On average, one in four senior nonprofit executives will leave their organizations in the next two years. Their departures will leave a gaping hole that will result in months of lost productivity and will create a burden on organizational resources: recruiting and time spent looking for a replacement can nearly equal an individual's salary depending on the position. Unfortunately, the retention rates at other managerial levels are no better.

Why are they leaving? Our research¹ shows that among the primary reasons is lack of development. Nonprofit leaders and managers believe that going elsewhere will help them grow faster than staying where they are.

To reduce these exits, nonprofits can create a talent management process that includes defining and using competencies that will help individuals grow in their roles and organizations. Competencies, when well-defined, identify those skills, capabilities, and experiences needed for staff members to perform their work today and to grow in the future. (Our article, "A Framework for Great Nonprofit Leadership," shares more on how to approach defining leadership competencies.)

However, when ill-defined and wrongly applied, competencies can undermine key parts of the talent process. In our work with 50 nonprofits, we have witnessed four common mistakes organizations make when defining and using competencies.

1. Using competencies to assess an individual's performance
The performance assessment of an individual should be based primarily on how well they are doing against their agreed upon goals and targets for the year. Competencies enable this performance. They provide a guide for individuals to understand the skills, capabilities, and experiences they need to develop to improve their performance over time. Organizations that do this right use the performance assessment process to identify the competencies for each individual to work on. For example, a program manager charged with growing her program over the next couple years may need to strengthen competencies like strategic thinking or relationship building to achieve this job goal.

Our House, Inc., a nonprofit based in Atlanta that provides early childhood education and pre-k schooling for children from families experiencing homelessness, provides a good example of an organization that uses competencies to help individuals know where and how to develop. Supervisors assess individuals against annual job goals and targets, and then against a set of competencies to identify areas for development. Next, they define specific development goals for each competency that the individual should work on (see example below). Using this information, the subordinate and manager co-create a development plan each year.

2.Thinking of competencies only in relation to the work of the individual and organization

Most nonprofits that have identified and defined competencies use a common list of job-related competencies. These are generally relevant for everyone in the organization (e.g. communication, dependability, workload management) and can include competencies specific to certain roles (e.g. work planning for supervisors). However, many of these nonprofits forget that they need a set of leadership competencies—in addition to the job competencies—for organizational success. While these competencies may not apply to everyone in the organization (e.g. strategic thinking, external relationship building, motivating and developing others), they are vital to the organization's day-to-day management and long-term success.

Consider the senior team at Our House. The team engaged in a process to identify both the job and leadership competencies that they believe are required for the organization to succeed (see a list of these competencies below). "Identifying job and leadership competencies gave us clarity," said Tyese Lawyer, president and CEO of Our House. "We had been struggling to understand the particular challenges with some staff members, and by identifying both job and leadership competencies, we could better understand if we needed to focus more on job-related development or leadership-related.

3. Failing to develop a tailored set of competencies that are both organization-specific and future oriented

Some nonprofits we have worked with have a starter set of competencies pulled from an HR website or another source. When we ask if the competencies will enable the organization to achieve its strategic priorities, senior teams reflect and typically modify the list, often quite considerably. Starter lists have their use, but organizations need a set of competencies that are specific to their work and that enables them to succeed in the future.

Not long before Our House's conversations about competencies, the nonprofit had merged with Genesis Shelter, which served mothers and their newborns experiencing homelessness, to create a larger, more complex organization. Therefore, as Lawyer and the senior team at Our House identified competencies, they considered both current and future needs. As they reflected on the changing role of the organization, the team identified several new competencies that became more relevant because of the merger. For example, the team defined the job competency of "mission-driven" to include an understanding of how the programs interact to achieve the mission. Also, in order to improve service delivery across multiple programs, they knew that staff needed to become more focused on client needs, so the senior team added "service focused" as a job competency. By ensuring that their competencies incorporate new and future needs, Our House leaders have helped staff members develop competencies that will prepare them for the path ahead.

4. Not defining competencies in a manner that makes it easy to use them for development purposes
Many organizations have a short definition for each competency. Some venture further and provide detail on the major elements of the competency. However, few organizations have taken the time to create a scaled definition, one that provides an understanding of what it means to progress from an early stage to an advanced stage for each competency. (See Our House's definitions below.) "My leadership team refers to those competencies and their definitions when we discuss how to help each person progress," said Lawyer. "We'll say things like, 'This director is "early stage" now on the problem-solving competency, and we need him to be "proficient" in order to do the job well. How can we help him get there?'" she added. "Having those clear definitions makes development less nebulous; we can pinpoint where to focus our development support."

Having well-defined competencies is important in the development process. Competencies should have a clear set of attributes. Scaled definitions for each attribute provide an individual with a clear understanding of what it takes to improve within each competency. They help shift the individual's mindset from assessment ("where I am today") to development ("where I'd like to be next year"). Managers also benefit from the careful crafting of competencies. What it takes to progress is well defined (the "what"), allowing them to focus their attention on the "how," what actions to take to progress to the next level of competency.
 

Conclusion

Organizations that approach identifying and using competencies with leadership development in mind avoid many of these pitfalls. They automatically look through the lens of what skills they need today and tomorrow, and adapt their competencies to achieve organizational goals. In addition, getting the competencies right and using them for development purposes gives nonprofits a good shot at increasing retention and job satisfaction among emerging and existing leaders, helping them keep the talent that is key to their organizational impact.

Footnote

[1] Libbie Landles-Cobb, Kirk Kramer, and Katie Smith Milway, “The Nonprofit Leadership Development Deficit,” Stanford Social Innovation Review, Oct. 22, 2105, https://ssir.org/articles/entry/the_ nonprofit_leadership_development_deficit.