Environmental, Social & Governance Briefs

Nonprofit Board Experience Develops Employees for Leadership

October 12, 2018

This is the second post in a four-part series about the Nonprofit Board Leadership Study, which was conducted by several multinational corporations to explore the potential benefits of nonprofit board service for employees, their companies, nonprofits, and communities.

The purpose of the 2018 Nonprofit Board Leadership Study was to build on the 2017 study by exploring the potential value of nonprofit board service for employees, their companies, nonprofits, and communities. The evidence in the 2018 study shows that nonprofit board service helps companies build more diverse, inclusive, and high-performing workforces, and advance solutions to social, economic, and environmental challenges. This post focuses on study results directly related to leadership development.

Companies describe a leadership crisis

Developing leaders to face new challenges in a dynamic world is essential for companies to grow shareholder value. Unfortunately, however, companies lack any confidence that they have a pipeline for future leadership. According to a study conducted by DDI, EY, and The Conference Board, the Global Leadership Forecast 2018 (GLF 2018): “C-level executives rank developing ‘next gen’ leaders and failure to attract and retain top talent as their biggest challenges in the coming years by a wide margin. In fact, only 14 percent of CEOs believe they have the leadership talent to execute their strategy.”

Furthermore, traditional leadership development programs fail to achieve the desired results. According to the GLF 2018, “a ‘do-it-yourself’ mentality leads to leadership failure… organizations that rely on a self-directed, insular approach to learning are failing to engage leaders in meaningful development.”

Board experience develops business leaders

People develop as leaders through experience. In the 2018 study, employees report that their board experience affects them at work; they describe themselves as better leaders (80 percent), more confident (77 percent), accepting more responsibility (72 percent), feeling more useful (71 percent), and better qualified for promotion (60 percent).

More than half of the respondents indicate that they developed skills in board governance (65 percent), networking (58 percent), communication (54 percent), strategic planning (52 percent), and decision making (52 percent). Nonprofit board service, therefore, is an important opportunity for corporate leadership development.

Additionally, when asked to rate the value of the nonprofit board experience in helping them to develop their professional skills, on a scale of 0-100, the average of all responses is a strong 72.

Nonprofit board members commented:

“Just like I’ve recognized what I can bring from my company to the board, I also realized that I have more to contribute at my company. At work, sometimes you’re focused on your little piece of the puzzle. But now I see the bigger picture and can talk with peers about solving challenges.”

“[Having been part of a nonprofit board merger], I’m more qualified for promotion. The experience has given me more confidence…. Doing that merger gave me the confidence to do things I don’t usually do.”

“Having to understand the financial drivers [for nonprofits] has expanded my horizon. We just went through an initiative to expand the nonprofit. The expansion had implications related to taxes, compliance, finances... The experience has helped me to develop some muscles, acumen that I didn’t have.”

“My board experience has given me the ability to connect with customers on a different level and the ability to partner with enterprises on common causes. You can build your professional network, which accelerates the learning that you can bring back to the company.”

“My understanding of organizational politics (system) has materially increased. Back in the corporate world, I’ve become much more considerate of just how complicated it is to get things done, to understand stakeholders, and the constraints that they’re operating in.”

Board experience is a pathway for companies to advance people from diverse backgrounds to leadership

Companies require more effective ways to build more diverse leadership teams, because the lack of diversity among business leaders hurts the bottom line. McKinsey’s latest study of diversity in the workplace, Diversity in the Workplace, “reaffirms the global relevance of the link between diversity—defined as a greater proportion of women and a more mixed ethnic and cultural composition in the leadership of large companies—and company financial outperformance.” For companies seeking to develop leaders from different backgrounds, board service provides unique opportunities for success. Most respondents (72 percent) rise to leadership positions. Among them, 51 percent serve as board officers, including board chair, vice chair/president, secretary, and treasurer, and 62 percent serve as committee chairs.

Board service develops employees’ relevant skills for 2020

According to “The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution,” published by the World Economic Forum, the top ten skills required for 2020 will be:

• Complex problem solving
• Critical thinking
• Creativity
• People management
• Coordinating with others
• Emotional intelligence
• Judgment and decision-making
• Service orientation
• Negotiation

Board programs advance recruitment and retention

 

By engaging employees in board service, companies can advance their goals for recruiting and retaining the best people from a variety of backgrounds. Employees who work at companies that support board service report that this improves their impressions of their employers (68 percent). Some employees report that the company’s board program was a factor in their choosing to work at the company (22 percent), and even more state that corporate support for board service is a factor in their desire to stay at the company (46 percent). By fostering deeper understanding and empathy among their employees, and supporting meaningful leadership and community engagement, companies that promote nonprofit board service are in the best position to attract the best candidates from a broad group of people and grow their value to the company.

About the study

The 2018 results are based on surveys submitted by 842 employees of four companies and 18 follow-up interviews. Altogether, 1,799 surveys from eight companies affirm the value of nonprofit board service for companies seeking to change behaviors to build a more diverse, inclusive, and high-performing workforce, and promote the Sustainable Development Goals. (Dow and PIMCO employees participated in the surveys in 2017 and 2018. HP, Johnson Controls, PwC, Symantec, and Target employees participated in one year or the other.)

Nonprofit boards provide employees with the experience to develop vital skills, build confidence and find more meaning in their work, in addition to opportunities to rise to board leadership.