A mass departure of executive directors from their nonprofits is expected over the next five years, although at a slower pace than previously predicted, with executives citing frustration with their organizations’ shaky finances, under-performing boards of directors, and the difficulty of balancing work and life, a new study says.
The study by the Meyer Foundation in Washington, D.C., and CompassPoint Nonprofit Services in San Francisco also finds nonprofits are not prepared for executive transition.
Sixty-seven percent of executives plan to leave their jobs within five years, down from 75 percent in in similar studies in 2006 and 2001, says the study, Daring to Lead 2011, which is based on an online survey in the fourth quarter of 2010 that generated responses from over 3,000 executive directors.
The smaller share of executives planning to leave suggests the recession temporarily may have slowed executive departures, the study says.
With one in six leaders age 60 or older, for example, 22 percent of that group said a loss in their retirement savings contributed to a transition delay.
Executive directors cite their boards as a big reason they plan to leave.
Forty-five percent of respondents said their boards had not reviewed their performance within the past year, for example, and only 18 percent said their performance review was useful.
Thirty-three percent of current executives followed a leader who was fired or forced to resign, “indicating the frequency of mis-hires and unclear expectations between boards and executives across the sector,” the study says.
“New leaders were particularly challenged by establishing effective partnerships with their boards, describing disillusionment with what boards actually contribute with respect to strategy, resources, and personal support along executives’ steep learning curves,” the study says.
And satisfaction with board performance was lowest among leaders on the job between one and three years.
“It appears that many boards see executive transition as ending with the hire, when in fact leaders – nearly all of whom are in the role for the first time – need intentional support and development as they build efficacy in the executive role,” the study says.
It also finds that only 17 percent of organizations surveyed have a documented succession plan, and just 33 percent of executives were very confident their boards will hire the right successor when they leave.
The troubled economy also is a big factor in departure plans by executive directors.
Eighty-four percent, for example, said the recession had had a negative impact on their organization, and one in five said the negative impact was significant.
Forty-six percent said their organizations had operating reserves of less than three months of expenses, with most experts suggesting nonprofits should have at least three months of reserves.
The study offers a series of recommendations to improve transition planning, understanding of financial sustainability, professional-development options and performance and composition of boards.