Charities, especially larger ones, are among the most complex organisations in the UK, but surprisingly little is known about how they structure their leadership teams and make decisions that affect so many lives.
A new report, Building Outstanding Leadership Teams: Insights from Charity Chief Executives, produced by the consultancy the Compass Partnership with the Centre for Charity Effectiveness at Cass Business School, sheds some light on this neglected area.
The study is based on a survey of chief executives of 102 of the UK's top 500 charities by income, and the findings were validated by a sample of human resources directors. It also compares leadership performance against a list of 20 drivers of outstanding performance identified by the researchers.
The study says there is a rich diversity of leadership team structures across the sector, and varying levels of performance. It also highlights the importance of chief executives "getting the right people on the bus" at the top of the charity and the importance of leadership teams setting its tone and values.
The majority (62 per cent) of the charities surveyed had a single leadership team and 28 per cent had a leadership team and a wider senior team of directors who reported to the chief executive. The number of people on the leadership teams varied from one person to more than 12 people, with an average of 6.5 people.
More than 80 per cent had made structural changes to their leadership team in the past three years. This was more often an increase in size (42 per cent) than a decrease (25 per cent).
The typical turnover of leadership staff was one or two members every two years, which was the figure in 57 per cent of the charities studied: more than a third of charities (35 per cent) reported having three or more joiners in the past two years.
Mike Hudson, director of Compass and co-author of the report, says: "An organisation does not want to be at either end of the spectrum on churn. Too a high a staff turnover rate creates a level of instability, but not changing can affect performance. Changing one senior team member every year or two sounds ideal."
The study says that a "bewildering array" of more than 100 leadership job titles now exist in the sector, which led the researchers to put job titles in groupings. All of the charities reported having a chief executive; the next most common job title grouping was director of finance/corporate services (87 per cent). Fifty-five per cent had directors of fundraising, marketing and communications.
It's challenging to get people who are good at delivering their departmental responsibilities and having a strategic perspective, and are team playersMike Hudson, director, Compass
An overwhelming majority (85 per cent) of leadership team members studied were white British; 55 per cent were male and 44 per cent were female (the remaining 1 per cent declined to answer the question). The average age of the chief executives surveyed was 54 years, and almost half (46 per cent) were aged between 55 and 69 years old.
The study asked chief executives to rate the effectiveness of their leadership teams. More than 76 per cent said theirs were extremely or very effective. The best-rated tended to be smaller, with less churn and a high proportion of staff with postgraduate qualifications, and had appointed more than half the team externally.
"An important starting point, particularly for new chief executives, is to get the right people on the bus," says Hudson. "It's challenging to get people who are good at delivering their departmental responsibilities and having a strategic perspective, and are team players.
"You need to be all three of these things in order to be a good director. Just promoting the functional expert can be a mistake."
Leadership team meetings also came under scrutiny. The researchers found that leadership teams spent an average of 15 days a year in leadership meetings, with the majority of the meetings chaired by the chief executive (89 per cent) and 5 per cent saying that another specified team member acted as the chair. The majority of leadership teams (92 per cent) held awaydays to discuss issues such as long-term strategy and team development. Two-thirds of them met face-to-face at least fortnightly and, although virtual meetings were much talked about, they were rarely used, with 56 per cent of respondents saying they never used them.
Six out of seven leadership teams conducted reviews of their team meeting performance. Performance during meetings was more often evaluated during individuals' appraisals than collectively at a formal annual review or informally at the end of meetings. Overall, 68 per cent of chief executives thought that the meetings of their leadership teams were extremely or very effective.
More than 80 per cent of charities had invested in leadership development recently, with three-quarters receiving some form of external assistance. But overall the chief executives gave a low rating to their performance on team development. No chief executives rated their teams as extremely effective at team development and only a third (32 per cent) rated their teams as very effective. More than half (60 per cent) of chief executives acknowledged that they were only quite or not very effective at this.
Hudson says: "We were surprised by how many organisations had taken the initiative to develop their leadership teams. But we also found that, in many cases, the process hadn't delivered results. I suspect this is partly because some charities have used corporate team development organisations that might not have tailored their team development to the culture and values of the charity sector."
The report is available from the Directory of Social Change, price £32 for charities
Part of the study tries to establish the main components of highly effective leadership teams. The researchers conclude from their analysis that there are five, starting with "leadership of behaviour" - setting levels of openness, for example. The other components are "great team working"; effective team meetings; leadership of strategy and impact; and investment in team development.
For each component, researchers identified four top characteristics that allowed them to draw up a list of 20 key drivers of outstanding leadership performance. The researchers then examined how many of the drivers the charities in the study had in place: the average was 11. Twenty-nine per cent had 15 or more and were deemed to be stronger performers, 46 per cent had between eight and 14 (medium) and 25 per cent had between one and seven (weaker).
Charities with more of the drivers in place tended to have incomes of more than £50m and employ more than 500 staff. The chief executives of these charities also tended to have broader experience and to have been in post for eight years or more. The most effective leadership teams had generally appointed at least half of their members from outside the charity and more than two-thirds had postgraduate qualifications. The stronger-performing teams were more likely to have a deputy chief executive or chief operating officer, or ethnically diverse teams. Charities with incomes of less than £20m that had no or few leadership team members with postgraduate qualifications tended to have the weaker teams.
Hudson says: "The leadership team should discuss their values and the behaviours that they expect of each other and, as a team, they have to be clear with the rest of the organisation about how they expect everyone else to behave."
Case study: Shelter
Campbell Robb (right), chief executive of Shelter, agrees strongly with the Compass report finding that setting behaviour across the organisation is a key component of effective charity leadership.
"You need to have some organisational values and clear measurements, and hold yourself to high standards of outcomes," he says. "That sets a culture that drives the whole mission."
One core value that Shelter holds dear is the need to challenge. "It means lots of different things in our organisation, from challenging government on welfare reform to the leadership team challenging each other to make sure we've got our mission right," he says.
Shelter's leadership team comprises seven people, most of whom are highly experienced. The team meets at least once a month to discuss strategy and gain a consensus on the key issues. Robb believes it's important to allow leadership team members a chance to air their views so they feel valued. "Not everyone always agrees with the final decision, but everyone feels that they've had their say," he says.
Since he became chief executive four years ago, Robb has recruited directors internally and from other charities and sectors. Having senior people with the right skills and experience is important, he says, but he believes you also need to find people who can "spark off each other" in order to have an effective management team.
Robb views breaking down the silos that tend to exist between different departments as one of the main challenges for charity leaders.
"Each division has a clear objective, and my job is to make sure we're more than a sum of those parts," he says. "For any leadership team, that's a big challenge."
Most of Shelter's management team has been in place for about five years, which he views positively, given the spending cuts in the homelessness sector. He concedes, though, that stability can come at the cost of new ideas, and that it's good to add new people to the team every few years.
Shelter provides individuals on its leadership team with specific training when required and also uses mentors. But it doesn't generally use psychometric tests when recruiting leadership members. "At this level you have at least two interviews and we do some numerical testing as well," he says. "The candidates will often spend time with senior management colleagues and the people they will manage. It's important to have the views of other colleagues and members."
Robb believes that charities across the board need to give more careful consideration to leadership. "It's what makes an organisation work together and motivate its staff," he says.
Case study: WaterAid
The water and sanitation charity WaterAid started to invest more heavily in leadership development five years ago after the pound dropped sharply against other currencies in some of the countries in which it worked.
"To counter that, we decided to train all of our senior leaders to be as effective as possible in terms of influencing and inspiring others," says Barbara Frost (right), chief executive of the charity. "It was a fragile time, but we still decided to do it."
WaterAid had an income last year of more than £66m and employed 671 people, who are led by a directorate of six, including Frost. She says the leadership team tries to meet weekly for at least 30 minutes. "We try to meet after our general Monday morning staff meeting, but it's not always possible because we're an international organisation and have lots of people travelling," she says.
In addition, the directors hold a full-day leadership meeting once a month. These meetings generally start with a talk on a video link from a representative of one of the countries in which the charity is working. Frost says: "It helps give the leadership team a real sense of what we're all here for."
The rest of the day is divided into discussions about strategy, followed by the more day-to-day issues of running the charity, says Frost.
The leadership team goes on at least two awaydays a year. At these, the directors work on their skills with a leadership coach.
The Compass study highlights the importance of leadership teams setting the tone and behaviour across the organisation, and Frost says it's something that WaterAid tries to achieve through a variety of methods.
"For us, effective leadership behaviour involves demonstrating, promoting and talking about our organisational values, and ensuring that we talk about those at our inductions and when we carry out six-monthly reviews or annual appraisals," she says.
WaterAid also spends a lot of time on recruitment and selection when appointing people to senior management posts.
"We never recruit until we're sure that we've got the right person," says Frost. "We carry out psychometric tests and hold several interviews. We really try to understand people and how they can contribute to the organisation."
She says the charity tries to give all the staff, from junior workers to its directors, a say in its overall strategy.
The charity has had a stable leadership management team, says Frost, with most of its directors holding their posts for between five and 10 years. One area the leadership team is trying to improve is collaborative working across the charity. "We're trying to get away from people working in silos and some functions not being so valued as much," she says.