Before discussing the issues of leadership and management it is important to acknowledge the increased complexity of leading and managing in the sector.

Managing an organisation or program in the Social Economy is more difficult than in the for-profit sector because:

1. There are more issues / variables to be managed;
   
2. Each of the issues has the same or greater uncertainty; and
   
3. The uncertainty extends over longer timeframes.

Take revenue as an example. For-profit organisations generate cash from the sale of products and services, and the utilisation of debt and equity. Organisations in the Social Economy have these options available to them, but in addition may also utilise grants from philanthropic organisations, donations from the public, government funding as well as fundraising events and activities.

Managing an organisation’s human resources is also more difficult. Not only do non-profit organisations need to manage all the same technical and psychological issues that for-profit organisations must, but they have to do so while paying up to 30% less in salary. The task of managing volunteers creates added pressure and complexity.

Another source of complexity is the number of stakeholders and their competing interests. Social Economy organisations have to balance the interests of staff, volunteers, boards of directors, funders, clients/cause, policy makers and the general public. Unlike for-profit organisations where the principle source of revenue is the customer being served, Social Economy organisations are meeting the needs of one group of stakeholders (clients/society at large) with the resources provided by funders (and to some extent employees through sacrificed salaries). While meeting their organisational objectives, executives must manage all the other competing interests of its additional stakeholders.

The ultimate challenge for Social Economy organisations is the establishment of clear cause-effect relationships between their interventions and social objectives. Hence, the measurement of performance in the sector is another immense challenge.

Perhaps a part of this challenge (or because of it) is the fact that accountability for leaders and managers in the social economy is not only contentious but highly complex. This is because their actions and behaviours as well as the sector generally are ‘driven’ by at least by four forms of motivation and values (See section 11.4 this report).

First, they need to perform as leaders and managers and demonstrate capabilities that support the development of their organisations and the sector generally. This performance is about both social and economic impact but it also highlights the need for them to integrate the business and cultural/social dimensions of their work. Social economy leaders and managers’ actions and behaviours need also to be driven by the values of the sector; they must be ‘right’ per se (in themselves) and in principle. Furthermore these actions and behaviours need to be aligned with the search for a common and social good. And finally, leaders and managers in the sector at all times need to act and behave in the public interest, that is, they need to act to increase the credibility and reputation of the sector.

One has to reflect as to whether similar motivations drive other sectors; or that the complex nature of these drivers which are the basis for accountability are understood by other sectors and groups who impact so strongly on the work of the Social Economy.

A frequent catch-cry from some funders is the need for “innovative programs”. The assumption is that it is possible to:

1. “prove” a particular program is in fact different from the alternatives (as opposed to a copy of an existing intervention, whether repackaged intentionally or not); and
2. that the difference enhances impact (effectiveness and/or efficiency) - that is, that it creates more good than the next best alternative. One of the real challenges in this regard is checking for unintended (negative) consequences. The clear implication is that managers of organisations in the Social Economy need more, not less, skills than their peers managing similar sized for-profit organisations.

This argument is understood and felt, although not necessarily articulated by the sector. As shown below, the majority of respondents agreed that running an organisation in the Social Economy is harder than a similar-sized for-profit organisation.

There was less support for the statement that the sector’s leadership and management capability and performance is of high quality. While 57% of Social Economy respondents agreed that the sector’s leadership and management capability was of high quality, 18% disagreed. Somewhat to be expected, the for-profit respondents were more critical, with only 30% agreeing, and nearly 44% disagreeing.

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