Australian not-for-profits are tops for talent, but there’s more work to do

Presenting the findings of their 66-page study Building from purpose: Unlocking the power of Australia’s not-for-profit sector, the leaders of the firm’s social sector practice, Roland Dillon and Eleanor Brown, told community organisations in a March 2022 webinar that much more could be done to improve their practices.

The webinar was part of the Institute of Community Directors Australia (ICDA) training series and remains free to view for a limited time.

Using the “organisational health index” methodology developed by McKinsey & Company, the study examined the views of 4,500 respondents from 37 not-for-profits in 2021, as well as interviews with 100 senior leaders, ten case studies and global comparisons. The study was published in November 2021.

“What we found is that the sector is in fact world-class on several dimensions, particularly in acquiring talent, creating a shared vision, inspirational leadership, and a beneficiary focus,” Ms Brown told attendees.

She said most organisations and respondents surveyed had been “above the global median” on those practices, and that many were in the top 10% globally.

The report showed that the healthiest not-for-profits excelled in three capability areas: talent growth, “execution excellence” and “shaping the system”.

Growing talent

Ms Brown explained that while talent acquisition was top tier for 90% of Australian NFPs, just 35% were able to follow up by developing that talent. According to the report, respondents believed that coaching/mentoring, professional growth and an employee focus would help do just that.

Execution excellence

In this area, only 40% of organisations excelled, each demonstrating the “discipline” to execute a mission. The report suggested that clear roles and personal ownership could be developed, and that a disciplined culture and good operational management would help in this area.

System shaping

In this area, the report showed that 60% of organisations were above the global average in their ability to “shape society through community connection, collaboration and innovation”, while many organisations told researchers that “shaping how society thinks about an issue” was their core strength. But Ms Brown said many organisations had trouble “translating that connectedness into practices”.

The McKinsey and Company study suggested that strong partnerships and stakeholder management would help in this area through methods such as innovation and sharing knowledge and ideas.

Collaboration a key to unlocking potential

The McKinsey and Company leaders also examined the potential for cross-sector collaboration, proposing several ways that cooperation could develop those three capability areas.

For example, in the area of talent growth, the research proposed broadening opportunities for professional development through sponsored leadership development, investments in cross-sector leadership programs and increased access to coaching and mentoring.

The presentation also covered issues of not-for-profit growth, and how to use the research to spark conversations with boards, funders, employees and stakeholders to boost organisational health and performance.