverse conicts and challenges to successfully lead

an NGO through the nancially challenged 2010s

Malcolm Duncan IRC Australia, and Board member of IRC Global Executive Search Partners

Malcolm Duncan

http://www.insightgroup.com.au/http://www.ircsearchpartners.com/http://www.ircsearchpartners.com/http://www.insightgroup.com.au/

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As governments gradually reduce the amount of money, fund-raising becomes an integral part of theservice: Thats why many services have been taken up by faith-based organisations, because they have

traditionally had balance sheets that can subsidise or support theprovision of these services, he says.

The UK and Canada have similar government models.As Sylvia MacArthur (Managing Partner at Madison MacArthur Executive Search Specialists IRC Canadain Toronto, and president of the Board of IRC) says: In Canada, almost all major NFPs are now headedup by seasoned business executives. The aim was to bring more rigor and business discipline to theseorganizations. It has really changed the focus of these organizations, and they are now far moresophisticated in capturing wallet share.

According to Alam and Robb, in Issues of Economic Efciency of Human Service Delivery in Australia1:Public investment is also inuenced by social factors. For instance, both public sector agencies andnon-government organisations, including charities, religious and not-for-prot entities, have a long and

sustained history of involvement in the funding and provision of human services such as disaster reliefand support for people with a disability and other disadvantaged groups.

Malcolm adds that current models can cause conict: Some FBOs are providing tiered services to the enduser. For example, in aged-care, if you can pay for it you can live in a resort-like facility, while otheraged-care facilities can be far more basic with shared wards and more modest services.

Alam and Robb state that, while a range of models in delivering human services is possible anddesirable both from society and government perspectives, many human services are provided to peoplewho are poor, and therefore cannot afford to pay a market price (e.g. service for homeless people) andpose a challenge to the viability of a for-prot provision or user-pays full price service model.

Increased government divestment means the services will necessarily become more money driven.In Australia, it follows the line were moving to models of more self-funded retirees so thats a very bigpart of it, says Malcolm. This generation of people who are approaching retirement (55+) are expectedto pay for retirement from their own pension savings.

Is there an ideal CEO?As Malcolm explains: The successful CEO must understand the commercialimperatives that drive the sector. The prot-and-loss model, and the challengesthese businesses face having to manage across the social and political interface.And in that sense, CEOs need to be able to position their organizationsas a peak body, to inuence government policy and decision making and funnelthe end consumer to use their services.

He sees marketing as another key CEO skill: Just as important, from a marketing point of view, is theability to put the right architecture around the business, to attract the funding from the end consumer.It may be to attract a person in their 60s looking to transition out of their home, and buy into age care,or it may be a parent whos looking to buy into child care the ability of an organisation to attract the enduser to a tiered service offering is vital and the CEO will always be chief salesman and marketer for theirorganisation and the brand.

1 International Review of Business Research Papers Vol.5 No.2 March 2009 Pp. 52-61

Issues of Economic Efciency of Human Service Delivery in Australia

Khorshed Alam and Walter Robb

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He adds that executives also have to be experienced in dealing in a regulated environment, used to

working effectively with government, understand government policy issues, and have a deep appreciationof how government formulates policy, particularly social policy; those qualities allow the CEO to moreeffectively inuence the debate.

Naturally, they require all of the other leadership characteristics of a successful CEO, including the capacityto inspire and energise their enterprise.

Is it difcult to attract those top yers?Malcolm knows it can be difcult to ll such a demanding CEO role, because of the need for commerciallyengaged people at the top of their game: Its not a role where you can consider stepping back fromcorporate pressure. What you really need is an astute leader that understands government imperativesand the direction their sector is heading in. Its harder in the NGO sector than in the commercial sector,

because youre dealing with policy as well.

The lack of bonuses can create a major issue for recruitment, despite competitivesalaries. However, Malcolm adds, People who are attracted to this sector areusually those with a personal desire rather than nancial reasons. Theres got tobe a belief in wanting to give back, or a sense of engagement with the mission ofthe organisation. The outcomes within these organisations are not driven by thebest commercial result, rather the best social outcome, which means sometimestaking the least commercial choice, or the less economically rewarding path.

Malcolm sees the role attracting people in their mid 40s to mid 50s often from asuccessful background in nancial or professional services who have arrived at apoint in their career where they have decided that nancial stability and security

allows them to give back. Theyre happy to take the CEO role and contribute back, he says. Theyredriven by social conscience but still want the challenge that large complex enterprises provide.

Malcolm concludes: Managing and leading NGOs is a growing challenge, which necessitates explainingand educating the right candidates about the benets, the challenges and the career options of thisincreasingly signicant sector.

ABOUT IRCWith a growing roster of leading executive search rms across Europe, the Americas, Asia and Australia,IRC Global Executive Search Partners has more than 250 accomplished executive search professionals.Ranked among the worlds 15 largest retained search rms, IRC Global Executive Search Partners hasbeen providing consistent and high-performance executive search solutions to its clients for the pastfteen years. www.ircsearchpartners.com

ABOUT MALCOLM DUNCANManaging partner and Director ofThe Insight Group (founded 1994), Malcolm Duncan is based in Sydney,Australia. www.insightgroup.com.au

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