The Main Strategic Leadership Challenges Faced by Non-Profit Organizations
The problems of strategic leadership concerning non-profit organizations differ in certain specifics regarding the management of commercial structures. The formal approach and low effectiveness of regional NPOs are due to several reasons, among which the following should be noted. It is insufficient consideration of changes in the external environment; low level of professional knowledge of the management of NPOs, lack of a scientific approach to strategic leadership (Rosenbaum & More, 2021). It is worth noting that the peculiarity of non-profit organizations is the regulation of their purpose and mission in the charter. All this leads to the fact that their flexibility regarding strategic management is significantly reduced. (Rosenbaum & More, 2021). Thus, this is directly reflected in the fact that NPOs do not have the opportunity to make more precise changes to various aspects of their activities such as internal analysis, strategy development and others.
It should be noted that from the point of view of strategic management, non-profit organizations are limited in their accuracy and consistency due to the fact that goals are often unclear or unreachable. Therefore, in order to attract qualitative changes in operational activities, it is necessary to pay attention not on modifying the mechanism of functioning of the management system of NPOs but on changing its internal orientation to external, taking into account the marketing approach. The functioning of non-profit organizations should be based on the close interaction of two aspects: social and economic. The second acts as a lever necessary for the implementation of the statutory mission and purpose of the NPO.
According to the statutory texts, the top management is responsible for planning, organizing the management structure, motivating employees, and exercise authority. Accordingly, these aspects become an obstacle to the improvement of the strategic leadership of the organization. The main aspects of strategic management in the case of non-profit organizations are assigned to the top management. However, the main problem is often the lack of highly qualified personnel who would have an understanding of the economic and managerial features of the functioning of NPOs. (Rosenbaum & More, 2021). In addition, it is worth mentioning that the management for the most part acts only as a link in non-profit organizations. Thus, the leadership feature for them is the provision of a much larger sphere of responsibility for subordinates without interfering in their activities authoritatively.
In a good modern, innovative team, the leadership potential is distributed: everyone is able to take responsibility, and leadership is transferred like a ball, dynamically. Someone functions perfectly in a crisis, someone is an emotional leader and can keep the tone in the team, and another is in the lead in tracking justice, the fourth can keep the boundaries of time and obligations. This approach is quite clearly seen in commercial organizations. They devote more time to integrating various modern leadership theories into their work, contributing to more dynamic development. Non-profit organizations are characterized by the lack of a transparent leadership system, which can aggravate the relationship with stakeholders and slow down the process of change initiatives.
The leader needs to use other levers to motivate employees since sometimes the organization’s activities are in a narrow financial framework. The same problem can lead to the absence of highly qualified specialists. In addition, it should be understood that holding various events to increase leadership literacy among employees is a rather complex process. This is due to the lack of financial opportunities for conducting training and little interest on the part of employees who may regard the organization less seriously due to their non-profit activities (Rosenbaum & More, 2021). Thus, NPOs have a much more extensive range of leadership problems than commercial organizations, which have more opportunities to invest in this aspect of the development of employees and managers.
Established Leadership Theories
The head of the NPO must have a particular set of qualities that differ from an entrepreneur’s or manager’s standard set of characteristics. Since non-profit organizations are not interested in actively participating in financial relations, they often cannot offer as much remuneration as commercial organizations (Rosenbaum & More, 2021). Moreover, many organizations operate with the involvement of staff on a voluntary basis. This is one of the advantages of third-sector organizations, explained by people’s desire to participate in society’s life, to work for the benefit of the needy strata of society or society as a whole. In this case, the only compensation for the manager’s work will be moral satisfaction from the completed goals. Consequently, the more moral satisfaction the manager receives from pursuing the organization’s goals, the stronger the motivation to work more successfully.
The participation of volunteers in the work of the organization entails another essential quality of a leader – the ability to inspire the team, convey a unifying idea, and rally people around it. The motivation of the staff depends on the number of employees willing to work for the organization and the degree of their activity and involvement (Rosenbaum & More, 2021). Authoritarian leadership style is rarely found among the management organizations of the third sector. As a rule, they adhere to a democratic style, including subordinates in the decision-making process, but the “Laissez-faire” style is often practical.
Minimal involvement of the leader is helpful with a sufficiently developed corporate responsibility and respect for the goals of the organization and the superiors among subordinates since it shows a high degree of trust in solutions and proposals from below and, as a result, additionally motivates self-organization and the performance of additional tasks. Furthermore, when choosing between theories X and Y, according to Douglas MacGregor, the leader of the NPO is characterized by a declination in favor of theory Y (do Adro & Leitão, 2020). Moreover, when hiring staff, NPOs should choose people for whom this theory is as accurate as possible; that is, self-organization and self-control are natural when fulfilling the goals to which they are committed. A successful manager, based on this theory, decides to take action to create such conditions and conditions so that subordinates can and want to learn to accept responsibility and seek it.
At the peak of the organization’s development, when the task of creating a standard corporate image and spirit, which are integration factors in themselves, has been successfully completed. The achievement-oriented style will be effective for setting and completing tasks that are difficult to accomplish and inaccessible at the level of the organization’s development at previous stages (do Adro & Leitão, 2020). Consequently, the existing leadership theories are only partially suitable for NPOs, since it is necessary to take into account additional aspects related to the specifics of the work of employees (Rosenbaum & More, 2021). This is determined by the volunteer nature, which allows employees to have a much more comprehensive range of responsibilities to increase their motivation and interest.
Meanwhile, rewarding leaders help their followers determine what needs to be done to achieve the desired goals. Rewarding leadership involves daily communication with subordinates necessary to perform the daily work agreed upon by the leader and subordinates. As a result, rewarding leadership is based on the idea of reciprocity; that is, the relationship between leaders and their followers develops through exchanging certain rewards – job evaluation, payment, recognition, and praise (do Adro & Leitão, 2020). This also includes clarifying goals by leaders and communicating to organize the performance of tasks and work by employees as part of the implementation of the organization’s broader goals. Such relationships depend on the hierarchy and the ability to work in a similar exchange mode. All this requires such leadership skills as the ability to achieve results, manage through structures and processes, solve problems, plan, organize, and work within the structures and boundaries of the organization.
Non-Profit Organization
A non-profit organization Khalifa Bin Zayed Al Nahyan Foundation was selected for consideration. In this case, leaders with a hypothetical change initiative should use several approaches and strategies that meet the characteristics and needs of this type of organization. The strategic approach implies that all NPOs’ activities aim to achieve a single goal in the mission. Any administrative decision, every implemented project, and every resource attracted and applied should bring the organization closer to achieving this goal (Gratton, 2018). Otherwise, the actions of the organization are not just meaningless but malicious. They lead to an empty expenditure of effort, time, and resources that could be directed to something valuable from the point of view of strategy. It is essential that this single goal, as well as approximate ways to achieve it, should be determined in advance. It is important for a leader to say where and why the team is going, and it is essential to follow this path (Gratton, 2018). It is necessary to have a common value focus and vision, constantly improvise, be sensitive to signals and adjust the action plan. The strategy should be developed by the heads of the NPO and the team, its key participants who make decisions.
Joint work on the strategic plan will help develop a unified view of the organization’s goals, objectives, and activities. The strategy should give all team members answers to the questions “Why do I work here?” and “What will my activity give me and the organization?” If the strategy is adopted and understood only at the management level, then it will have no practical sense (Gratton, 2018). Discuss the effectiveness of activities, the results obtained, and revising the strategy together with the team because working with the strategy should take place in two-way communication. This brings the team together, gives employees an understanding of what they are doing, and does not let the management relax.
The main risk of working in the absence of strategic leadership is the inefficient use of limited resources. This, on the one hand, leads to a lack of visible changes in the sphere in which the NPO operates, and on the other hand, to the disappointment of stakeholders, partners, and distrust from the general public. The leader needs to identify a range of problems that fall within the scope of the organization’s activities and define goals and objectives, the implementation of which will solve the problems (Gratton, 2018). Then the organization needs to make a logical model of its activities, analyze possible risks, and make a program plan and budget. It is necessary to check the goals and objectives set in the strategy and refer to the key performance indicators developed within the framework of the strategy. Strategic planning will allow employees of the organization to understand the overall goals of the NPO and their tasks concerning these goals, as well as to feel part of solving a significant social problem.
The best example of the formation of strategic development priorities is the introduction of a system of balanced indicators, which allows managers to focus on the central projections and link them together. This approach also allows a leader to create scenarios for the impact of changes on each department and each target group of personnel. It is necessary to analyze target groups that perceive changes differently, have their projects and vision, and create platforms for discussion, formation of mixed groups (Gratton, 2018). Moreover, it is essential to prepare “hybrid” scenarios, where the position of others will be taken into account. This will lead to the development of unique tactics for implementing the change initiative and supporting changes after the implementation and completion of the project.
In the case of non-profit organizations, it is necessary to involve many different stakeholders since the activities are most often aimed at solving social issues. Thus, it is necessary to ensure that the organization’s change will not lead to an adverse reaction from the public interested in its work. Particular leadership competencies should be developed among employees, giving them more freedom (Gratton, 2018). Furthermore, an important factor in choosing a change management strategy is the use of all structural elements that are part of the enterprise’s structure: managerial, personnel, production, and financial. Step-by-step implementation of the change management process will lead to a positive result, which, in turn, will allow the NPO to respond in a timely manner to changing environmental conditions and increase its public importance. All this will become a solid foundation for implementing a policy of change in a non-profit organization.
References
do Adro, F. J. N., & Leitão, J. C. C. (2020). Leadership and organizational innovation in the third sector: A systematic literature review. International Journal of Innovation Studies, 4(2), 51–67. Web.
Gratton, P. C. (2018). Organization development and strategic planning for non-profit organizations. Organization Development Journal, 36(2), 27-38.
Rosenbaum, D., & More, E. (2021). Risk and opportunity—The leadership challenge in a world of uncertainty—Learnings from research into the implementation of the Australian National Disability Insurance Scheme. Journal of Risk and Financial Management, 14(8), 383. Web.