I was talking with a leader who has led both in the for profit and non-profit sectors. He spent around fifteen years in the non-profit sector leading people and then transitioned to the marketplace. During our conversation we discussed three areas to compare leadership in these two arenas.
General Leadership Approach
In the non-profit sector leaders are surrounded by individuals who work because of buy-in to a shared vision. This leader does not get to exert the executive leadership that occurs in the for-profit sector. In the marketplace a leader unfortunately can use power and fear to move people. In the non-profit sector the leader must influence because they have little to no power.
This leader suggested a few ways we can effectively influence others:
- Create buy-in through sharing the vision – as John Maxwell states in The 21 Irrefutable Laws of Leadership – “people buy-in to the leader before they buy in to the vision”
- Build Trust – because of the principle above a leader in the non-profit sector must build trust to get people to buy into the vision
- Understand your people – to influence people, we need to understand what motivates them and align the vision with their personal vision
The difference between the two: influence vs. power. Leading from relationship or from position. Regardless of the sector, influence will be more successful in the long run.
Management
Before going further allow me to differentiate between a manager and a leader. A managers mindset is to focus on people accomplishing the work correctly. Leaders provide vision and inspiration. A manager can and should function as a leader, but if they are in the middle it may limit how much vision they can provide.
What is the difference in non-profit vs. the marketplace? Many times in non-profit work the managers are leading volunteers so they are limited in the amount of production they get out of their people. In the marketplace often managers are leading paid staff therefore they can more easily hold them accountable. The primary difference is the amount of leverage a for profit manager has to get results. Fear of punishment from a leader in the long run will not lead to a healthy environment.
Employees
The difference between the employees in these two sectors returns to number three above. The factor that motivates employees. Daniel Pink in his book Drive suggests money is only a motivator up to a point where people feel adequately compensated for the work they perform. The difference this leader found between non-profit and for-profit employees was money tends to be the primary driver in for-profit. Most likely this is because of the emphasis on money as a primary metric for success.
On the other hand, in the non-profit sector employees are wired for the vision of the organization. They are passionate about the cause. As long as they are adequately compensated they want to see the vision fulfilled more than anything else. This reality is why leaders need to keep the vision in front of their employees. A bigger vision than money will translate into a healthier culture in any type of organization.
There are three areas where these sectors differ. If we apply some of the principles of leadership from the non-profit sector, leaders will develop healthier cultures in their organizations. Which of these three areas do you need to develop within your organization or team? Need help thinking into it? Contact me for a powerful thinking partner call. Lead Well.
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