In today’s knowledge based economy an organization’s ability to collect and leverage corporate knowledge is a form of competitive advantage. Most corporate functions (e.g. human resources, finance) have some form of audit process to capture insights and lessons learned as a basis of fine-tuning function capabilities to meet future needs. Audit findings can impact operational efficiency, for example, by identifying process improvements. They can also impact leadership effectiveness.
Audit insights gained through a review of succession planning efforts as well as exit interviews can play a key role in leadership effectiveness. Succession planning creates a roadmap for developing and aligning leadership talent with business needs – it’s about future planning. Structured exit interviews provide an opportunity to look in the rear view mirror and offer leadership insights related to both people and process capabilities. These two activities, succession planning and conducting exit interviews, are common practices in the private sector but no so much in the non-profit sector. That’s unfortunate.
Where to Focus
A quick review of some Risk Assessment tools used by funders reveals very little focus on leadership effectiveness. The Governance section of these tools makes no mention of conducting Board exit interviews. This is a lost opportunity for collecting insights for improving the governance structure or managing risk at a function/department level. These interviews substantially contribute to organization learning and knowledge management. The Human Resource (HR) section of these tools has more of an operational focus than strategic –which sends the wrong message regarding the value of HR and need for oversight. Most of the questions are of the yes/no variety – which offer very little insights for funders to gauge HR leadership effectiveness. None that I have reviewed places any audit emphasis on learning and development and very few mention succession planning. There is no perceived value for non-profit Boards to focus on these matters if funders don’t encourage it.
Funders as Change Agents
As government bodies continue their role as institutional investors in the non-profit sector they should shift their risk assessment focus to encourage more robust leadership effectiveness requirements as a funding prerequisite. For example, as suggested in a previous article, the risk assessment tool should make Board exit interviews a mandatory requirement to leverage insights into leadership effectiveness capabilities. Essentially, these interviews form part of the knowledge management process. They should also require fund recipients to have audited HR practices – according to professional standards – in much the same way they require the fund recipient to have audited financial statements. This would require fund recipients to have a higher level of focus on succession planning as well as learning and development – both of which impact leadership effectiveness.
As the saying goes….if you are not measuring, you are just practicing!
By Dave Nanderam, Managing Partner, ASSOCIUM Consultants. Through our collaborative approaches, innovative HR products and customized advisory solutions we impact four leadership priorities: managing risk, driving productivity, strengthening talent capabilities and supporting your bottom line. Let’s connect to find out how ASSOCIUM Consultants can help your organization.