Say you hit the nonprofit jackpot: A philanthropist believes in your mission and—inspired by the evidence of impact you’ve already demonstrated—wants to see your organization grow quickly. Money has always been your most pressing concern, but now that you have a big benefactor behind you, you’ve got the wind at your back. You’ve conquered the biggest challenge of growth. Haven’t you?
Maybe not. In fact, probably not. We have seen many organizations grossly underestimate the people, structure, and culture challenges that face them. As a result, they make mistakes, and the implications become visible only after they have compounded into serious problems: decreased program quality, missed growth goals, and/or loss of funders.
When organizations don’t catch and address these problems early, the fixes are expensive and overwhelming. Here are some ideas to help you scope and anticipate the human side of things—and avoid the missteps that sabotage rapid growth.
Be direct and transparent when responding to the always-asked question: Is the executive director the right person, in the right role, to lead the organization into the next phase?
If that executive director is you, you no doubt have already considered this question, and assume your board and staff have too. It is a potentially awkward topic to discuss publicly—but the more transparent, the better. Ironically, this moment provides a great opportunity for the leader to demonstrate courage, candor, and mission-first values. Addressed early and head-on, an organization can successfully remediate anticipated and acknowledged gaps in the leader’s capabilities by bringing on leadership team members with complementary strengths, shaping the executive director’s role to focus on his or her strengths, and/or providing the leader with targeted professional development resources. Avoiding this topic creates unnecessary stress, demoralizes staff, and increases the odds of a forced succession that can slow the organization’s progress by years.
Grow your senior team to the size of the challenges it will face.
With growth usually comes the need to expand your senior team, and add new and important roles. But are you underestimating the extent of what’s likely to come your way? As the organization scales, there will be changes and adjustments: bad hires, new struggling sites, stalwart funders who unexpectedly don’t renew, new organizational structures that cause confusion, software that suddenly fails. You can’t always know exactly what form the issues will take, but one thing is certain: Even the most rewarding growth creates opportunities for mistakes and miscues. Your plan should factor in the extent to which your senior team members will be increasingly pulled out of their day-to-day jobs to put out unexpected fires. A leadership team overtasked with handling short-term problems will lack the forward-looking capacity required to anticipate and avoid potentially costly mistakes.
Get creative with internal development and external hiring decisions.
Consider the vice president of finance in an organization with a $5 million operating budget, versus one with a $25 million operating budget. With growth, the role changes dramatically, requiring more sophisticated understanding of strategy, financial expertise, and management capability.
Can your team members grow into more-complex roles? Organizations with cultures that encourage learning are likely to take a “let’s just give our people a chance” tack, but this well-meaning gesture can set up people to fail.
Focused and purposeful professional development is far more likely to succeed. Start by envisioning what the future role will look like, clarify the learning curve required for the incumbent to succeed, and then ensure that your organization and your staff are willing to make the significant personal and organizational investments required. Realizing, for example, that this path might require an incumbent to work six days a week for a year, that person is far more likely to either step up successfully or gracefully acknowledge the need to bring in new people with more-advanced skills. With foresight, it may also be possible to restructure a role so that the required skills are more attainable.
Hire for the roles and skills you’ll need in a year (or two).
Are the people you’re planning to hire this year going to be capable of doing their jobs exceptionally well next year, when their jobs have become bigger and more complex? Focusing on the immediate needs of today can all too easily lead to a hire that won’t work for the longer-term.
Plan for the time and risks involved in hiring and developing middle managers.
Middle managers come by many different titles. In some nonprofits, they’re regional directors responsible for satellite locations. In schools, they are principals. Whatever their title, if you are going to scale, you are going to need more of them. Are you acknowledging the complexity of identifying, recruiting, hiring, and onboarding them? If not, you will put your organization at serious risk.
As noted, promoting top internal candidates to these positions is an attractive option; incumbents can offer deep understanding of the organization’s culture and program model. Be aware, however, that it can take a year or more of concerted effort to strengthen necessary-but-underdeveloped management and communication skills—so you’ll need a long runway. Alternatively, top external candidates offer seasoned management skills, but without time in your organization’s trenches, they may not be great role models for your culture or appreciate the distinct strengths of your program model.
These challenges compound if your middle managers work far from the organization’s senior leaders, because it will be more difficult to support or monitor their adjustment. What’s more, if your middle managers need to make hires of their own, the “wrong” ones are more likely to hire “wrong” team members, all before the original hiring error becomes evident.
Factor in turnover and hiring mistakes—and their costs.
Each stage of growth brings changes that will cause a bump in turnover. In addition to accustomed changes (such as relocations or shifting career interests of employees), some team members may feel less in sync with the emerging culture, hurt because they no longer report to the executive director, less attracted to their increasingly specialized role, or may be unable to keep pace in acquiring the skills their new role increasingly requires.
Your organization’s first stab at defining a new role—a first chief operations officer, director of talent, or regional director—presents another often-overlooked vulnerability. You may not fully understand what qualities lead to excellence in that role and are therefore inherently more likely to hire poorly. You’ll then face needing to make yet another change.
You can mitigate the risks with concerted action, but even then you will experience churn that can double your perceived recruiting needs. Take a 50-person nonprofit expecting to get to 60 staff within a year. If you’re planning to hire only 10 new people, you’ll likely face trouble. Even assuming an optimistic 20 percent annual turnover and only a 10 percent bad hire rate, it will actually take 21 hires to hit the desired growth goals. That’s more than double what many such organizations prepare for—both in terms of expense and program delivery.
I got a call recently from a senior manager at an education nonprofit. In the past 18 months, building on excellent results, the organization had grown from 30 to 90 employees. But now, the nonprofit was struggling. A new vice president hired to spearhead growth had left. Turnover was high, and early signs suggested that program results were suffering. The person I spoke with said, “We knew human capital management was important. I just do not think we understood all the facets of the challenge. We did fairly well on the issues we identified, but we just didn’t see them all until it was too late.”
It’s not too late for you. Forewarned is forearmed.
This article is Part I of a two-part series. Part II, "Four Strategies for Staying on the Path to Scale" offers thoughts on the fourth leg of the strategy-capital-people stool: designing a scale-ready organization.