The Leadership Challenge

Managing a community development corporation (CDC) has never been easy. It’s even harder today. Competition for resources has intensified. And keeping talented staff is especially tough in today’s tight job market.

Add to these longstanding CDC trials new organizational challenges. With the advent of the information age, the pace of commerce everywhere has accelerated. There’s precious little time for reflection or recovery from mistakes.

The demands on CDCs are growing, too. It’s no longer sufficient to be good at real estate development. To help residents take advantage of rising opportunities in a strong economy, many CDCs feel pressure to become involved in a broader range of unfamiliar activities more closely related to human services – including education and job training, job placement, child and elder care, and transportation to job-rich metropolitan counties.

As CDCs mature from upstart organizations to enduring institutions in their neighborhoods, paying attention to management issues can make or break a CDC’s ability to respond to these organizational challenges. No management component is more critical than leadership development. Creating good leadership structures and nurturing the appropriate kinds of leadership are a must.

Dispersing Decision-Making

The traditional CDC model is built around a visionary and entrepreneurial leader – and in the early stage of a CDC’s life, this type of leader is often the best. He or she is likely to have grown up or worked in the community, and often has the high drive and energy needed to catalyze change. CDCs thrive on that special quality of vision, the ability to look out at a block of blighted buildings and imagine a new employment center, a book store, a health clinic. Many entrepreneurs micromanage – but during an organization’s formative stage, this can be a plus. Young CDCs need to complete projects to build a track record of success.

The traditional CDC leadership model is not always so effective as a group begins to mature, gain expertise, and widen its community responsibilities. The entrepreneurial leader typically builds the organization around his or her specific relationships. These become hard to sustain as the CDC’s activities expand. Most entrepreneurs use a “command and control” leadership style. But this approach can be a drawback in today’s “networked” economy, which places a premium on working collaboratively, forging alliances, and sharing information widely among many people who make decisions for the organization.

What leadership qualities should CDCs be seeking instead? The single most important is dispersion of leadership. Instead of a dominant director and perhaps a few leaders at the top of the organization who “manage” everyone else, a more fitting approach today is to create a guiding coalition – composed of staff, board, volunteers and other stakeholders – all of whom take personal responsibility for the CDC’s results. In this new configuration, staff teams handle most projects and activities, since they are the most knowledgeable, and ultimately accountable to the particular constituency or project. The executive director does not delegate functions while maintaining overall project control. Instead, the team is responsible – and staffed with people who can get the job done.

Training

There is a growing consensus that leaders are made, not born. A flat decision making structure within a CDC functions as internal leadership training, since more people are involved in decision making. However, it is crucial to also focus explicitly on providing employees and volunteers with formal leadership and technical training and other leadership development support, like coaching or mentoring.

CDCs and their funders are starting to invest more in training and learning opportunities, primarily technical training. But this is not enough. Technical training is important, but too often a person with technical capabilities gets promoted to a management and supervisory level without the needed management and leadership skills. Staff needs to be exposed to both technical and leadership and management training on a continuing basis. So, too, do CDC boards.

Cross-Training

Versatility and depth are important for any organization, from sports teams to Fortune 500 corporations. CDCs are no different. As CDCs expand, senior staff need to understand other parts of the organization, too. For example, workforce development and economic development staff need to communicate clearly and often to ensure CDC job training programs really do help make individuals more employable and achieve job creation objectives.

Such “cross-training” could be achieved as simply as having one day per quarter when professional staff share their expertise. That’s when business development staff can show human service personnel how to identify market opportunities or maximize revenue. Human services staff, in turn, show business development staff how the services they are providing help stabilize businesses by strengthening employees. Such “cross-training” helps to ensure that when senior staff depart, all CDC knowledge is not lost. It also encourages a more team-centered environment.

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Succession

Even with dispersed leadership, the executive director’s role remains vitally important. Even so, most CDCs don’t have succession plans for directors, let alone for senior staff or their boards. It is difficult enough when an executive director leaves. When the director and several senior staff depart, a CDC can literally face disaster without a succession plan. That very scenario actually happened at Eastside Community Investments in Indianapolis, when long-time president Dennis West resigned at the same time as major senior positions were vacant or filled with new staff who had limited knowledge or experience. Already facing serious problems, within a few weeks the CDC collapsed financially. (See Shelterforce #104)

Succession planning should always be in place for executive directors, and should also be undertaken for senior management of larger CDCs, especially those with vice presidents, comptrollers, and major program directors. In many large organizations, it can take up to a year to replace the executive director. A succession plan will identify and prepare another staff person to maintain the relationships and momentum of the CDC in the short-term while the search for a new director commences. A succession plan should define the process and timeline for the search and recognize that a new executive might need a different set of skills than the previous one as the organization moves forward.

Succession planning is also important for boards. A sudden lack of leadership or continuity on the board is like a ship without a rudder. Someone needs to be ready to step in when a volunteer leader leaves. For a board chair, this person is often the vice-chair. Someone also needs to be prepared to take over from the treasurer, who is responsible for the fiduciary health of the organization. There is a learning curve involved in being treasurer for a multi-faceted CDC, and an assistant treasurer is more likely to be able to step in than someone who has only been a general board member.

Leadership from the Board

In many CDCs, strategic decisions are made by the executive director, with input from the board. That equation should be reversed. Boards should do the strategic planning, with staff input. “Lots of organizations die from making poor strategic decisions,” says George Knight, former executive director of the Neighborhood Reinvestment Corporation. “Private companies fail from taking the wrong strategic path, too. Maybe even nations. That’s why strategic decisions should be the top concern of a CDC board.”

CDC boards are typically composed of community residents, business and civic leaders and outside professionals. While most board members provide valuable service – and some are extraordinary – the Achilles heel of many CDCs is their boards of directors.

Sometimes boards conflict with staff or try to micromanage. Other boards ossify. Continuity is a strength in managing an organization. But boards need turnover, too, to infuse new energy and ideas.

“As the CDC grows, the board needs to have the know-how to assist the executive director and bring sophistication to the policy decisions and monitoring of the corporation,” says Anita Miller, former director of the Comprehensive Community Revitalization Program initiative in the South Bronx. “The key is to keep adjusting.”

Most successful CDCs spend a great deal of time figuring out how to identify and solicit potential board members whose service could help the organization. “Our board members are carefully selected for their willingness to work,” says Jim Dickerson, founder of Manna, Inc. in Washington, DC. “If a board member misses two meetings, he or she is subject to being replaced.”

CDCs use a variety of strategies to ensure a good mix of skills, tenure and personalities on their boards. “We use a skills grid to decide who to put on our board,” says Dee Walsh of REACH in Portland, OR. And like many successful CDCs, REACH makes board training a high priority. “Board members have mentors and can take training courses each quarter in financial management, development and other community development and organizational essentials,” Walsh says.

Invest in Organizational Needs

CDC funders shoulder much of the blame for poor management practices across the sector. They put their money into CDC projects, programs and services – not organizational development. As a result, the community development field tends to offer relatively poor salaries and benefit packages, limited training resources, and limited opportunities for professional development. All of this must change if CDCs are going to prosper in the 21st century. In today’s competitive environment, it’s no longer smart or practical to continue making minimal investment in CDCs’ human capital and organizational needs.

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