Peter Shergold shines a light on nonprofit CEOs and how they must master the art of juggling relationships.

Peter Shergold shines a light on nonprofit CEOs and how they must master the art of juggling relationships.

Let me make a frank confession. I struggle to make time to do my job as well as I would like. There are always more people who would like to talk to me than I can manage, and more meetings than I can attend. I welcome air travel as an opportunity to read without interruption. I balance work and life poorly. Is any of that unusual? Not, I suspect, if you’re a committed chief executive officer of a nonprofit organisation.

Nonprofits are unusual. They are third-party businesses. The people who receive the benefits of the services they deliver are rarely those who pay for them. To raise the funds to sustain the enterprise generally means persuading others to invest in social impact. Nonprofit leaders have to persuade them to make a leap of faith.

Complexity in diversity of stakeholders

This simple fact helps to explain why nonprofits have such an extraordinary diversity of stakeholders who need to be nurtured. First, there are those who collectively provide the resources to ensure the financial sustainability of organisational mission. Their motives vary. Some philanthropists and benefactors want to provide a gift of giving; others want to know about the social rates of return on their donation. A growing number want to loan funds or buy equity in a social business which offers blended financial and social value. CEOs in the ‘third sector’ will know that ‘fundraising’ now comprises a multifarious group of interests, each demanding attention.

Those who work for CEOs, in a paid or unpaid capacity, are also stakeholders. Upon them depends success in delivering community purpose in an effective and efficient manner. Pressured by workload, inadequate resources and their own commitment, they too are at risk of ‘burn-out’. They need support as much as management.

Some organisations have members who pay annual dues. Often they have limited and spasmodic engagement with the organisation. Yet as every chief executive officer knows, if a closer relationship can be built with these individuals, they may in time become enthusiastic donors, volunteers or active ‘ambassadors’.

Then there is the complex and ambiguous relationship with governments and public service agencies that many CEOs now have to oversight. Often they will have to negotiate contractual service agreements. Sometimes they will need to be advocates for changes in public policy. Always they will have to work within a regulatory and taxation framework which, in Australia’s federal structure, manifests itself as an administrative nightmare of overlapping jurisdictional requirements.

How well CEOs handle all this will influence the public trust and reputation that is crucial to nonprofit success. A proactive media strategy is necessary to win broader community support for organisational goals. Action-research can help to substantiate a case for change before the court of public opinion. In this sense media companies and universities are, in very different ways, stakeholders.

It’s all about relationships

It is clear, then, that a major part of the leadership responsibility in a nonprofit is engagement with heterogeneous stakeholders. As Lesley Fitzpatrick of the Australian Rural Leadership Foundation puts it, the knowledge and capability of a contemporary CEO needs to “be developed through relationships, relationships, relationships!” The challenge is that relationships need time, time and more time – although, paradoxically, the key stakeholders are often equally time-poor. ‘Finding time’ is a shared challenge.

Effective communication strategies

To some extent CEOs can rely upon an effective communication strategy to nurture the support of those who are nearest and dearest to organisational success. Websites, electronic newsletters and podcasts, together with a program of public events, can convey some sense of the drive and purpose of organisational effort.

CEOs can also make relationship management the responsibility of others. Although Elaine Henry is very much the dynamic public face of The Smith Family, she emphasises that there need to be ‘touch points’ at various levels between the organisation and its stakeholders. Similarly, at Family Life, Jo Cavanagh has ensured that “primary leadership for relationships is delegated to various levels of the organisation with related accountability through reporting structures.”

Delegation requires staff to be given training and support in fulfilling their representational role. The skills have to be recognised as core competencies. It is not sufficient that they are experts on operational details: they need to be able to convey to outsiders the values, ethos and mission of the nonprofit.

Managing stakeholders

It is clear that stakeholder collaboration needs to become an explicit part of nonprofit business strategy and resource allocation. The Smith Family has formalised this approach through a process of stakeholder value management analysis, directed not only to staff but to board members. By identifying those groups who deliver greatest value to the organisation, Elaine Henry has found it possible “to not only hone our networking skills but ensure we ‘network with a purpose’”.

Yet in many instances, CEOs will have to become involved directly. An important aspect of their leadership is to model the behaviours – interpersonal skills, empathic understanding, emotional intelligence – that sustained relationships require.

Stakeholder management is central to the craft and practice of leadership in nonprofits. As Dawn O’Neil of Lifeline Australia emphasises, investing time in relationships “is not something that is a ‘nice’ to do activity – it is a ‘must do’ activity”.

Negotiating mutually successful outcomes

The challenge is that relationship management for nonprofits often requires negotiating successful outcomes with much larger public and private institutions. It needs to create the cross-sectoral collaborations which so often lie at the creative centre of social innovation. Uniting Way’s Doug Taylor characterises the process as “trying to make elephants dance”. It requires great dexterity and a fair degree of flexibility.

The difficulty, as Toby Hall points out, is that whilst relationship management is vital it’s also very hard to deliver. “In reality,” says the CEO of Mission Australia, “nearly every nonprofit leader lacks the time to do the job properly”. Tough decisions have to be made about where to direct one’s efforts. For Toby it requires focussing on those relationships that add value to the people who are served and, more broadly, on those matters that help to build leadership skills within the nonprofit sector.

The plain truth is that it is the chief executive officer who is most likely to understand the entire relationship network and to comprehend the political nuances that frame its operations. It cannot easily be captured in corporate plans, organisational charts or duty statements. The experience, knowledge and informed intuition that is held personally by the chief executive officer needs to be shared. That, too, takes time.

Do as CEOs do

CEOs, through their actions as well as their words, have to convey the sense of social mission by the authenticity of their behaviour. They must walk the talk consistently because they genuinely believe in it. To create “the spirit of ‘partnership’”, says Julie Edwards of Jesuit Social Services, “there needs to be a personal and real relationship … it takes time, skill, vigilance.”

A ‘real relationship’ requires more than securing resources and support. According to Lesley Fitzpatrick it must provide “a meaningful interaction that offers a perspective or opportunity to the external organisation that is unique and valued”.

Peter Binks, of the General Sir John Monash Foundation, believes it is necessary to convey a ‘value proposition’ in which the external stakeholder is offered something of value – positive identification with the ‘brand’ (or purpose) of the nonprofit they support and, more generally, an assurance that they are making a contribution to social good.

At one level chief executive officers can feel most keenly the burden of expectation from those outside the organisation. The new chief executive officer of the National Centre for Indigenous Excellence, Jason Glanville, notes that nonprofit leaders, “particularly in the indigenous sector, can be crushed under the weight of goodwill of external stakeholders.”

Yes, as Jason acknowledges, that pressure is counter-balanced by the ability of those outside to provide support and encouragement to a CEO, particularly at a time of organisational or personal crisis. Sometimes it is the external stakeholders who can be the best listeners and offer the most objective advice. Leadership can be made a little less lonely.

It is clear that ‘relationship management’ is an inadequate description of what is a reciprocated process of engagement with stakeholders. It’s really a strategic approach to structured dialogue. Collaboration depends on a shared appreciation of mutual interest. It’s about building and sustaining partnerships. It’s as much about heart as mind. And always, it requires the time of the CEO.

Making time for relationships

I am a traditionalist. I tell time in an analogue fashion. With this in mind I have designed the wristwatch to which the CEO of every nonprofit will aspire.

Initially I put the CEO at the centre. That’s how the world often appears to many nonprofit leaders who experience pressure from stakeholders coming at them from all directions. It feels personal. In truth, however, CEOs are simply the apex of organisational ambition.
I’ve put mission at the head of the timepiece.

The watch identifies twelve major stakeholder groups and the key contribution they make; these are the relationships which the CEO has to manage in a strategic manner for collaborative purposes.

I know it’s too simple. Most nonprofits have a range of activities and a plethora of issues on which the CEO needs to represent the organisation to a variety of stakeholders with different perspectives.

It’s really a matrix relationship. And it’s not just the CEO who needs to wear different hats at different times: those they meet with may well play a variety of stakeholder capacities. Indeed one of the greatest challenges in managing the network of relationships is for the CEO to identify both the purpose of a particular engagement and to be clear on the respective roles that each side will fulfil.

I find the watch a useful device. It focuses on managing extraordinarily time-consuming relationships, day-in and day-out, in an effective manner. In my old-fashioned world, I can almost hear the time ticking away. So little time, so few resources and so much ambition.

That’s the world of the CEO of a nonprofit.

Making time for stakeholders – the CEO’s wristwatch


members donors, benefactors, philanthropists, social investors business supporters volunteers paid employees governments, public service agencies universities, think tanks, research units other nonprofit organisations boards media active supporters beneficiaries