Lessons For-Profit CEOs Can Learn from Nonprofit Leaders

Consider some of the findings from the Nonprofit Finance Fund’s annual State of the Sector survey, which explores challenges faced by nonprofits. It pointed out that the biggest issues for nonprofits are achieving long-term financial sustainability, staff retention and competitive wages, and raising funds that cover full costs.

Sounds a lot like classic for-profit challenges, right? While different organizations generate revenue through different means, there are a few best practices from the nonprofit world that can make a positive impact in for-profit organizations.

1. Hire passionate people. Passion for the mission is nearly a given in a nonprofit environment; organizations naturally attract people based on their societal goals. If employees are not passionate about the mission, the relationship is unlikely to work over the long-term. For-profit companies should also lead their recruitment efforts with the mission in mind.

“CEOs who better understand how the success of their company connects with a strong community may gain more traction with employees, customers, and advocates across their industry.”

When an employee base doesn’t know what they’re working toward, companies may find it hard to develop long-term advocates who will help them grow in the right direction. This does not mean that for-profit missions need to be as altruistic as those of nonprofits. Microsoft’s mission, for example, is to help people and businesses throughout the world realize their full potential; Coca-Cola’s mission is to refresh the world, to inspire moments of optimism and happiness, and to create value and make a difference.

In common practice, though, factors such as work experience, personality profile, and communications skills overshadow commitment to a mission or even the related notion of cultural fit, according to Business Insider. While those elements are certainly important to the selection process, the foremost concern in an interview should not be “why are you right for this job?” but rather “are you aligned with our mission?”

2. Be a presence in the community. We all know that a company’s most important assets are its employees and customers. Both groups are expensive to replace and companies can create a sense of loyalty by involving both employees and customers in the community. Being engaged and connected in the community helps to keep turnover down and brand awareness high. Simply put, it makes “work” feel like a part of “home,” and instills a sense of pride that can’t be easily shaken.

Nonprofits readily accept that they won’t go far without providing a sense of connection around their mission and the surrounding community. For-profits of all sizes routinely deprioritize these elements—but in the battle for better margin, CEOs who better understand how the success of their company connects with a strong community may gain more traction with employees, customers, and advocates across their industry.

3. Embrace leaders with “skill diversity.” Nonprofits tend to be open to leaders who have diverse talents and skill sets, in part because they value highly the commitment to amplify the organization’s message and commitment to understanding the mission. That means they are just as likely to appoint a CMO as Executive Director as they are a financial executive.

For-profit companies, on the other hand, are predisposed to a CFO/Finance background when it comes to selecting a CEO. Managing the bottom line and understanding finance are given more emphasis, and as a result, leadership is often weaker in some of the soft skills that can be equally instrumental to sustaining growth in the new economy. If you think about what makes a great leader, the soft skills will rise to the top. McDonald’s is one major corporation leading this line of thinking, as it appointed former CMO Steve Easterbrook as CEO in early 2015 as part of a turnaround effort.

Nonprofits readily accept that they won’t go far without providing a sense of connection around their mission, engagement with the surrounding community, and diverse skills. For-profits of all sizes routinely deprioritize these elements—but in the battle for better margin, CEOs who better understand how the success of their company connects with a strong community may gain more traction with employees, customers and advocates across their industry.

 

Carla McCall :Carla is co-managing partner of AAFCPAs and since 1995 specialized in providing assurance, tax, and business consulting services to sophisticated nonprofit organizations and closely-held companies. Carla's overall contributions to women in the accounting profession are immeasurable and at AAF have been pivotal since her founding of the AAF Women’s Opportunity Network.