Leadership lessons from the top

Leadership is contextual, it exists not in and of itself. Different styles and types of leaders emerge depending on the environment in which organisations exist. Clearly the ‘mood music’ around charities has changed considerably over the last 25 years. So, I would argue that leadership styles have also changed during that period – and need to change again.

Late 1990s: Prosperity and collaborative leadership
Towards the end of the 1990s, with an incoming Blair government, there was quite a productive environment centred on the notion of partnership. The perception was that charities and voluntary organisations would work in partnership with the state. As a result, the sector saw significant beneficial change. Changes in tax relief on gift aid was worth nearly half a billion pounds for charities. There was a lot of investment in infrastructure, in learning hubs, in ICT, governance and funding. There was a compact between the sector and the state at a national and local level. So, the style of leadership was partnership based. Those that were good at building coalitions, at participative leadership, tended to flourish.

2000s: Competition and tough leadership
In the early 2000s charities became more enterprising. Community Interest Companies were launched. We were trading much more and earned income, as a proportion of the sector’s turnover, increased significantly. Leadership styles changed and parts of the sector began to emulate the private sector – or the way they thought the private sector behaved. In the private sector, they understand when to compete and when to collaborate, but for some voluntary sector leaders, competition was all.

This was compounded by a significant growth in contracting to provide state services. You become much more aware of the bottom line If you’re negotiating contracts with the state. You become less collaborative because you’re competing with other charities. So, the sector moved away from a collaborative, participative, management style. Some small and medium sized organisations held onto it but the real competitors began to develop a more brutal style of leadership – they had to get out there and earn the money and make the contracts.  

2010s: Austerity and brutal leadership
At the same time, the sector was expanding rapidly, doubling in size, in services and employees. It also became more dependent on public money, on contractual relationships with government to deliver services. This meant a lot of charities were incredibly vulnerable to the drastically different political landscape when the coalition came to power in 2010. Two conflicting narratives then came to the fore: austerity and the Big Society. Budgets were cut to the bone.

A lot of organisations were unable to function in that environment, particularly those that had become dependent on public sector contracts. Organisations are still struggling because the margins on contracts have been completely wiped out. Contracts are also now so large that it’s almost impossible for voluntary organisations to compete. Most regional prime contractors are private sector organisations who then sub-let to voluntary ones. Not surprisingly, leadership got much, much tougher in that environment.

So you can see the shift from collaborative leadership, to a more brutal, competitive style. So where are we today? Well the sands have shifted again. Since 2015 the charitable sector has been consistently questioned in terms of its morality and its reputation, which calls for a totally new type of moral leadership.

Now: Reputation and moral leadership
In the 2010s Charities have been in the firing line and need leaders with a strong moral compass to restore their reputational damage. Salaries have hit the headlines (it turns out that a lot of people didn’t realise charity staff were paid a salary at all). In terms of fundraising, tragic stories about people who were hounded for donations, like Olive Cooke, a poppy seller who killed herself, and Samuel Rae, a man suffering from dementia whose data was shared between organisations, were damning. Thankfully this led to an enhanced self-regulatory regime, even before GDPR. Safeguarding has also been in the spotlight, most recently with formal investigations into charities like Oxfam and Save the Children.

These issues are bound to have an effect on leadership styles, not just amongst managers but amongst Boards and governors too. The result? We’ve become risk averse and leadership is focused on managing risk and reputation. Reputation management is the new normal for the voluntary sector, and if your leaders are not up to speed, you’re going to be in trouble fast.

Future: Courageous leaders required
The dilemmas frequently facing leaders are moral judgments, and these are complex. As you rise through the ranks, I’ve found, you actually make fewer decisions, but the decisions you make are far more important and often far more complicated. In terms of fundraising, for example, how we raised money in the past was perhaps seen as less important than what we were doing with it, because we do good work ie the ends justify the means. A more individual, consumer-based approach would say how you raise the money in the first place is more important.

Understanding the nuances of these moral dilemmas is quite an important part of the skill set for leaders now, and I don’t think we teach it enough. Understanding the work of people like Martin Luther King, for example, is quite handy in a tool kit, because he has confronted moral issues. His letter from Birmingham jail is absolutely spot on in terms of when it’s legitimate to do the wrong thing (or in this case, the illegal thing).

The sector is facing a real dilemma. Leaders are operating in an environment where it’s important to be courageous, but they have to balance that with risk profiles and potential reputational attacks. That is a really difficult thing to square. It’s going to take leaders and Boards with a lot of gumption to continue to take risk-based decisions and they’ll need a huge amount of courage to do that.

This article was based on a presentation to members of the Charity Learning Consortium by Sir Stuart in June 2019.