February 2, 2017; Star Tribune (Minneapolis, MN)
There’s long been the sense of an impending exodus of nonprofit leadership as Baby Boomers, often decades at the top of their organizations, retire or move on to sunset careers, leaving boards scrambling to fill the void. A decade ago, CompassPoint’s “Daring to Lead 2006” study found that four out of five nonprofit CEOs did not expect to be in their same position in 2011, and that 10 percent of employed nonprofit CEOs were actively seeking new positions.
To address this executive turnover problem, many organizations are engaging corporate-style executive search firms, or “headhunters,” in order to find replacements for the passion and institutional knowledge at the helm. According to Shannon Prather of the Minneapolis Star Tribune, the dynamic nonprofit world of Minnesota exemplifies how this new paradigm of hiring is playing out, where several headhunting firms have sprouted in the state’s storied Twin Cities urban center to meet the burgeoning demand to refresh nonprofit, civic, and school management.
Ballinger Leafblad, formed in St. Paul in 2014, is one ascending search firm fomenting this dynamic change in nonprofit staffing practices. Formed in 2014, the St. Paul headhunter works exclusively with nonprofit organizations. Partner Lars Leafblad explains that his personal values match his clientele, seeing nonprofits as “mission-driven and community-focused.”
Nonprofit patrons appreciate the firm’s loyalty to their field, and Ballinger Leafblad cannot meet the demand, reluctantly turning away some potential customers. Karin Gessner, a board member for the regional Ronald McDonald House Charities, felt a kindred spirit in Ballinger Leafblad, who helped them hire new CEO Jill Evenocheck in 2015. “We just liked their energy and their connections and their focus on nonprofits,” she said. “They really seemed to know the market.”
Executive searches with the firm cost in the range of $45K–65K. Though nonprofit boards have historically been hesitant to spend donor funds on headhunters, judging by the excess demand for Ballinger Leafblad’s services, many now see this as money well spent. Two other local young headhunting firms, CohenTaylor and LymanDoran, devote a significant portion of their attention to executive searches for nonprofit organizations, with similar fee structures and client demand.
It’s not uncommon for executive recruiting firms to charge fees equivalent to three or four months or more of the executive’s anticipated compensation. The fees typically cover advertising costs as well as extensive time spent working with client recruitment committees and stakeholder groups, vetting candidates, coordinating interview processes, and acting as facilitators for the decision-making process. In addition, they often help clients and their legal counsel with specifics of making an offer to a candidate, drafting the employment agreement, and even assisting with “onboarding” the newly hired executive. An experienced headhunting firm also provides the relationships and networks that often help find promising candidates who aren’t actively seeking a new position.
These firms understand that they are not simply swapping one highly-skilled person with another, but rather are seizing upon the lode of leadership departures to modernize and retool the infrastructure of the nonprofit world with fresh ideas and heightened and responsive competencies to reflect the contemporary needs of the communities they serve.
“It’s an inflection point where they have an opportunity to pause and think about strategic direction and how they want leaders to help them get there,” said Libby Carrier Doran, co-founder of LymanDoran.
Furthermore, both the nonprofits and the headhunters understand they have to do more than simply mimic corporate hiring strategy, since nonprofits are most often leaner and must hire leaders more quickly, lacking the deep bench of senior executives large corporations have to assume temporary control during the executive search process. The St. Paul and Minneapolis search firms have customized their services to be responsive for nonprofits’ unique needs in this regard.
Another added wrinkle is that headhunters serving nonprofits have many masters, as they must address the often divergent needs and goals of nonprofit employees, donors, and even the outgoing leadership, whereas corporations’ board of directors are typically in central control of the hiring process for executives. Lars Leafblad admits that nonprofits “tend to hire by committee.”
It’s hard to quantify the benefit of this trend towards for profit-style use of executive search firms, since nonprofits’ metrics for success are markedly different than corporate measurements. But many iconic Minnesotan organizations have used this trio of Twin City headhunting firms: Minnesota Zoo hired President John Frawley, and Big Brothers Big Sisters of the Twin Cities brought CEO Michael Goar on board. Initiative Foundation of Little Falls, Minnesota, just short of two hours northwest of St. Paul, used Ballinger Leafblad, who went far afield and located Matt Varilek, chief operating officer of the Small Business Administration in Washington, D.C. A South Dakota native, Varilek is the type of hire where headhunters truly demonstrate their added value in bringing new skills and passion on board for their nonprofit clients, preserving their established identity while rejuvenating them at the same time. YWCA of Minneapolis, Minnesota Chamber of Commerce, Lifeworks and Generation Next among others have also utilized their executive search services.
The growth of this dynamic engagement is a classic example of market forces balancing supply and demand, and since both the supply (headhunters) and demand (nonprofit) sides are happy with results so far, it is likely the symbiosis of headhunters and nonprofits will continue to grow.—Louis Altman and Michael Wyland