NPQ study: Nonprofits outscore for-profits in leadership

On Jan. 7, The Nonprofit Quarterly released initial findings of study that reveal nonprofit leaders may be more effective than for-profit leaders. Click here to read the details of this landmark study, conducted last year by Community Resource Exchange, in partnership with Performance Programs Inc.

Over 2,500 management leaders in the nonprofit and for-profit sectors were studied using surveys submitted by peers, direct reports and managers – a total of 22,859 respondents. Nonprofit leaders significantly outscored for-profit counterparts across the board in 14 out of the 17 dimensions of leadership practices, such as persuasiveness, risk-taking, demonstration of effectiveness and vision. For-profit leaders scored higher in only three dimensions.

NPQ editor in chief, Ruth McCambridge said the findings attest to the excellence and effectiveness of nonprofit managers and should have been expected.  “Nonprofits have innate complexities that challenge executives in unique ways. Managing multiple sources of restricted funds, a diverse continuum of important stakeholders and a variety of reporting requirements in even the most resource thin environments is par for the course even in very small nonprofits.”

Jim Collins, author of “Good to Great” and researcher of management practices in both the business and nonprofit sectors, agrees. “We should not be surprised by the findings of this nonprofit leadership study. In executive leadership, the individual leader has enough concentrated power to simply make the right decisions. Legislative leadership, on the other hand, relies more on persuasion, political currency, and shared interests to create the conditions for the right decisions to happen. For this reason, we should expect to see very high leadership ratings in the social sectors, as true leadership only exists if people follow when they have the freedom to not follow.”

Of 14 dimensions in which nonprofit leaders outscored for-profit, the greatest differences appeared in six dimensions characterized by sensitivity to people and situations and the use of personal versus hierarchical power.