by Dr. Ginny Trierweiler, the Mission-Based Leader’s Coach
A scarcity mindset can doom an organization—in at least 3 ways. Mission-based leaders, such as Program Directors, Executive Directors, Operations Directors, and Board members, must guard against perpetuating such a mindset, as it is almost guaranteed to hold back the mission-based organization from fulfilling its mission.
- A scarcity mindset may translate to failing to hire enough staff to get the job done. The Head Start program that combined the Operations Director position with the Compliance, Quality Assurance, and federal grant management responsibilities discovered that the entire program took on a compliance emphasis rather than emphasizing excellent care. They could never achieve the excellence and impact focus they sought as long as they combined the two positions. It’s a balancing act to figure out when to add positions, but it is important to be thinking ahead about it.
- Often, a scarcity mindset translates to hiring the most inexperienced and unskilled staff. After all, momentum leads us in that direction. Those are the people applying for the jobs and it’s easier on the budget. But that is generally a poor strategy and often produces poor results. The accountant hired at 25% below market rates was only able to get half of the job done, resulting in serious losses to the organization. Some of these losses involved revenues that weren’t collected and some involved waste and inefficiency. When the executive director took the risk of hiring a more experienced accountant and paying the (nonprofit) market rate, the board of directors was concerned about the rising costs. However, once accounts receivable were well-managed, income increased dramatically, and it became much less common to tap into the line of credit in order to meet payroll. Ultimately, paying more for a more qualified employee paid off for the organization.
- A scarcity mindset may result in failing to invest in key elements of business success, and may hold the organization back. Often, when starting up a mission-based business, there is little funding to invest in important functions. Founders of nonprofit organizations are often happy if they can hire one part-time staff person to take on some of the day-to-day work of getting the organization going. However, mission-based leaders must continue to adapt to lead their organizations forward. If your organization continues to function without investing in important business functions, such as professional accounting services or marketing, it can never fulfill its potential.
It used to be that charitable organizations were evaluated for how much they minimized their administrative costs. Donors gave more to organizations that had the smallest administrative expenses. Although we may understand that donors are wary about organizations in which the CEOs are paid unusually high wages, it is not wise to insist that mission-based organizations, any more than any business, spend as little as possible on administration. Somebody needs to lead the organization and somebody needs to manage payroll and receivables. It is also important to get an annual audit of your financials, etc. When you try to hire the cheapest personnel in these roles, you generally can’t hire the most skilled professionals. This can hold the organization back from achieving its mission.
Instead of leading from a scarcity mindset, lead from an excellence mindset. You will protect the organization’s resources better when you focus on recruiting and retaining the Best—the Most Likely to Succeed rather than the Least Expensive —employee. It tends to be smarter to seek staff with the talents, intelligence, and work ethic to get the job done – and to get it done well. (More on how to hire the best in previous blog posts at www.managingmission.com)
As a mission-based leader in these constantly shifting times, one often finds that new skills, new people, or new positions are needed to make the organization function optimally. Yet, it can be difficult to make time as needed for the analysis and planning these kinds of decisions require, and we often end up making such decisions in a reactive way, after things have reached a boiling point. When you are leading a mission-based organization, it is advisable to take some time each year to evaluate whether now is the time to invest in moving your organization forward. Answer questions such as:
- How clear and aligned is our leadership about our mission and vision?
- How clear are our organizational goals?
- What are strengths and weaknesses in implementing our programs, services, and change efforts?
- What are the greatest opportunities at this time for better strengthening our future or fulfilling our mission?
If there are opportunities to take your organization seriously forward, be thoughtful about the planning process. Consider investing some time and money in a professionally-led strategic planning process. This is another time to avoid a scarcity mindset. It is not sensible to devote 7 hours of 10 leaders’ time to a planning process that is not effectively led or productive. If you can devote that much of the organization’s leadership time to a process, devote some fiscal resources to ensuring that time is well-used for taking the organization decisively forward.
Have you seen first-hand how a scarcity mindset can hold an organization back from fulfilling its potential?