There are half as many Generation X'ers as there are baby boomers. This is why demographers and policy analyst talk about the impact of retiring baby boomers on Social Security and Medicare and why we hear about impending shortages of leaders and managers in every sector from government to big business to the nonprofit sector. This major demographic change is headline news regularly across the country and was acknowledged by the Chronicle of Philanthropy in their January edition with a front-page story on succession planning.
The less frequently told story is the impact of this societal sea change on leadership of the third or not-for-profit sector. For our critical social and community institutions—our local nonprofits—these demographic trends and their potential consequences are more critical for a number of reasons. First, because nonprofits have a social welfare mandate as opposed to a profit mandate, they often allocate a higher percentage of their resources to providing services than to building infrastructure or supporting management functions. Thus they have thin management structures; according to a recent survey released by the Annie E. Casey Foundation, fewer than 15 percent of small nonprofits with zero to five staff have deputy director positions, and under half even have program manager or director positions. These numbers translate into few people "waiting in the wings" to take on leadership. Further, many senior nonprofit managers (in the organizations that do have them) are baby boomers over age 40. Again, the recent survey notes that 70 percent of deputy directors are over the age of 40, meaning that many in this second tier of leadership will also be leaving their positions and will be unavailable as new leaders.
Second, nonprofits have traditionally paid lower wages and offered limited health and retirement benefits. These are significant barriers to attracting employees, especially college graduates who have increasing amounts of debt. Further, Generations X and Y are particularly interested in balancing work and family, a recent study by the American Business Collaboration shows. The long hours often required in nonprofit leadership positions combined with low wages and mediocre benefits are not conducive to a balanced work/family life. It isn't that younger people are not interested in nonprofit work—surveys continually show their interest in volunteering and philanthropy—it is simply that the sector is not structured to make it easy for them to continue working in the jobs they love.
Finally, there are currently few opportunities for nonprofit employees in their 30s to take on significant leadership or management challenges; there are few middle management positions in general and older, more experienced baby boomers seek many executive director positions. Young people interested in the sector are trying to compete for these jobs by getting nonprofit certificates and graduate management degrees. The number of these types of programs has blossomed in the past few years. Unfortunately, these degrees and certificates are unlikely to equal the credibility that many boomers have amassed from their longer work experience. As one young leader said in a recent study by Frances Kunreuther, Up Next, "I'm not on the board of one organization anymore because a lot of older people came in [and] told us we're doing it wrong. Because I didn't live through the '60s and struggle the same way, our legitimacy as leaders is questioned or not understood or challenged because we haven't had the same life experiences." Another young nonprofit staff person said, "The challenge for our generation of leaders is credibility—being celebrated when we know what we need to know but being chastised by other leaders ... a Boomer who believes we don't know enough. Balancing on someone else's beam becomes frustrating." Generation X may be the "missing generation" of nonprofit leadership—by the time the sector needs those young leaders (when they would be experienced leaders in their 40s), many will have left the sector seeking new opportunities and challenges.
So what will happen to our nonprofit sector as it is forced to compete for new leaders?
- Will Generation Y Come to the Rescue?
By the time the baby boomers are all reaching retirement age and the squeeze for talent is most pronounced, the baby-boom echo (Generation Y) will be just beginning to enter their 30s and may be a source for leadership. The baby boom generation numbers about 77 million. Generation X is about 38 million people; Generation Y is about 60 million people. Of course, this group is also being heavily recruited by businesses and will have significant college debt.
Nonprofit Strategies: Examine salary and benefits and slowly raise them to be more in line with government; consider innovative means of engaging Generation Y as volunteers and board members—continually engaging them in the sector so they will be aware of employment opportunities.
- Innovative Shared Leadership
Baby boomers are likely to remain relatively healthy and continue to want to contribute to the nonprofit sector, and there are currently younger leaders in the sector who'd like more opportunities for management and leadership.
Nonprofit Strategies: Work to engage younger leaders from both Generation X and Generation Y in innovative shared leadership models that draw on the expertise of baby boomers while nurturing new leadership.
- An Increase in Immigration Will Fill Leadership Needs in All Sectors
Even with significant immigration, in the shorter term there is likely to be a significant squeeze on leadership talent. Most immigrants entering the United States are not coming into leadership positions, and most are not working in nonprofits at all. In fact, many may not even know about the opportunity of professional work in the nonprofit sector. Foreign-born workers are much less likely to have a high school education than the native born. Foreign-born workers are also less likely to be in executive and managerial positions than their native-born counterparts. For example, 9.9 percent of foreign-born workers were employed at executives, administrators, and managers, compared to 15.3 percent of the native-born population. Seniority, language barriers, and hiring practices that eliminate anyone without a college degree are reasons that immigrants are underrepresented in senior positions.
Nonprofit Strategies: Examine hiring practices and consider means of encouraging immigrants to apply for positions; consider marketing and promotional campaigns in immigrant communities.
Paige Hull Teegarden, Managance Consulting
© 2006, Managance Consulting
Paige Hull Teegarden, MPP, is vice president for research and client services at Managance Consulting. Managance's mission is strengthening the management of socially responsible organizations to enhance performance that changes lives and communities.