When Should Your Executive Director Think Like a CEO?

Nonprofit leaders are known as “executive directors” and for-profit leaders are known as “CEOs.” Is there a difference between the two? Both are leaders of their organizations; both strive to meet the expectations of their board of directors; and both work hard so that their organizations can achieve their goals.

Mindset is where their differences lie.

Above all else, nonprofit leaders are focused on the organization’s mission – on doing good in the world and improving the lives of the populations they serve. Although executive directors should not stray from this mindset, there are a few lessons they can learn from for-profit CEOs.

Lessons Learned from For-Profit CEOs

Keep a tight rein on expenses.
CEOs yearn for high revenues and minimal expenses, while executive directors aim to meet the needs of their customers, consumers, and beneficiaries. A singular focus on finances can lead you away from your objectives, but being aware of costs is key. When you monitor your expenses and limit them whenever possible, you can expand the reach of your services and provide better benefits to your existing consumers.

Delegate, delegate, delegate.
Executive directors have their hands in almost every business function – fundraising, programs, procurement, finances, human resources, and vendor relationships, just to name a few. CEOs focus on the big picture. They know how to delegate. To get comfortable with delegating, you should hire qualified people who you trust and slowly, over time let go of the reins. Letting go of the everyday tasks of running a business will give you more time to achieve big results for your organization.

Perception matters.
Although many nonprofits pride themselves on fostering a family environment in the workplace, this culture will not always serve you well. Take a lesson out of the CEO rule book by maintaining a certain distance from your employees. A “work first” environment will encourage your employees to put in the effort, and it will give the general public confidence that you are using their contributions wisely.

CEO Lessons That Nonprofit Leaders Should Think Twice About

Not all lessons from CEOs will benefit a nonprofit organization. Some lessons that nonprofit leaders should think twice about are:

Growth is the most important success factor.
Growth may very well benefit your organization, but growth above all else should never be your goal. Never lose sight of your mission statement. Meeting the needs of your consumers is your main objective; only focus on growth if it can help you reach that objective.

Make more money to make shareholders happy.
CEOs seek to please their shareholders. If they can guarantee a good return for the company, shareholders are rewarded with a return on their investment. As a nonprofit, you do not have the same obligation. You make money so that you can meet the needs of the population that you serve, and if you make more than anticipated, you should spend it on your consumers. Generating a surplus of revenues will actually be counter to your goals.

A win is a win.
Success will look different to nonprofit leaders than to for-profit CEOs. CEOs often strive for quick wins to show their shareholders they are making changes. You will be better off measuring your success in consumer outcomes. Are you serving your population better than you were this time last year? Are your customers having a better experience thanks to the changes you’ve made? Small wins are less important than the big victories.

If you have questions with regard to your nonprofit organization or your executive leadership, reach out to a Jones & Roth team member today.