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Best Leaders Are Internally Motivated

There was a post on the Harvard Business Review blog site about a recent leadership study – Why You Lead Determines How Well You Lead.

According to the study, people with an internal motivation to lead are more effective than those with external motivations. More surprising, a person who has a mix of internal and external motivations, does very poorly.

“As one might predict, we found that those with internal, intrinsic motives performed better than those with external, instrumental rationales for their service — a common finding in studies of motivation. We were surprised to find, however, that those with both internal and external rationales proved to be worse investments as leaders than those with fewer, but predominantly internal, motivations. Adding external motives didn’t make leaders perform better — additional motivations reduced the selection to top leadership by more than 20%. Thus, external motivations, even atop strong internal motivations, were leadership poison.

Many believe that the best way to influence behavior is to incentivize it, and such external incentives certainly work with lab rats. In our study, however, adding external incentives clearly did not improve leader performance.”

and later

“If those we seek to develop as leaders adopt external justifications for leading well — such as an increase in shareholder value, better pay or perquisites, or increased profits — they are likely to be less successful as leaders in comparison to those who seek to lead for more internal, intrinsic reasons alone.”

If you have been reading my blog for awhile, you probably can see where my mind is going here. These results made me wonder if non-profit leaders might not make the most effective leaders since internal motivation for doing the job is all but given.

Now remember, effective leader doesn’t necessarily equate to successful. This is a “if you are so smart, why ain’t you rich” situation. Non-profit organizations are notoriously underfunded and lack the resources to achieve the success they aspire to. Not to mention many are pursuing work which others won’t because there is no profit to be made.

Likewise non-profit leaders may make really stupid choices because there was never any time to properly develop and cultivate them throughout their careers. (Not that this type of grooming has kept their for-profit colleagues from making stupendous mistakes either.)

Yes, I am flirting with suggesting that for-profit corporations pull something akin to the movie Trading Places consider looking for effective leaders in non-profit organizations (sans the whole bet thing).

Yes, this regrettably will take talent out of the field, but it would put them in a place with greater resources to provide their leadership skills with more impact. Without maximizing shareholder value as a central goal, the general business environment may shift for the better. Though that might be as big a fantasy as the movie.

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The Arts Are Enough of a Gamble Without Casinos

When you do a S.W.O.T. analysis for your organization (Strengths, Weakness, Opportunities, Threats), Opportunities and Threats were where you listed external situations that could help or hinder you.

When I worked at an arts center in southern New Jersey, one of the biggest threats was Atlantic City. While it might take you hours to get there in summer time traffic, Atlantic City was 45 miles away and therefore fell into the customary 50 mile exclusion zone that prevented performers from appearing within a certain time period before or after their event date. It frustrated the artistic director to no end because we would frequently be outbid and excluded by casinos in Atlantic City.

This is one of those situations where it is too simplistic to claim that arts organizations that can’t support themselves or serve their community ought to close. No one in the local community was going to Atlantic City to see these performers. There was sufficient community interest in seeing them, it was just that the organization was prevented from offering the shows which makes it difficult to generate revenue.

That is why I have been watching an effort by performing arts presenters in upstate NY to prevent the same thing from happening to them. Last October, a coalition of a dozen venues received “assurances from Gov. Andrew Cuomo’s administration that potential private casinos in New York will be required to partner with local arts organizations rather than compete with them.”

Earlier this month, the coalition, Upstate Theaters for a Fair Game, came to an agreement with 10 of the 17 casino license applicants.

“While we were not able to reach agreement with a number (of casino applicants), the agreements we have reached are significant because they declare clearly the size and scope of casino entertainment plans, they have joint booking agreements that will guarantee access for the casinos and for Fair Game groups to touring performers, they support the Fair Game Fund for those same facilities and establish arts granting programs for smaller organizations in every region,” said Philip Morris, the CEO of Proctor’s in Schenectady and the chairman of Fair Game. “Finally, should the plans the casinos propose be significantly changed, each applicant has agreed to mitigate those impacts with additional support.”

According to another article, the state mandated that some sort of agreement be made. The agreements provide some funding for members of the performing arts coalition, keeping a fair bit of the money in the community.

Under the agreements, casinos will share gambling revenue with the coalition. Amounts will vary by casino and region. Of the distributed gambling revenue, 85 percent will remain in the region where the casino is located, with 15 percent going to the Fair Game coalition. Of the 85 percent that remains in our region, 70 percent will be split by the Bardavon and coalition member Bethel Woods Center for the Arts, on the Woodstock site in Sullivan County. Bethel Woods and the Bardavon will distribute the remaining 15 percent to local arts organizations.

But agreements haven’t been made with everyone, some like the Mohegan Sun have publicly stated they will refuse to do so.

As some members of the coalition say, the situation is still evolving. This situation will be a good case study for what to do if faced with casinos or some similar competitive threat in your area.

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I Gave Away My Right To Vote

A couple weeks ago, I encouraged others to take away my right to vote.

Why? Because I am an ex-officio director on a board by dint of my position and during a recent review of the board’s by laws, I discovered they did not specify that my position was non-voting.

In a recent repost of one of her blog entries, Ellis Carter clears up some common misunderstandings about ex-officio officers, one of which is that the term means they don’t have voting rights.

There is often a misconception that ex officio board members lack voting rights. The term “ex-officio” has nothing to do with voting rights. Ex-officio directors can be voting or non-voting; therefore, it’s important to clarify in the bylaws whether ex officio board members have voting rights.

No election or appointment is required. Also, it can be very confusing to make a position “ex-officio” and subject the ex-officio director position to term limits. Ex officio directors are not generally subject to term limits because the director position is tied to the office. What happens if the term ends before the director leaves the office the position is tied to? The better practice is to avoid term limits for ex-officio directors all together.

Other than the fact the original intent has always been that the person in my position not have a vote, one of the prime reasons I asked to have the by-laws changed was to remove any concerns about a conflict of interest that might exist. This particular board’s sole existence is as an independent partner in the presenting season of the performing arts center I run. Among the things they vote to approve are fairly significant transfers of funds in support of that partnership.

While I have never attempted to vote and my presence has never been used to establish a quorum, there is always the possibility my position technically having a vote might be used as a tie-breaker in a contentious situation.

On the other side of the coin, there may be decisions the board makes that neither I nor the university will want to be entangled in. Closing an admittedly small opening to claim I might have voted on the decision is a good step to take.

It occurs to me to wonder if ex-officio board members are covered by board insurance depending on whether they have voting privileges or not. Are there any lawyers reading who might know?

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If Other People Can Make Money At What You Do…You Might Not Be A Non-Profit

I almost passed by a recent post by Lucy Bernholz on Philanthropy 2173 blog titled What Are Non-Profits For?

I’m glad I didn’t because her news that health clubs were challenging the YMCA’s non-profit status based on the idea that they were competing for customers left me a little incredulous. (my emphasis)

In both cases above the challenge comes because of who the organizations serve – in the YMCA case the membership is very similar to those folks who join commercial gyms, so why does one get tax privileges over the other. The argument raised in the case against free software is that such a resource might be used by commercial enterprises – so where’s the public benefit?

The nature of these challenges focuses on who might be benefitting from the services, not whether the services themselves are a public benefit. This is ironic from a nonprofit standpoint. For decades nonprofit managers and funders have been trying to build sustainable revenue sources for nonprofit organizations so they can survive. So much so, the Red Cross recently argued that its spending practices are trade secrets! BUT, at least in the logic of the two headlines above, if the organizations might serve those who can pay (one source of sustaining revenue) then they may not be nonprofit.

The other case she refers to is a situation where the IRS denied non-profit status to an open source software company because for profit companies might use their product.

While it doesn’t apply to all non-profits, one of the basic reasons often given for why we need non-profit organizations is that they often provide necessary and useful services that other entities won’t, in part because the opportunities for profit were low to non-existent.

In my experience growing up in the 1970s, the YMCA was offering services like swimming, exercise classes, weight rooms and summer camps long before health clubs and specialized exercise clothing were even on anyone’s radar.

The idea that the YMCA is a competitor with an unfair advantage in a niche they pioneered now that businesses can make money running yoga and kettlebell classes, is a little appalling to me. Rather the fact that these challenges have gained traction in different places around the country is what appalls me.

Does that mean that a gallery can open near a museum and challenge the museum’s tax exempt status because they are a competitor in art sales?

Or that if a movie chain notices that a demographic shift in their city has created a substantial demand for foreign films, they can demand that the a venerable art house movie theater be required to pay taxes?

I can understand the skepticism about the non-profit status of organizations like Roundabout Theater, but the vast majority of non-profits haven’t been competition to other companies–until apparently societal views shifted to make what they do worth pursuing.

I wondered if anyone was hearing similar rumblings in other lines of business.

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