How to succeed in the third sector

How to succeed in the third sector
Published: 
December 2014

A growing number of business professionals are seeking a career in charities or social enterprise but they are often unprepared for the culture clash. Here’s what you need to know to make a smooth transition.

Those making the transition need to reflect on themselves, learn to take back their ego, integrate personal development and mindfulness.

Feeling disillusioned by corporate life? Do you long for a more meaningful role where you could make a difference to society? If so, you are not alone. In the wake of the GFC, the third sector has been attracting increased interest from business professionals seeking greater career fulfillment.

Whether it’s volunteering for community projects, doing pro bono work or serving on a non-profit board, many business people choose to contribute their skills to a good cause and some will make the transition to a full-time role.

Management skills are certainly in demand at a time when social enterprise and voluntary organisations are expected to take a more professional approach. However private sector managers expecting a smooth transition may be in for a culture shock. They are often unprepared for the challenge of managing multiple stakeholders and limited budgets and the frustrations of working in a slow-moving environment.

A recent report commissioned by the Schwab Foundation for Social Enterprise entitled Leadership in Social Enterprise: How to Manage Yourself and the Team gives some insight into the type of conflicts that can arise. The authors which include Dr Anna Krzeminska, a strategy lecturer at UQ Business School, interviewed almost 100 social entrepreneurs, some of whom spoke openly about their attempts to recruit senior management from outside.

One case involved a business which had recruited an MBA graduate with a successful track record in the corporate world. “When she came on-board, she came with a lot of energy and a ‘new broom sweeps clean’ attitude, not respecting any of the work that we had done before and it was a complete failure,” the social entrepreneur complained.

“We had lots of fights, and in the end she did not deliver what was expected as she was not used to a work environment where there is no large staff, but management has to actually do a lot themselves…she produced a lot of expenses as she was just used to a different level there as well.”

The former COO herself told a different story. “I was really hoping that I could bring some of my business knowledge and experience from the past ten years to help that social enterprise to scale at a global level,” she said.

“But it was difficult at the very beginning because I was shocked by a lack of processes and lack of operational mechanisms…I was very eager to change the problem to make a difference.”

Fortunately this story had a happy ending – the former COO is still with the organisation, but operating a franchise in another country.

According to Dr Krzeminska, social entrepreneurs are often worse than small business owners when it comes to letting go of the reins. They and their teams often distrust professionals from a private sector background and may fear they will compromise the social mission.

She says that private sector managers can make a successful transition but they need to be aware of the key differences:

  •     Different goals and structures

The presence of social mission in non-profits and social enterprise adds a whole new dimension to management, says Dr Krzeminska. “It’s about balancing financial performance with social goals. This also makes it more difficult to measure performance – how do you measure social impact?
“Another difference is that, where the private sector focuses on growing the market size, not-for-profits already have a big enough market – the issue is how best to serve it with limited resources. In fact the market is often so large that they can be pushed into growing too quickly.

“Third sector organisations are also less flexible – they don’t have the same freedom to change their goals or their business plan – and the wider range of structures means they are also more complex.’

  •     Different culture

In non-profits and social enterprise, the culture is more consultative and less competitive. Corporate types accustomed to preening themselves to win promotion had better change their ways, says Dr Krzeminska: “It’s not about developing your career but about driving change.”

  •     Fewer resources

Salaries are almost always lower in the third sector, though flexible working conditions and, in some cases, greater public recognition may compensate for this. Financial constraints may make it difficult to recruit and retain staff and there is generally little or no HR support.

Many organisations rely on volunteers which in itself can be a source of tension. The Schwab survey found there was more conflict in organisations with more volunteers and volunteers reported more conflict with managers from the private sector.

  •     More stakeholders

The wealth of stakeholders further adds to the complexity. Sponsors, funders, government bodies, regulators, clients and beneficiaries – each will have their own agenda. As a result, things move much more slowly in the third sector, which can be a major source of frustration for people accustomed to getting things done.

Despite the gloomy picture painted in individual interviews, the majority of entrepreneurs in the Schwab survey did manage to recruit and retain managers from the private sector. The most successful transitions were where managers had the right ‘fit’ with each of the three key dimensions – they were committed to the social mission; they fitted in with the culture and with the founder.

For many people, a move to the third sector is part of a personal journey.  They may be very successful in business but they have reached a stage where they want to make a contribution to society. Some will have been through a life-changing experience.

Samantha Kennerley had had a successful career running her own PR and marketing agency in the UK before moving to Australia and becoming head of marketing at UQ Business School. Two years ago her 19-year-old son James was left in a coma after being struck by a vehicle.

Samantha is now CEO of Youngcare, which helps young people with high care needs. Although James has made an almost complete recovery, she believes the experience gave her a strong connection with the Youngcare cause.

She says: “Leading and driving the team is even more key to success with a not-for-profit; working for a NFP is not an easy gig, you have to get the cause and have the connection. Driving the culture more towards this has been a big part of my journey.”

Dr Krzeminska believes it is this personal development process that is the key to success in the third sector. “Those making the transition need to reflect on themselves, learn to take back their ego, integrate personal development and mindfulness. Personal development is the basis for mastering all the other challenges.”