The third sector, which we understand to be the vast array of charities, voluntary
organizations, community groups, cooperatives, mutuals, and social enterprises, is subject to
a radical shift due to the social, political and economic environmental changes in Europe.
Since 2008 the sector has been operating under the shadow of austerity, with an increased
demand for services against reduced resources (Wilding, 2010). As a result, much of the
sector’s activity has shifted towards an emphasis on survival and resilience, along with an
intensified focus on collaboration and increasingly desperate attempts to demonstrate impact
and value for money (Macmillan and McLaren, 2012). At the same time, however,
expectations of organizations in this sector have increased markedly. Accountability
requirements have increased and organizations are expected to be more transparent in
reporting what they do, how they spend their money, and what they achieve (Salamon, 2010).
There have also been changes in how performance is managed across the sector and
organizations have been under pressure to get a ‘better grip’ on measuring and understanding
the differences they make to people’s lives (Hudson, 2009). There has also been a change in
how governments perceive the sector with an increasing recognition that third sector
organizations are best placed to address some of the intractable social problems which society
faces, such as poverty. As a result, the growing diversity of the sector, in terms of size,
purpose, legal form, and scale of reach is transforming (Hunter, 2009).
Such changes have raised questions over whether we can describe the third sector as a
coherent, single sector (Alcock, 2010). Moreover, there are calls to address the deeper
question of what the sector is in the process of becoming and what role it should play,
through and beyond the contemporary politics of austerity (Macmillan and McLaren, 2012).
Consequently, questions have been asked about what to call the sector and what gets
included, as well as how ‘fuzzy’ or permeable the boundaries might be to influences from the
market and the state (Billis, 2010). In the absence of a sector-wide dialogue to address such
questions, it is possible that the major ‘shake up’ being experienced by third sector
organisations is accompanied only by a rather defensive, narrow and increasingly noisy
pursuit of sectional claims and interests which merely perpetuates the issues faced by the
sector (Cook, 2012).
After lack of funding, government policy and regulation, insecurity of funds and lack of
volunteers, lack of leadership has been identified as one of the top five constraints facing the
third sector (Green, 2009). Leadership skills and strategic and forward planning have been
found to be among the top ten skills gaps in voluntary sector organizations (Clark, 2007).
Such findings have opened up major debates on the leadership of the sector. Macmillan and
McLaren (2012) point out that due to the shifts in the sector, and their implications, the
question of leadership has become significant and needs to be examined. Similarly, Kearns
et al (2015) argue that there needs to be an exploration of what leadership means within the
sector. The justification for this argues Taylor (2014) is that the quality of third sector
leadership will shape the life chances and experience of all citizens.
In order to address this need our purpose in this article is to explore leadership in and
of the third sector. We do this by first providing a brief overview of the existing research on
leadership in the sector, aiming to identify any common perceptions or themes. We then draw
on twenty written narratives of leaders in the sector who reflect on their experience and
perceptions of leadership. This is followed by a discussion of the challenges in the sector
based on those narratives. We conclude by identifying the impact of our findings for
leadership across the third sector. This paper seeks to contribute to the emerging literature on
leadership in the third sector by exploring the leadership in practice. We do this through a
practical focus on the experience of individuals in positions of leadership in the sector.
Leadership in the Third Sector
Literature on leadership has become a significant growth industry, and, Western (2008:19)
has argued, “leadership now challenges the dominant status of ‘the efficient manager’ who
for the previous century was the unsurpassable figure within the organisation discourse”.
However, the accent remains on leadership as configured within individual organisations
rather than leadership between organisations or across the third sector. The latter would
require a style of leadership which demands highly sophisticated political skills (Hartley and
The terms ‘leadership’ and ‘management’ are both apt to be used rather indiscriminately and
without fine distinction. Grint (2005: 15) provides a clear definition:
Management is concerned with executing routines and maintaining organisational
stability – it is essentially concerned with control; leadership is concerned with
direction setting, with novelty, and is essentially linked to change, movement and
persuasion. Another way to put this is that management is the equivalent of dj vu
(seen this before) whereas leadership is the equivalent of vu jade (never seen this
before). Management implies that managers have seen it all before and simply need
to respond correctly to the situation by categorising it and executing the appropriate
process; leadership implies that leaders have never seen anything like it before and
must, therefore, construct a novel strategy.
Elsewhere, and rather counter-intuitively, Grint (2010) suggests that conventional
thinking which demands of leaders the ability to solve problems, act decisively and to ‘know
what to do’ may be exactly the wrong approach to tackling what he terms ‘wicked problems’,
that is to say highly complex situations for which reflective and deliberative responses (the
aforementioned ‘novel strategies’) are required. But, as Grint readily acknowledges, pressure
to act decisively often leads organisational chiefs to try to apply ‘tame’ (predictable,
managerial) solutions to ‘wicked’ (hugely complex, unpredictable) problems. That suggests
that a leadership narrative for something as diverse as the third sector must be a narrative of
empowerment, giving confidence, direction and practical support to organisations to enable
them to apply context-specific solutions. It may involve providing and interpreting relevant
information and posing challenging questions than seeking to provide decisive answers.
In the existing academic and practitioner literature on leadership in the third sector
there is extensive research on what those in leadership positions actually do, for example:
governance (Jegers, 2009; Taylor, 2015); strategising (Never, 2010; Hopkins et al, 2014); and
managing human resource (Kreutzer et al, 2009). In addition, there is research into:
leadership models (Dwyer et al, 2013; Boerner and Geber, 2012; and Mahalinga Shiva and
Suar, 2012); team member exchange (Willems, 2015); leadership philosophies (De Vita,
2008; Parris and Peachey, 2012; and Ebener and O’Connell, 2010); and distributed leadership
(Duncan and Schoor, 2015). Howieson and Hodges (2014) suggest that a way to understand
and make sense of these different approaches is by exploring leadership thinking and theories
using three conceptual viewpoints: i) Leadership model: a leadership model contains theories
or ideas on how to lead effectively and/or become a better leader (for example, path-goal
leadership); ii) Leadership philosophy: a leadership philosophy contains values-based ideas
of how a leader should be and act and the sources of a leader's power (for example, servant
leadership); iii) Leadership style: a leadership style is a classification or description of the
main ways in which real-life leaders behave (for example, autocratic leadership).
Much of the available literature is US-centric and refers to the ‘Nonprofit’ rather than
the third sector; for example, a frequently-cited book in the literature is that of Perry (2010).
In this text, there are dedicated chapters on the tasks, perspectives, and skills (conceptual,
human, and technical) of leadership. Perry (2010) reviews leadership theories in the
Nonprofit sector and explains in some detail grassroots leadership, shared and servant
leadership but makes the important point that if the unit of analysis changed from the
‘individual’ to ‘social collectives’ (groups, organizations, and communities) this would
radically change leadership theory and research. In this regard, Dobbs (2004) offers an
extensive critique on the problems with the traits approach to individual leadership in
Nonprofit leadership and suggests that relationship building is very important (i.e. the ‘social
collective’). Sohmen (2004) offers ‘A Model of Nonprofit Project Leadership’ that is based
on transformational, visionary, and servant leadership ― again, theories that have their
origin in US literature.
This is not to say that models and philosophies such as transformation or servant
leadership ― and North American theory in general ― are not important or relevant;
however, we argue that many of the current theories of leadership are derived from an
individual level of analysis, which we are not sure has relevance to the third sector in Europe.
In addition, what is difficult to establish is leadership theory that is actually grounded in a
European context and from within the sector ― including its diversity. Although we see
evidence in the literature of distributed Leadership (Gronn, 2000, 2002; Grint, 2005) and
shared Leadership (Carson et al, 2007; Bergman et al, 2012) as applied to the sector, we do
consider that theory needs to be developed further from within the sector context and its
Indeed contemporary approaches to leadership are changing ― some writers (for
example, Bligh, 2016) now question the utility and applicability of hierarchical leadership,
with the all-seeing, all-knowing ‘heroic’ chief executive at the top. In an environment
increasingly characterized by change, the question for this sector may be: where does
leadership go next? (Jackson, 2012). In this regard, leadership ― in the context of
organizational improvement and change ― becomes a collective rather than an individual
responsibility (Hodges, 2016; Raelin, 2015). It is the interactions between the leaders and
their followers that matter as opposed to what each individual does (Howieson and Hodges,
Several studies do discuss the question of whether theories of leadership from the for-
profit literature would apply to third sector organizations (for example, Phipps and Burbach,
2010). Elsewhere, Taliento and Silverman (2005) identify several areas in which third sector
leadership may adapt the practices of for-profit leadership including: dealing with a wider
range of stakeholders who expect consensus; the need for innovative metrics to monitor
performance; and the challenge of building an effective organization with limited resources
and training. Such an approach, however, merely highlights the dangers of ‘cutting and
pasting’ from one sector to another rather than positioning leadership within the context of
the sector within which it is operating. For as Hopkins (2010: 26) says: Good leadership is
vital given the complex and dynamic third sector environment. While many of the qualities
required of leaders in the third sector are similar to those leading in other sectors, there are
distinct skills and behaviours needed to be successful in the sector as a result of its multiple
stakeholder relationships and challenges that are qualitatively different from the public and
The focus of much of the research that has already taken place within the context of the
third sector tends to be on the typical attributes and characteristics of Chief Executives, which
is very similar to the early leadership traits theories. Kirchner (2007), for example, has
developed a leadership model for third sector organizations. In this model, the Chief
Executive is seen as leading upwards (managing governance), downwards (harnessing
resources and running an organization effectively) and outwards (representing the
organization). Similarly, Paton and Brewster (2008) draw a conceptual framework for ‘what
is it like being a Chief Executive’. The framework includes: system and field awareness, or
the ‘helicopter view’ of seeing the bigger picture; emotional awareness; and intuition.
The exceptions to these studies of Chief Executives are those that focus on the
leadership characteristics required within the sub-sectors of the third sector. Ockenden and
Hutin (2008), for example, provide an analysis of more informal and less hierarchical
leadership in small, volunteer-only organizations. Chambers and Edwards-Stuart (2007)
identify a list of characteristics of successful leaders in the social enterprise sector, which
include: integrative and speculative thinking; drive and persistence; a strong value-base;
focus; and networking. A much longer list of characteristics is provided by Cormack and
Stanton (2003) which includes: passion, a strategic perspective; networking and influencing;
personal humility; motivating a team; resilience; self-confidence; being a visionary and
inspirational communicator; and involving others in decision-making. A common theme
across these studies appears to be the importance of a communicative ‘ambassadorial’
dimension in leadership, alongside references to networking, representation, articulating a
vision both within and beyond the organization, and conversation. For instance, Peck et al
(2009) draw attention to the significance of story-telling and narrative. This
‘communicative’ dimension of leadership in the sector is explored and extended by Kay
(1996) who conceptualises leadership as a process of creating and sustaining meanings in
negotiation with, and influenced by, others. Kay (1996:131) depicts the concept of
leadership as a ‘sense making’ process involving: “...a multi-dimensional process of social
interaction, creating and sustaining acceptable meanings of issues, events and actions.”
This process of ‘sense-making’ around shared understandings and meanings, involves: vision
setting; interpretation and take-up; and influence and credibility (Kay, 1996). This approach
is supported by Schwabenland (2006) in her creative discussion of story-telling and
leadership in the foundation and development of organizations to achieve social change.
Such studies of the sub-sectors are, however, limited in examining leadership across the
context of the wider sector.
We consider, then, that the majority of studies fail to focus on the uniqueness of
leadership in the third sector with particular reference to national institutions and culture.
Instead, there tends to be a ‘scattergun’ approach to leadership in the sector that lacks
coherence (Clore, 2007). This has led to calls for leadership within the sector to be given
special attention (Macmillan and McLaren, 2012) and for it to be reconceptualised (Kirchner,
The purpose of our research is to contribute to the understanding of leadership in the
third sector and the particular challenges of this sector. Thus our research questions are
twofold: what does leadership mean within the third sector, and ― given the changes
happening in the environment within which the sector operates ― what are the leadership
challenges in and across the third sector? We have attempted to answer these questions
through the examination of written narratives produced by senior people in leadership
positions across the sector using narrative inquiry.
Narrative inquiry is set in human stories of experience (Clandinin and Connelly,
2000). This method was selected in order to provide a framework through which to
investigate the ways that individuals in the third sector experience leadership depicted
through their own reflections. It was seen as the most appropriate approach as narratives can
help to make sense of, evaluate and transform the present and shape the future so that it will
be richer or better than the past (Clandinin and Connelly, 2000). This notion can be expressed
as “life as led is unseparable from a life as told . . . life is not ‘how it was’ but how it is
interpreted and reinterpreted, told and retold” (Dyson and Genishi, 1994:36).
Narratives function in opposition to elitist scholarly discourses and their use in
research offers an opportunity for groups to participate in knowledge construction
(Canagarajah, 1996). Moreover, narrative is well-suited to addressing the complexities and
subtleties of individuals’ experience of leadership in organizations (Webster and Mertova,
2007). Narratives can help us to understand experience, which is important because people’s
lives matter, whereas other forms of research often look at outcomes and disregard the impact
of the experience itself (Bell, 2002). In this way, we consider that narratives are powerful for
exploring the experience of leadership in the third sector.
The narrative approach used in this study allowed us to set the criteria for participants
to formulate their conceptualizations of leadership in their own words, to attach meaning to
the construct, and to express how they value certain aspects of it (Heres and Lasthuizen,
2012). This method allowed the focus to be on an individual’s experience of leadership, what
they thought leadership should look like, and the subjective meaning they attached to the
concept, rather than evaluating the individual’s own leadership or lack of it. The study
participants, in the study, largely based their views of leadership on their daily experiences
and realities. Their conceptions of leadership were informed by practice and situated in the
context in which they were operating.
The research was conducted during 2012-14. A total of 20 participants took part in
the study ― 6 females and 14 males ― and were drawn from organizations across the third
sector in the UK from England, Scotland, Wales and Northern Ireland. As the sector is broad
in context, it was outside the scope of the research to include all the different types of
organizations within it, hence a sample approach was used.
The sampling approach taken can be described as ‘non-probability’ ― the purpose of
which was not to “establish a random or representative sample but rather to identify those
people who have information about the process” (Hornby and Symon, 1994:169). Thus, the
sample was constructed through key informant sampling (Tremblay, 1957). A snowball
sampling technique (Atkinson and Flint, 2001) was used so that individuals who agreed to
participate recommended other potential respondents. One danger of ‘snowballing’ is the
potential for cloned respondents with each person at risk of being much like the next in terms
of traits, interests or patterns. To prevent this, 10 separate ‘snowballing’ chains were
launched, each starting from a different networking source. The sample of participants (see
Table 1) included leaders from third sector organizations such as charities, mutuals and
cooperatives, community, voluntary and social enterprises. There is one participant from
each organization. Participants were asked to provide, in their own words, commentary on
the following: their experience and perceptions of leadership; what leadership means to them;
and the challenges that they face.
Table 1 [here]
From these personal and very individual narratives, the researchers identified the
main themes. NVivo was also used to aid thematic analyses (King, 1998) and as a means of
mapping evolving relationships between themes. Several iterations of thematic analysis were
carried out. A key aspect of the analysis was a reflexive approach to the analytical process
itself, particularly focusing on the way in which understandings emerged, were clarified, and
became constructed in the process of writing this article. From this general analysis, there
emerged the experience, perceptions, their understanding of leadership, and the challenges
faced by the participants.
The findings are based on the analysis of participants responses to the two key research
questions which we set out to address: i) what does leadership mean within the third sector
and; ii) What are the leadership challenges in and across the third sector. For the first
question two main themes were identified and for the second question six key challenges
were raised by the majority of participants. We discuss key findings next.
What does leadership mean within the third sector?
With regard to the first research question, namely ‘What does leadership mean within
the third sector?’ our analysis highlighted two main themes about the meaning of leadership
which were: ‘leadership is an approach’; and ‘leadership is personal qualities’.
‘Leadership is an Approach’
Findings from the study show that the participants defined leadership as a specific
approach. For example, one participant (N) expressed the opinion that, “Leadership is not a
qualification, but a set of values and approaches, inherent and/or trained. It creates values
and communities.” The overall approach required by leadership was identified through the
various narratives as maintaining the reputation of the organization, ensuring that ethical
obligations are adhered to, motivating people, and creating a positive environment. Each of
these is briefly discussed next.
Maintaining the reputation of the organization. Participants described this as leaders standing
by their vision, and even when times are tough making sure that the reputation of the
organization is not compromised. The benefits of this approach were described as:
“if you are certain that your principles are sound and that a compromise or a
purely financial decision may result in a poorer service being delivered, you will
emerge with your company reputation intact when others fail to survive”
Ensuring that ethical obligations are adhered to. This refers to leaders needing to find ways
to leverage their ideas and their intellectual property into financial returns, while staying true
to ethical values, in order to retain the foundations on which the sector is built. One
respondent (T) reflected that:
“we need a combination of ethical, clear-sighted leaders together with new
thinking on how to practically sustain the material and health benefits derived
from capitalism, without the destructive effects on mental health, a sense of
community and our natural environments.”
Ensuring that people are motivated. For the majority of participants (n=16), leadership is
about motivating people. This view was explained by one respondent (M) as:
“the best leaders are those who consciously take the time and effort to understand
the motivation and behavioural drivers of those they lead and who ensure that
they provide them with the opportunities, resources, and the support they need in
order to enable them to do the best they can.”
Similarly, another participant (N) offered that:
“leadership is not task-orientated, but about the understanding of what needs to
be done to drive an organization or a business forward. It is about gaining buy-
in from staff to a shared vision. It is about providing staff with the opportunity to
grow within their own role and feel that they are able to contribute to the
business. It is about gaining the respect of peers and staff and creating a vision
and getting buy-in to the vision from the staff to take it forward. It is about
creating a desire to succeed among all colleagues by ensuring they can see where
they fit in and contribute to the wider picture.”
Leadership is about creating a positive environment. This is where staff believe in what
leaders are striving to achieve, while motivating them and giving them the opportunity to
grow and flourish in their own careers. As one participant (D) stressed: “leading with
courage, conviction and transparency will instil confidence and provide a positive climate for
These comments show that leaders in the sector believe in the creation of a fairer, more
caring, better educated, and healthier world. How they lead is influenced by the mission and
values which pervade all aspects of the organizations in which they work.
In summary, findings from the study suggest that ‘leadership is an approach’ which is
built on the reputation, ethics, people, and environment within the organization.
‘Leadership is Personal Qualities’
The importance of the personal qualities of leadership was emphasized throughout the
narratives. The qualities which make a significant contribution to how leaders are perceived
were summed up as: “the consideration of values, self-awareness, and self-regulation”
(Participant D). This was supported by another participant (H) who reflected that,
“good leaders have strong values and have thought about those values deeply. They
know how their values apply in all sorts of contexts such as making decisions about
money, assessing strategic business opportunities, deciding whom their organization
should partner with, and dealing with challenging people problems.”
Numerous personal qualities were cited by the participants including: influencing,
motivating, inspiring, being visible, listening, observing, empowering others, having
conversations with people, being authentic, resilient, empathetic, courageous, gaining respect,
trust and credibility, and having a strong set of values. Respondents in the study also referred
to the importance of emotional traits such as empathy and resilience ― it was described as
the critical mental and emotional intellect of leadership being linked to ‘mindfulness’, which
was defined as clarity of mind, core ethics, and openness to new thinking, which in turn
creates authenticity. Such qualities need to be developed and honed. As one participant (H)
explained, “developing and honing the personal qualities of leadership is where the
difference between success and failure will always
The findings also indicated the significance of leadership qualities which were relevant
for influencing policy. This was defined in terms of leadership being about social skills to
impact on policy decisions. It was also described as:
“how you make things happen successfully on a sustainable and repeatable basis. It
needs to be delivered authentically and with skill. An essential element is to act as a
sense-maker for others, gaining trust and engagement through shaping and sharing
context, explaining why actions are required, and motivating through demonstrating
progress against the bigger picture” (Participant Q).
Some respondents did, however, question whether leaders in the sector had the social
skills required to engage effectively with the opportunities that existed to influence policy
and whether they were able to adapt and make the best use of all the policy levers available to
them. A question was raised, for example, as to the ability to unite and gain support and
cooperation across different parts of the sector. So the ability of leaders to use their social
skills in order unite the sector or certain parts of it, to build coalitions, and to rise above
vested interests and create a common collective identity were identified as characteristics of
good leadership, but also, and of note, a significant challenge facing the sector.
Findings from the research indicate that although leadership reflects the personal
qualities which individuals bring to their role, these qualities need to be developed and
continually improved upon across the third sector.
What are the leadership challenges in and across the third sector
In terms of the second research question, namely ‘given the changes happening in the
environment within which the sector operates, what are the leadership challenges in and
across the third sector?’, findings indicated that leadership in the third sector faces multiple
challenges. The main ones identified from the research are: recovering from recession;
building collaborative relationships; remaining innovative and distinctive; building and
developing capability; and reinforcing the legitimacy of the sector.
Recovering from recession
The impact of the economic recession and the ensuing years of austerity are key
challenges for leaders. The financial crisis requires leadership which focuses on several
specific actions including making decisions, taking action under pressure and clarifying and
communicating decisions to internal and external stakeholders, as well as the media. The
danger is that this can result in short-termism. As one participant pointed out, “the economic
pressures created by recession require leaders to focus on efficiency and cost-management,
and can result in short term decision-making” (Participant K).
The challenge of dealing with the financial crisis is not about returning to the so-called
glory days; rather, as one respondent wrote, “what is needed is fresh thinking which learns
from the success and failures of the past and creates a new future”. To do this participants
pointed out that there needs to be a vision and business values which are not compromised
even when times are tough. As one participant (A) advised, “Leaders will need to find a
balance between supporting those disadvantaged by the financial depression, while investing
in the infrastructure for innovation to flourish”.
Due to rising public expectations, the third sector is faced with delivering more services
to more people who have greater needs, but with less resources and without compromising on
quality. This was supported with comments such as, “the sector has to adopt a consumer-
centric mindset, without the necessary skills and experience” (Participant I).
The financial challenges are forcing the sector to consider working in partnership with
other sectors. The increasing promotion of partnership working, however, appears to be
presenting, what one participant defined as, a ‘conundrum’. This was described as “the
competition for a reducing pot of money [which] can lead to organizations moving beyond
their area of expertise in order to diversify and secure other sources of funding” (Participant
R). The challenge for the sector is to move from a reliance on grant funding to one of a focus
on contracts. This involves looking for opportunities for collaboration with other
organizations across the sector and in other sectors to deliver savings, create additional value,
and attract new funding.
Building collaborative relationships
Collaborative and partnership working with other organizations to deliver savings and
create value is a key challenge. Participants described how organizations in the third sector
are being driven to find a balance of preserving their own place in the sector while being
confident enough to share knowledge and information for wider benefit. They are having to
identify who they should align themselves with in collaboration and what form the
collaborations should take. According to one participant (T), “funders are now requiring
third sector organizations to collaborate with each other and with organizations from other
sectors to deliver savings and create additional value”.
The challenge is, on the one hand, to look for opportunities for collaboration with other
organizations across the sector and in other sectors to deliver savings, create additional value,
and attract new funding; while, on the other hand, competing for contracts and commissions
with the very organizations that they are required to collaborate with. One participant (M)
described it as having “to find a balance of preserving their own place in the sector while
being confident enough to share knowledge and information for wider benefit”. This is
driving a need to identify what form collaborations should take. Participants question
whether it should be an alliance based on shared risk and reward or a partnership using prime
and sub-contractors. There is recognition that it should be possible to benefit from
collaborative working as long as the time is taken to develop high levels of trust. Leaders
need to identify who they should align themselves with in collaboration and what form the
collaborations should take.
Remaining innovative and distinctive
Delivering and implementing innovation is a further challenge for the sector. Given
that for the vast majority of the sector there are not enough resources to fund services, leaders
need to find new ways of providing services. This was highlighted by one participant who
pointed out that they will need to find new organizational models, which use technology and
utilise volunteers more in a way that enables them to support beneficiaries. Another
participant noted that there is the opportunity to create, to innovate, to develop and ultimately
to make changes:
“leaders need to think about and understand what is happening in the wider society,
how it may affect them, and what they can do to shape the future. They should think
beyond their immediate sphere of influence, beyond today and over the horizon.”
This will involve, “changing or moulding the culture so that it is positive and creative”
(Participant S). There is, however, a note of caution as one respondent (R) was mindful that,
“dynamic, socially impactful entrepreneurship in the sector is hampered” and to make it
happen, he went on to suggest that there is a need to “liberate innovators” as currently there
is a lack of innovative ideas evident across the sector.
The leadership of the sector appears to have simply run out of ideas about how to take
the sector forward, yet in a time of constrained financial resources, innovative ideas are seen
as increasingly important. For as one participant (A) said, leadership is failing to grasp:
“the opportunity to create, to innovate, to develop and ultimately to change something,
be that addressing a social problem with community innovation, becoming more
community orientated or coaching leaders through challenges and seeing them thrive
and grow in the process.”
It would appear that a key challenge is the need to drive distinctiveness and innovation
across the sector, for the capacity to innovate and remain distinctive is a critical determinant
of long-term survival in the third sector.
Building and developing capability
A key challenge is that leadership remains in scarce supply despite high and increased
demand. This issue was described by one participant (I) as, “many people believe they
possess the skills but do not know what leadership is.” This lack of leadership is being
exacerbated by the shift away from traditional technical or operational roles to more
collaborative, networked leadership roles. These roles imply the need for greater political
awareness, more collaborative and engaging behaviour, and exceptional influencing skills.
However, in their role as leaders in the sector, individuals are often confronted with
challenges that few are fully equipped for, either organisationally or individually. This dearth
of leadership was summed up by one participant (I) who wrote that:
“whilst anchoring our leadership role in an intention to serve the community and care
for the whole is important, it is often not enough. Because the task at hand is to
transform deeply engrained and destructive power dynamics, it is critical that we learn
the skills of collaborative leadership and nurture cultures of trust wherever we are.”
Another participant (J) stressed that: “the kind of leadership we are familiar with is not
working anymore” and emphasized that, ‘the leader’s role is to create space (or social
containers) for the community to articulate its concerns and set its own agenda.” They went
on to conclude that the kind of leadership that is required involves: “openness to change and
being changed …qualities of authenticity; courage and care… and to nurture a quality of
connection with self and others that can lead to genuine organizational and community
renewal.” In the words of one participant (T), the challenge is that there is a need:
“for a combination of ethical, clear-sighted leaders together with new thinking on how
to practically sustain the material and health benefits derived from capitalism … a
sense of community and our natural environments. To achieve this requires a major
paradigm shift, a cultural evolution, which can only be achieved by visionary
The lack of investment in leadership skills means that there is a small pool of
appropriately skilled leaders, a continued drain of talent to the public and private sector, and a
restricted pipeline of future leadership across the sector.
Reinforcing the legitimacy of the sector
Leadership in the sector faces the challenge of reinforcing the legitimacy of the sector
while maintaining the belief in the special nature of voluntary association. As a result, the
sector is having to reach out to a discerning public that understands where value resides and
what is ‘worth backing.’ Yet as the economic slowdown continues and the social
consequences of government policy become more apparent, the space in which the sector
operates will become more contested. Politicians and commentators have already started
questioning the legitimacy of charities campaigning on social issues, especially if they are in
receipt of government funding. This questioning of the legitimacy of the sector will intensify,
and its voice will come under greater scrutiny. The sector’s role is being held up to scrutiny
by the wider community and particularly by the people that it serves. This was summed up
by one participant (F) who wrote that,
“as government policy impacts on people’s lives, the sector will be expected to stand
up for the less well-off. It will lose credibility if found wanting. The leadership
challenge will be to stay relevant whilst not overstepping the legitimacy question raised
The challenge is in maintaining the core purpose of the sector which was described as follows
by a participant (O):
“The idea of scaling up successful models has a certain allure to a social
entrepreneur but we need to ensure that the drive for size does not replace a drive for
quality, authenticity and social impact. Equally, in an era when local authorities look
to become commissioners of service rather than providers of services, the voluntary
sector should approach large contracts with a degree of caution especially where
public sector partnerships risk compromising the independence of the community or
voluntary sector organisation by overbearing governance or local authority
Leadership across the sector, in order to retain legitimacy, has to reinforce what the
purpose of the sector is, why it is needed and what its special contribution.
In summary, evidence from the study suggests that leadership in the third sector is
operating in a sector that that is sensitive to social, economic, and political change and is in a
state of flux as its workforce and services respond to the drivers for change. Such challenges
are placing significant pressure on leadership across the sector.
The findings in this study indicate several significant areas of discussion. First, the
research results point to an underlying sense that leadership in the third sector is at a
crossroads. Evidence from the research suggests that leaders appear to be confronted with
challenges which they are not yet fully equipped for, either organizationally or individually.
The traditional approach to leadership appears to be out-dated for the changing context in
which the sector is operating. Participant (S) points out the dilemma that this is creating:
“businesses putting on the sheep’s clothing of the third sector and the third sector putting on
the wolf’s clothing of the private sector, while the public sector seems undecided about what
to wear and is trying on both.” This recognition of the value of leaders moving between
different sectors supports what Buckingham et al (2014) calls boundary crossing ― bringing
the experience of working in the private and/or public sector to the third sector. This
‘blurring of sector boundaries’ requires leaders to be more externally focused and aware of
what is happening in the external environment and to adopt a more collaborative way of
working across sectors.
Findings also indicate that leadership across the sector has to prove its effectiveness.
According to George (2010), the ultimate measure of effectiveness for leadership is the
ability to sustain superior results over an extended period of time. Leadership is, however, a
more widely pervasive phenomenon than this. Some researchers believe that the role of
leadership is best seen not in terms of its economic impact, but in how it shapes the
organizational context, such as goals, members, incentives, and culture (Oldham and
Hackman, 2010). As is evident from the current study the scope and importance of
leadership in the third sector needs to be addressed, not only in terms of their impact on
performance effectiveness but, and more importantly, in terms of their influence on the life of
an organization, which Nohria and Khurana (2010) refer to as meaning, morality and culture.
Second, as is evident from the findings leadership theories and frameworks cannot be
imported from the corporate world and imposed on third sector organizations. It will require
subtle and critical adjustments to be made in order to reflect the different ethos and culture of
this most sophisticated sector. Leadership theories and frameworks, which abound in private
and public organizations, may bring great benefits, however, they may be of limited value
unless they are tailored to address the different context of third sector organizations.
Third, it is clear from the narratives that the third sector’s challenges will not be met by
identifying a few innate leadership attributes nor by recruiting and developing more people
into leadership roles. It is not more leaders that are needed but instead it is leadership at all
levels that is needed. As Leslie and Canwell (2011) point out leadership is tied to multiple
actors across an organization or system and is, therefore, not about a single man or woman in
a senior position. It is about people working and collaborating across an organization being
involved in leadership activities for which core capabilities are required. Such capabilities, as
is evident from the findings of the current study, include acting ethically and collaborating
not only across the third sector and also across the public and private sectors. For in all
sectors, organizational boundaries are beginning to blur, because of partnerships,
collaborative working and commissioning. To help achieve this the third sector needs to build
leadership capacity and the capability to deal with complex and messy issues across different
Fourth, one specific area which the findings from the study evidence is the lack of
innovation in the sector. These findings support research by Osborne, Chew and McLaughlin
(2008) which found that innovation in the sector has reduced dramatically. On the basis of a
mixed-method comparison of third sector organizations in 1994 and 2006, they found that
innovative capacity is not a constant or inherent organizational characteristic, but varies
according to the cues and incentives of the public policy context. This is similar to the
findings of Mulgan (2007) which concluded that most of the literature on social innovation in
the third sector points to a sector that is better at believing they are innovative than actually
being innovative. Leadership in the third sector, therefore, needs to provide the mechanisms
to encourage, to support, and to sustain innovation. However, a third sector organization may
require unique innovation (McDonald, 2007); Light (1998), for example, posited that third
sector leadership must prepare the organization to innovate in order for innovation to become
a natural practice. While Kanter and Summers (1987) maintained that an organization’s
ability to innovate would determine its potential to meet future demands, to take advantage of
opportunities and resources in the environment, and to use resources to generate new
products and services. Indeed, external funders of third sector organizations often mandate
innovation (Hasenfeld, 1983). Drucker (1990) believed that innovation could be more
important for third sector organizations than for organizations in other sectors because the
changing society presents both a greater threat to, and a greater opportunity for, organizations
in the sector. Leadership can have a strong influence on innovation in the sector and can
influence new ideas and concepts for service delivery which are critical to the improvement
of organizational performance in the sector. The ability to ‘innovate’ is, therefore, one of the
key capabilities which the third sector leadership needs to develop.
Fifth, due to the challenges within which leadership operates in the third sector which
were indicated in the findings, there is a need to ensure that leadership is enacted in an ethical
way. As Trevino and Brown (2004:77) say: “The environment has become quite complex and
is rapidly changing, providing all sorts of ethical challenges, and opportunities to express
greed”. In order to address such challenges, leaders in the third sector need to understand the
ethical boundaries within which they are called to operate. It is important that leaders in the
third sector focus on how they behave, and how they treat others. They should ensure that
they use their positional power in an ethical manner, act in a timely manner to new situations
and challenges, engage in active stakeholder dialogue, implement solutions, and take
responsibility to improve their reputational conduct (Patzer and Voegtlin, 2013). This
involves identifying and collaborating with an increasing set of external stakeholders across
the public and private sector. So, not only is the leadership in the sector being driven to be
more ethical, there is also a growing need for this to be done in a collaborative manner.
Six, while some participants suggested that the third sector had got better at ‘growing
our own’ leaders, others felt that the sector was still not producing enough of its own leaders
and that those moving in from the outside lacked ‘grounding’ in the sector. To address these
challenges, participants were vocal on the need to develop a framework of leadership
specifically for the sector. The pressing need for such a framework is summed up by one
participant who wrote: “tinkering with old models must cease, redesigning is not only the
way ahead, it is critical.”
Limitations and directions for future research
In this study, an attempt was made to identify what leadership means within the third
sector and, given the changes happening in the environment within which the sector operates,
what are the leadership challenges in and across this sector. We do accept that the
contribution is limited by the context; that is, the data is from the third sector in the UK.
However, the views expressed by the narratives provide a deeper insight into leadership in
the third sector, than has previously existed. The narratives are valuable for a number of
reasons including: they help to extend the knowledge and perspectives of leadership in a way
that acknowledges the uniqueness of the sector; they are a starting point to understand better
the challenges faced by leaders in the sector; and they serve as an illustration of the benefit of
approaching leadership through the eyes of those practicing leadership.
The reflections from the leaders make a start at understanding what leadership means and the
context in which it is operating. It opens the way for more specific research across the sector
of both a quantitative and qualitative nature, inductive and deductive. Future research should
focus on providing further empirical evidence on leadership in and across the third sector.
Studies using longitudinal and multivariate methods are needed to provide a richer and more
in-depth exploration of the role and style of leadership needed in third sector organizations in
Since the third sector as a whole is undergoing a significant transformation in its shape, its
role and its relationship with the state. The patterns and processes involved in these
developments need to be charted as it is through understanding and discussing these shifts
and their implications that the question of leadership both in and of the third sector becomes
so significant. Research is, therefore, required which addresses the relative paucity of
reflection about leadership of the diverse sub-sectors in responding and coping with the
change they face. Such research will help to address what should be the content of the third
sector leadership narrative.
Finally, based on the findings it is evident that a leadership framework is required for the
sector, therefore, we suggest that research should investigate what such a framework should
be within the changing context of the sector.
In summary, this article provides an overview of the shape of leadership in the third
sector, and the challenges it faces. Leadership is operating in a sector that is sensitive to
social, economic, and political change and is still in a state of flux as its workforce and
services respond to the drivers for change. This is placing significant pressure on traditional
approaches to leadership which have to navigate the external environment, while attending to
internal organizational issues including ensuring a consistent pipeline of funding, retaining
independence, and the core mission of the sector.
Organizations within the sector need to develop their leadership to enable them to deal
with the challenges they are facing as well as respond to opportunities. Yet spending on
leadership development in the third sector still lags significantly behind that in other sectors
(Hudson, 2009). Without investment in leadership skills, there will continue to be too few
appropriately skilled leaders, a continued drain of talent to the public and private sector, and a
restricted pipeline of future leaders (Venter and Sung, 2009). The key questions which need
to be addressed are: how does the sector develop future leadership - how does it utilise
individuals who have gained skills in other sectors; and how does the sector demonstrate the
many ways those skills that make good leadership can be developed?
To address these questions, organizations in the third sector need both financial and
human capital. But whereas financial shortfalls are easily measured, communicated and
impossible to avoid, leadership shortfalls can be hard to calibrate, awkward to discuss, and
tempting to avoid. This is what makes the emerging leadership deficit so critical and raises a
number of imperatives. The first imperative is to acknowledge and understand the enormity
of the challenge. The second imperative is to make it a top priority, in governance, in
planning, and in day-to-day decision-making. If this is ignored, it has the potential to
exacerbate the depth and breadth of the challenges being faced.
Closing the gap will require action, as well as a willingness to innovate, to experiment
and to take risks at both an organizational and sector level. In individual organizations, board
members and senior managers must commit to build strong leadership teams. At a sector-
wide level, there is a need to collaborate to nurture the flow and development of a cadre of
leadership talent. In this context, two imperatives are salient: development of leadership
capability; and investment in attracting and retaining talent. To address the leadership
challenges much greater attention needs to be paid to building leadership capability and that
will require a shift in investment.
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