Business turns to not-for-profit leaders

I-MED – Australia’s largest operator of diagnostic imaging clinics – has a new CEO, and he isn’t who you’d expect.

Steve Rubic comes to the private-equity and hedge-fund owned company after 20 years in the not-for-profit Catholic health system.

Rubic is one example of a growing trend, according to the executive recruiters LeadingCompany spoke to.

While business leaders have often moved to the not-for-profit sector after a distinguished career making money, movement the other way is rare.

There are a number of reasons for this, says Andrew Staite, the managing director of executive recruiter Staite Henningsen Klein.

“There’s a perception that the not-for-profit sector is the ‘easy option’,” he says. “But in fact it’s a very competitive sector, and the challenges and the issues that they face are just as difficult and pressing as the commercial sector. They also have the challenge of usually having to manage without large budgets.”

Six weeks into the job, Rubic told The Australian that suggestions he isn’t prepared for the profit-driven private sector aren’t fair; in the Catholic organisations he led, the leadership team are just as concerned with strategic growth and transformation.

“While St Vincent’s [Catholic hospital in Sydney] is a not-for-profit, it was governed by very good commercially-experienced directors,” he said. “And while we didn’t have the same focus on shareholder returns, we had a myriad of key performance indicators, complexities and other performance deliverables for our own management to team to focus on.”

Darren Challis is the managing director of recruitment firm DH International, which also operate in the United States. He tells LeadingCompany movement between the profit and not-for-profit sectors is much more common there than it is in Australia.

“There’s a cultural difference in the way we think about the different sectors,” he says. “The Americans have much more of a tradition of philanthropy than we do, so that’s driven more professionalism in the not-for-profit sector. If you go to any of the top US business schools, as well as doing courses in entrepreneurship, finance and marketing, you can do courses in managing not-for-profits.”

“I think in Australia we’ve traditionally seen more separation between the sectors, but we’re starting to see a lot more movement.”

Staite says as the not-for-profit sector increasingly takes a more commercial approach to how its organisations are run, there are more and more suitable not-for-profit directors equally able to work in the private sector. As businesses focus on finding the best talent, they are increasingly turning to the not-for-profit sector as a poaching ground.

“I think we are seeing a much more blended workforce,” Staite says. “There’s a much greater propensity for people to want to change sectors, and a growing sense of how achievable that is.”

“In senior roles at large not-for-profit organisations, the capability to lead, and the commercial skills needed, are the same as those needed to drive a business.”

It’s more common in some sectors than in others, says Challis. There’s a “well-worn pathway” between the “for” and not-for-profit sectors in industries such as education, medical research, technology and in the arts.

“There’s also a lot of movement between the commercial world and the public service,” Challis says.

Ultimately, Challis says the term “not-for-profit” has negative connotations in the minds of many businesses that could prevent them from hiring the best executives and managers. He prefers the use of the term, “for purpose”, and welcomes the breaking down of the barrier between the two sectors.

“I think that cross-pollination, that diversification of the DNA, is healthy for companies and for the individual,” Challis says.