Differences and Similarities in Nonprofit Executive Planning in the United States and Germany

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    • 00:12

      KARL BESEL: Hello.I'm Dr. Karl Besel, and I'm the Assistant Dean and Directorfor the School of Public and Environmental Affairsat Indiana University Northwest.And the title for this case studyis Differences and Similarities in Nonprofit Executive Planningin the United States and Germany.The topics for this presentation.

    • 00:34

      KARL BESEL [continued]: Number one would be to develop an understandingof executive level succession planningin the nonprofit sector.And secondly, to demonstrate an ability to compare and contrastdifferences and similarities between the United Statesand Germany with regard to succession planning.

    • 01:01

      KARL BESEL [continued]: And I wanted to give you a little bit of historywith regard to what makes the American system unique.So I'll start with the American system, go into the German one.In United States, Alex Tocqueville,he was a French philosopher, in the early 1800svisited United States when it was just

    • 01:22

      KARL BESEL [continued]: emerging as a democracy.And he had a lot of insights which, in many ways,still seem very modern today.And I think one of the first thingsthat he noticed about the United States wasthe number of people that volunteeredin their local communities.And he also noticed that there was a high levelof associational life.

    • 01:43

      KARL BESEL [continued]: What I mean by that was that peopleseemed more likely to want to volunteerto be a part of the community.So that could take the form of beinga part of a local club in the neighborhood thatwas taking care of the elderly to starting

    • 02:05

      KARL BESEL [continued]: a nonprofit organization.He saw a higher rate of that in his observationsthan what he noticed in his home country of France.And Wilson really highlights a lotof those comparisons in his book, Bureaucracy,which he had published in 1989.

    • 02:26

      KARL BESEL [continued]: And in many ways, the data that he's using in that bookmakes very similar observations between the United Statesand Europe with regard to the nonprofit sector.And in contrast to what you see in the United States--and this aligns with what Tocqueville noticed-- is

    • 02:50

      KARL BESEL [continued]: that in the United States, you reallyhad people that wanted to get awayfrom centralized authority.So the emphasis was on self government.And in many ways, it makes sense that youwould have people that would want to volunteerin their community.In contrast to that, you had centralized authority in France

    • 03:13

      KARL BESEL [continued]: and people really didn't want to get away from that.They saw that the states still needed to play a crucial role,whether it was in health care, human services, or other partsof community life.Looking at the German example.

    • 03:37

      KARL BESEL [continued]: Germany, in many ways, is distinct from the United Statesin the way that it really does alignwith what you would see in other European countries.So there was a greater demand early onto develop a centralized health care system.So the Health Insurance Act of 1883

    • 03:59

      KARL BESEL [continued]: really was groundbreaking at its time in the waythat it really did provide for a lot of human services,a lot of health care benefits that were providedby the central government.What was interesting about Germanyis the fact that in addition to havingthat centralized authority, they did

    • 04:21

      KARL BESEL [continued]: have a nonprofit sector that did evolve outof that state system.So in Germany, very similar to the United States,you do see a very dynamic mix of for profit, nonprofit,as well as public sector health care providers.And really the focus of this case study

    • 04:44

      KARL BESEL [continued]: will be on what is happening with nonprofit organizationsin the health care sector.Germany, because of the commonalitiesthat it shares with United States,was used as a model for health care reform.And that goes back to the early 1990swhen you had politicians, such as Bill Clinton, that

    • 05:08

      KARL BESEL [continued]: wanted universal health care.So what he used as his model was the German examplebecause of its similarities with the United States.OK, and this is a case for executive succession planning

    • 05:30

      KARL BESEL [continued]: in the United States.One of the reasons why this is importantis we will have record numbers of executivesretiring in the nonprofit sector over the next 20 years.So even in 2011, you had almost three million executivesreach the age of 65.

    • 05:50

      KARL BESEL [continued]: And these increases will continueand they will actually surpass four millionby 2020 according to the Census Bureau.One of the reasons why executive succession planning isimportant, in addition to this demographic trend,is the fact that there's a long history of research that really

    • 06:11

      KARL BESEL [continued]: shows the central importance of the executive in sustaininga organization.So "charismatic leaders with professional independenceand idealism, have a potent influenceon the direction and performance of nonprofit organizations."So that comes from probably one of the first seminal studies

    • 06:33

      KARL BESEL [continued]: in nonprofit management going back to 1978.Chief executive is really identifiedas the single most critical factor underlyingnonprofit effectiveness by a number of studies.And I'm highlighting a couple from 1990, 1994.So there's quite a bit a research out

    • 06:53

      KARL BESEL [continued]: there to really show that the executive leader isvital to the long-term sustainabilityof an organization.That being said, if I was going to summarize what we foundwith our interviews would be that many peoplewould say, hey, we care about succession planning.

    • 07:17

      KARL BESEL [continued]: So whether it's a [INAUDIBLE] nonprofit director or boardmembers, across the board, they say it's important.But when you ask, what have you really done about it,they can show very little evidenceto delineate the fact that or really being able to say,we have a active plan for who is going to be our next leader.

    • 07:45

      KARL BESEL [continued]: One of the biggest challenges in the field of executive levelsuccession planning is the fact that although most executives--board members, people are actuallyserved by those organizations-- whatthey say is that they care about succession planning.But when you ask them, well, do you have a plan for who's

    • 08:08

      KARL BESEL [continued]: going to be your next executive leader,very little evidence can be demonstratedby nonprofits across the board.Large ones, small ones.That's what they have in common.Very little is really being done.And a lot of this was highlightedby a study conducted by Froelich, McKee, and Rathge

    • 08:28

      KARL BESEL [continued]: in 2011.And what they found in doing survey research with 800nonprofit organizations and 859 cooperativeswas that nonprofit board members and executives saidthat it was important, but they reallyweren't able to show that they had implemented strategic plans

    • 08:51

      KARL BESEL [continued]: for replacing their executives.And this is a quote from the studyand I think it really summarizes it quite well."Rose colored glasses approach, stemmingfrom paradox of a long-serving leader impartinga mindset of stability."So I think people become very accustomed and in many ways,

    • 09:13

      KARL BESEL [continued]: they probably become a little complacent if theyhave a good executive.To the point where very little is done in orderto really build in a intentional plan for leadership succession.

    • 09:33

      KARL BESEL [continued]: The demographic challenges that faceboth Germany and the United States-- and thisreally goes along with what I highlighted with regardto the number of executives that will be retiringin addition to a large number executives that will retirein the next couple of decades.In both countries, you see some pretty considerable

    • 09:56

      KARL BESEL [continued]: demographic shifts.So in the US between 2000 and 2050,the United States will become a minority majority countrywith the biggest shift resulting from the growth of immigrantsand their children.So in addition to the fact that you'regoing to have a record number of people retiring

    • 10:17

      KARL BESEL [continued]: over the next couple of years from executive positions,you do have changing demographics.And that needs to be considered by board membersand in both the United States and Germany,both these countries face low birth rates and that'scoupled with record numbers of retirementsover the next couple of decades.

    • 10:45

      KARL BESEL [continued]: And as far as best practice strategies-- and thisis what we found in interviewing 20 executives.And what we tried to do was to interview executivesthat actually had intentional succession planning.So we really wanted to find out howthey were putting these plans together

    • 11:06

      KARL BESEL [continued]: and just how these plans could resonatewith nonprofit organizations, whether itwas a large multi-million dollar one or one that hada budget of less than $200,000.And what we found is that number one,these organizations really neededto foster a culture of intentional succession

    • 11:27

      KARL BESEL [continued]: planning.So what we found in interviewing the executive for KaiserPermanente as well as Heifer International theseare two organizations that have had successionplanning over the last few years--is that they really instilled a intentional cultureof bringing up leadership transition at their board

    • 11:49

      KARL BESEL [continued]: meetings.So at Heifer, they actually have a planof identifying people that could possibly lead the organizationwithin the next five years.And at Kaiser Permanente, when they have their annual retreatwith their executive and their board members,they actually talk about who are going

    • 12:10

      KARL BESEL [continued]: to be the leaders over the next few years.So they're very transparent about peoplethat they wanted to spot internallyto actually lead their organization wellinto the 21st century.Secondly, they present demographic datato their board members.

    • 12:32

      KARL BESEL [continued]: So they want to highlight examples of leadersthat have come from lots of different sectors in societyand how these leaders really do fit the demographic changesin the United States.And when you look at the United Statesas a whole, where you're going to see most

    • 12:53

      KARL BESEL [continued]: of these demographic changes occurringwill be in the American south, which is interesting.Probably one of the more traditional areasin the country is going to see one of the largestinfluxes if Hispanics as well as Asians over the next 20 years.So that's something that board members--

    • 13:16

      KARL BESEL [continued]: probably especially if you live in a community whichhas been pretty stable over the last 100 years-- goodpossibility that you're going to witness some of these changes.Also needs to be a presentation of potential leadersto the board on an annual basis.So to amplify what organizations from Kaiser Permanente

    • 13:39

      KARL BESEL [continued]: to Heifer to even some of the smaller health careorganizations that we included in our study, what they foundwas that they just made this a practice of bringingthese young leaders to board members so that way the boardcould get to know some of these people thatcould be leading this organization 5,

    • 14:01

      KARL BESEL [continued]: 10 years down the road.The reflective questions for the study include the following.First off, what demographic trendsimpact leadership transitions within both countries?Secondly, what are some of the key components

    • 14:21

      KARL BESEL [continued]: of successful succession planning strategies?Thirdly, contrast and compare differencesin succession planning within both countries.And lastly, what are some steps a smaller organization cantake to improve upon succession planning?

Differences and Similarities in Nonprofit Executive Planning in the United States and Germany

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Abstract

Professor Karl Besel highlights the importance of succession planning for CEOs in non-profit organizations. He also compares the American and German health care systems.

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Differences and Similarities in Nonprofit Executive Planning in the United States and Germany

Professor Karl Besel highlights the importance of succession planning for CEOs in non-profit organizations. He also compares the American and German health care systems.

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