Leaders in social enterprises have relatively the same traits as those in other kinds of organizations. They are capable of driving the achievement of objectives and can empower others. Because of these abilities, leaders in social entrepreneurship facilitate the commitment of themselves and others to organizational goals, which is one of the most important outcomes in social entrepreneurship. However, there is extensive research that has shown that the management aspect of leadership is not significantly developed in social enterprises. Social enterprises such as the UCLA Social Enterprise Academy face leadership challenges in various areas including the development of management teams, delegation and succession planning, balancing and integration, as well as personal and professional development.
Leadership Challenges: Description and Analysis
Building a Management Team
While leaders in social enterprises such as UCLA Social Enterprise Academy have shown evidence of significant capabilities, one of the major challenges faced by such organizations is in building strong management teams. The motivations of social enterprises are different from those of non-social enterprises, and getting people who believe in and are willing to be committed to the social enterprise course is usually a challenge. Additionally, social entrepreneurs have been reported to have strong leadership skills and equally strong distrust in the ability of others to pursue the goals of their enterprises (Heinecke, Kloibhofer, & Krzeminska, 2014). Because of this, social enterprises often operate without a serious or competent mid-level management, specifically in the HR function. The lack of strong leadership in the HR function, complacency to let people in among social entrepreneurs, and limited publication of open positions have been mentioned as the main reasons why social enterprises have challenges in building management teams (Pomykol, 2014). These challenges are exhibited in recruitment as well as retention of management personnel.
In terms of recruiting new employees in management teams, social enterprises have to take into consideration various factors. These factors include social mission fit, cultural fit, founder fit, and compensation challenges (Heinecke et al., 2014). To ensure that all the criteria for suitability are met by potential employees, a strong enough and competent HR function is required, which is difficult to come by in social enterprises. For UCLA Social Enterprise Academy, for instance, the organizational mission is to help non-profit organizations gain knowledge that is essential for the development of their enterprises (Partnership UCLA, 2020). To do this effectively, the program entails a partnership between various stakeholders including UCLA alumni and UCLA faculty members, and industry professionals (Partnership UCLA, 2020). In such an enterprise, the management team that is selected for the organization has to fit in with the mission of supporting the development of social enterprises. Finding such a fit among potential candidates is one of the main challenges faced by social enterprises in the recruitment process.
Cultural fit is another recruitment challenge that mostly relates to social enterprises that work within specific cultural groups. Unlike conventional organizations that do not need to bond intricately with the cultures within which they are situated, social enterprises have to mesh completely with those cultures (Tian & Smith, 2015). The objective of most social enterprises is to support a specific community or a group of people, and cultural fit is mandatory in order to be able to develop effective and functional interpersonal connections and to be able to earn community support towards achieving organizational objectives. Sometimes, the cultures form the basis of organizational activity hence the need for stronger cultural fit in social enterprises relative to other organizations. Because of this complexity, finding individuals who fit both the mission and the culture of a social enterprise is a challenge that most social enterprises contend with.
The third challenge in recruitment for social enterprises is that there is limited interest in social enterprises among competent managers and supervisors. Non-social enterprises across several industries can afford to pay competitive salaries and benefits to managers and other employees. However, social enterprises are usually constrained by the business model as most of them operate on a non-profit basis. This makes the compensation for managers in social enterprises to be less competitive compared to other organizations, and less attractive to potential employees (Tian & Smith, 2015). An example of this could be seen in the context in which UCLA Social Enterprise Academy has to compete with other departments in the recruitment of senior managers. In such an environment, it is likely that the potential candidates would prefer to work with other faculties than with UCLA Social Enterprise Academy. The fact that the academy works mostly with volunteers should be sufficient confirmation of this challenge, and the same is compounded in other social enterprises with no ready managers who can volunteer from other departments.
Besides recruitment, the other challenge in building a management team in social enterprises is retention. The challenge in employee retention among social enterprises results from the tendency of such enterprises to hire young inexperienced individuals, who eventually find their purpose and leave (Heinecke et al., 2014). Such young employees have low salary expectations and are likely to accept the low remuneration given by social enterprises. As they gain experience and feel the need to expand their boundaries, social enterprises are unable to retain them due to the financial constraints that prevent the escalation of compensation to the amounts expected by the employees (Heinecke et al., 2014). The retention challenge is more significant in social enterprises than in other organizations due to the potential for other organizations to increase their compensation with business growth. For UCLA Social Enterprise Academy, for instance, the dependence on volunteers and partners implies that in case volunteer managers have financial needs that cannot be met by the academy, they are likely to pursue other opportunities elsewhere as long as they are competent enough. This tendency to shift raises another challenge in training, in that social enterprises consistently incur training costs to build the leadership skills of young managers who are then lost to other organizations.
The challenges in building a management team in social enterprises imply that such organizations are prone to lacking good leadership on the management aspect, unlike other organizations. In order to be set on the path towards sustainable good leadership, such organizations need to find approaches that can help attract and retain good leaders. UCLA Social Enterprise Academy has found a way to do that by incorporating the academy’s functions within the other functions of the institution and utilizing the management resources in other faculties for the academy as well.
Delegation and Succession Planning
Social enterprises also face challenges in delegation and succession planning. The challenge in delegation comes in the form of difficulty to find individuals who are willing and sufficiently competent to fill in the shoes of other managers. For instance, founders may be used to taking part actively in several organizational activities, and the absence of someone to delegate to even as the organization grows results in being over-burdened. According to Jackson, Nicoll, and Roy (2018), the delegation challenge is not only attributed to lack of mission, cultural and founder fit among already existing leaders in the organization, but also a function of the willingness of the founder to trust other people with the organization. Most social entrepreneurs do not trust the level of commitment of their managers to the organizational mission and goals hence have a negative attitude towards delegation. A recommendation provided by Heinecke et al. (2014) is that social entrepreneurs should be willing to delegate as soon as they reach a certain level of growth. This recommendation is based on the idea that as social enterprises grow a level is reached in which the organizational growth is sustainable, and there is a need to trust the organizational growth process and the individuals selected to facilitate its growth as leaders. At such a level, the social entrepreneur should be willing to let go. This recommendation is also suitable for non-social enterprises in which the primary objective is economic growth. In such enterprises, organizational growth determines the next course of action. When the organizations are sufficiently large, it becomes no longer possible for the entrepreneurs to handle all leadership functions. At UCLA Social Enterprise Academy, the same principle would be applied to ensure that the founders slowly disengage from the day-to-day operations due to the availability of other competent staff who can handle the leadership demands. Trusting available resources helps founders of both social and non-social enterprises to avoid situations in which they are doing too much by themselves.
Challenges in succession planning are also common in social enterprises. According to Jackson et al. (2018), succession planning is a key leadership concern in social enterprises due to the possible need for succession, especially of the founder. The key concerns in succession planning usually have to do with who would steer operations within the originally intended organizational mission. The need for succession would be observable where the founder leaves the organization due to factors such as the advisory of the board, attainment of retirement age, or even when there is a need to embark on a new path (Tian & Smith, 2015). Without a succession plan in place, the organization would be concerned about continuity. Similarly, non-social enterprises also face the succession planning challenge. However, unlike the social enterprises in which competency and retention are also leadership concerns, other organizations usually have sufficient numbers of staff and degrees of competency that can support succession planning even for delegation purposes (Tian & Smith, 2015). All organizations should always be prepared in case of unexpected happenings that result in the need for succession such as when a leader becomes seriously sick and no longer able to work or is involved in a fatal accident. UCLA Social Enterprise Academy somehow deviates from this challenge because it is affixed to UCLA’s general organizational structure. The possibility of moving human resources around and reaching out to thousands of alumni makes succession planning a manageable challenge for the institute (Partnership UCLA, 2020). Understanding organization-specific characteristics, therefore, is quite important for any social enterprise to facilitate decision-making regarding succession. Change of attitude among founders in social enterprises is particularly important for the realization of effective succession plans.
Balancing and Integrating Roles
Another challenge frequently faced in social enterprise leadership is that of balancing and integrating roles. In a social enterprise, leaders are often expected to perform several roles, some of which are characterized by conflicting demands. This need to balance is due to the challenges of recruitment and retention as well as the financial constraints in such organizations, which limit the number of people that can be hired in the organization. The ability to balance such roles effectively can be challenging to develop, especially when the roles are recurrent on a day-to-day basis and are aligned to specific strengths and preferences (Pomykol, 2014). In balancing roles, maintaining motivation while also ensuring effectiveness in the delivery of all functions is a challenge that most social enterprise leaders face. For instance, UCLA Social Enterprise Academy has students who play the role of consultants to social enterprises. As consultants, their objectives include developing income opportunities for non-profit organizations by conducting market research, creating business plans, and pitching ventures for competition for prizes and cash (Partnership UCLA, 2020). All these activities are carried out while working closely with the leaders in the enterprises to which they are attached. In that responsibility, these students perform the roles of leader-assistants while also focusing on their consultancy roles, which can be challenging for them. Comparing the situation in social enterprises with that in other organizations indicates that the levels of role balancing required in social enterprises are more rigorous than that required in other organizations, most of which have clearly defined roles from the chief executive officer (CEO) to the most junior employee.
Besides balancing different roles, leaders in social enterprises also have to integrate the competing interests of both internal and external stakeholders. Leaders in social entrepreneurs have to go beyond their responsibilities as managers and leaders of the organization in order to meet the organizational goals; they facilitate advocacy for the organizational cause under any opportunities that emerge in order to attain a broader change in the system (Jackson et al., 2018). Leadership in social enterprises comes with greater responsibilities for organizational representations on several occasions including fundraising activities, awareness creation regarding the cause of the organization, talks, consultations, and training aimed at spreading awareness of organizational functions and consultation activities (Jackson et al., 2018). The leadership position in social enterprises is thus frequently described as a hard-up, and few leaders are able to handle the pressure that comes with managing social enterprise responsibilities. On the contrary, the clear delineation of roles and opportunities for delegation implies that specific leaders in non-social enterprises do not necessarily have to address the interests of different stakeholder groups (Tian & Smith, 2015). Instead, different functions work closely with different stakeholder groups and the shared outcomes result in organizational growth. At UCLA Social Enterprise Academy, this ability to distribute stakeholder focus is seen in the engagement of different participants and partners, all aimed at attaining different goals.
The leadership challenges in social enterprises, particularly that of balancing and integration of roles, results in challenges in personal and professional development. Self and professional development require a great deal of self-awareness and clarity of mind to be realized effectively, yet both of these are seldom accessible in a social enterprise unless a certain degree of growth has been attained (Heinecke et al., 2014). It is therefore important for social entrepreneurs to explore opportunities for professional growth for themselves and their followers in order to facilitate efficiency in the complex workspace and subsequently motivate personal development.
Social enterprises have a different business model from conventional non-social enterprises. Social enterprises have a specific cause, which can be difficult to promote depending on the enterprise characteristics, while non-social enterprises have economic profitability as the primary objective. Through the example of UCLA Social Enterprise Academy, the leadership challenges in social enterprises have been explained. These challenges include building a management team, delegation and succession planning, balancing and integrating roles, and professional and personal growth. Unlike purely social enterprises, UCLA Social Enterprise Academy has a non-social affiliate, which has made some of the challenges insignificant.
Heinecke, A., Kloibhofer, M., & Krzeminska, A. (2014). Leadership in social enterprise: How to manage yourself and the team. Schwab Foundation for Social Entrepreneurship. Retrieved from https://www.researchgate.net/publication/263214103_Leadership_in_Social_Enterprise_How_to_Manage_Yourself_and_the_Team/citation/download
Jackson, B., Nicoll, M., & Roy, M. J. (2018). The distinctive challenges and opportunities for creating leadership within social enterprises. Social Enterprise Journal, 14(1), 71-91. Retrieved from https://www.emerald.com/insight/content/doi/10.1108/SEJ-03-2017-0016/full/html
Partnership UCLA. (2020). Social Enterprise Academy. Retrieved from https://partnership.ucla.edu/social-enterprise-academy/
Pomykol, A. (2014). Leadership in social enterprise: How to manage yourself and the team. World Economic Forum. Retrieved from http://www.socialenterprisebsr.net/2016/05/leadership-in-social-enterprise/
Tian, Y. E., & Smith, W. K. (2015). Entrepreneurial Leadership of Social Enterprises: Challenges and Skills for Embracing Paradoxes. Journal of Leadership Studies, 8(3), 42-45. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1002/jls.21339