Stanford Business

FEBRUARY 2007


Boomers Transplant to Nonprofits

 


John Tammen, center, poses on Treasure Island in San Francisco Bay with members of a work crew at the nonprofit landscaping service he heads.
Photo by Jonathan Sprague

From Software to Social Enterprise
John Tammen, MBA ’79

by Meredith Alexander Kunz

As John Tammen approached his 25th Business School reunion, he had to face an unpleasant truth: His corporate job was no longer a good fit. The 1979 alum had started his career in construction, then took a position with a 100-employee software maker. After several consecutive acquisitions, he found himself working at 50,000-employee Oracle. His job—selling large consulting projects—had become more narrow and less flexible.

There was a bright side: “I’d earned stock options all the way through, and I found less and less need for the income. That gave me the opportunity to look for something else,” he says. At age 55, he had too much energy to retire but did not want to continue working 70-hour weeks either.

Tammen heard about social entrepreneurship—nonprofits that are run like businesses but with a social rather than financial goal—and he immediately felt drawn to the concept. Responding to a Stanford MBA job posting for Richmond, California-based Rubicon Enterprises, he landed the position of general manager of its landscaping services business a year ago. His early career in construction served him well. “I could take over that part of the business immediately, which was really nice.”

Tammen’s business background helps him manage the operations, sales, and financial sides while overseeing 70 employees. The landscaping business, which pulls in $4 million annually, offers premium services to high-end clients, such as suburban shopping centers and housing complexes. Award-winning Rubicon also provides a much-needed asset to Bay Area residents: job training, counseling, mental health services, housing and legal assistance for over for 3,000 people who have had employment barriers such as homelessness, prison stays, and mental disabilities.

Tammen says he works as hard as ever but finds more fulfillment. “I have a whole greater sense of freedom, and I feel like I could do this for much longer than if I’d stayed at Oracle.”

To fellow MBAs thinking of moving into nonprofits, he advises seeking a midsize organization with “the possibility of growing in a significant way.” And, expect some culture shock. On his first day, he decided his desk was too small and replaced it with his own. “There aren’t the luxury items that you probably get used to as an MBA,” he says.

Ready for a Change, Not Retirement

It’s time to redefine “having a senior moment,” says David Campbell, founder of Hands On Worldwide. The new definition? “When our experience could help solve a problem.”

Campbell, a retired technology executive in Carlisle, Mass., now heads a nonprofit that organizes volunteer disaster relief. He points to creative answers that he and his volunteers came up with during post-Katrina relief work in Biloxi, Miss. When cars and gas were not available, they handed out bicycles; to help locals navigate the city, volunteers erected new street signs to replace those swept away by wind and water. It was Campbell’s decades of experience in the business world—including expanding Computer Task Group from 20 employees to over 4,000—that enabled him to grow his volunteer group from a handful to over 1,500 workers.

When most Americans think of retirement, they see golf courses, sandy beaches, and cruise ships. But another vision of retirement is gaining traction. That vision—“Americans leading with experience”—was the focus of the 2006 Purpose Prize Innovation Summit, co-sponsored by San Francisco-based Civic Ventures and the Business School’s Center for Social Innovation September 7-9. Americans in the second half of life are demonstrating “a tremendous wellspring of innovation” in the nonprofit world, says Marc Freedman, president of Civic Ventures and author of Prime Time: How Baby Boomers Will Revolutionize Retirement and Transform America. The Purpose Prize recognized a few such individuals by offering awards—of $100,000 and $10,000—to people over 60 who have shown entrepreneurialism in addressing community and national problems.

Stanford business graduates of all ages already engage with nonprofits but especially as they get older. According to a 2006 survey of Business School alumni, 68 percent had volunteered for a nonprofit. From the class of 1970 or earlier, more than 60 percent had served on a nonprofit board, some 20 percent had worked for a nonprofit, and 20 percent for a government agency. In contrast, about 10 percent of those from the 1990s had worked for a nonprofit and less than 2 percent for government. Several factors seem to be attracting businesspeople to the nonprofit sector as they reach 50 and over.

First, Freedman points to economics. Some have grown comfortable financially while others cannot afford to retire at 60, but they would like to be paid for work that matters to them. “Work—and not volunteering—is the future of social engagement in the second half of life,” he says. The traditional goal of “freedom from work” is being transformed into “freedom to work as an expression of one’s better self,” he says.

Indeed, a 2006 Merrill Lynch survey of more than 5,000 Americans reported that 71 percent plan to continue work in some form past age 61, and 65 percent of boomers and 70 percent of younger workers hope to move into a new profession.

Some see an opportunity for boomers to take the helm at nonprofits as the sector’s needs grow. The field pays less than the for-profit sector and suffers significant turnover. In a 2006 survey of 2,000 nonprofit executive directors by CompassPoint and the Meyer Foundation, three-quarters said they planned to leave their jobs within the next five years. Thomas Tierney, founder and chairman of the Bridgespan Group, a nonprofit management consultancy, projects that in 2016 alone, 78,000 new senior managers will be needed, but projections vary. Thomas Pollak, associate director of the National Center for Charitable Statistics at the Urban Institute in Washington, D.C., using more conservative assumptions, projects the number of executive directors that nonprofits and foundations will hire in 2016 to be around 28,000.

Vincent Robinson, MBA ’99, founder of the San Francisco-based 360 Group, a social-sector human capital consulting firm, has encountered more boomers seeking nonprofit work. “I see it as a trend, because baby boomers are living longer, are more affluent, are not just focused on retirements, and want to make contributions after their careers,” he says, though he adds that the extent of this movement still remains to be seen. [An example from this issue’s Class Notes section is Jose Moreno, MBA ’71, who retired as Philippines country head of Swiss Reinsurance to administer a nonprofit that builds communities for families in depressed areas.]

Some who have made the leap caution that this sort of “retirement” means hard work. After 33 years at IBM, J. David Nelson became COO at the National Foundation for Teaching Entrepreneurship in New York City, a group that engages low income youth in academics by training them to create their own businesses. The new job brought Nelson a longer commute and just as many hours on the job, but after five years, he says, “I’m still challenged by what I’m doing.”


Allison Davis, MBA '89

What should businesspeople considering changing sectors do to prepare? Alison Davis, MBA ’89, who runs the MBA–Nonprofit Connection in Palo Alto, recommends trying nonprofit board service. “There’s absolutely no downside to serving on a board—you learn a lot about nonprofit governance,” she says. Secondly, volunteering is an excellent addition to any nonprofit resume. Davis says that could mean pro bono consulting, “using your management skills in a nonprofit.” But even something as straightforward as helping clean up a beach or tutoring kids is a good idea. “People tend to not value that a lot—they think it won’t give you that much credibility, but in fact, it does.”

A knowledge of fundraising, Robinson points out, also goes a long way, because most nonprofit leaders have a major role in bringing in gifts and grants. MBAs can learn how to fundraise by serving on a development committee on a nonprofit board, or by actively soliciting gifts for a cause or institution.

No matter how hard they work at volunteer and board positions, MBAs may still face a disconnect when applying for nonprofit jobs, says Robinson, who has seen resumes that don’t take into account the differences in language across sectors. “I got a resume that said, ‘assisted with cost-benefit analysis,’ and discussed ‘ROI’ and ‘cost of goods.’ The [nonprofit] reader of the resume will say, ‘I don’t really know what this means.’”

For nonprofit job applicants, Robinson says he believes there is no obvious advantage to having an MBA and business background. “There’s a sales job you have to do, through clear positioning and packaging. Explain what your experience can really lend them.”

Perhaps the most important thing for MBA job-seekers is to make certain they can demonstrate a true commitment to the organization’s cause—and the pay cut. According to Davis, when nonprofits see a job candidate with a business background, they think, “We know you can make more money elsewhere, so why are you here?”

Businesspeople may face other hurdles once in the job. They may be used to having assistants, plentiful supplies, and well-appointed offices, none of which are a given in the social sector’s world of limited resources. Another common pitfall for those making move is that some nonprofit employees are fearful of retired executives trying to dictate to them or the people they serve. Nelson felt he had to convince a skeptical staff that he was the right man for the job—and not too “corporate.” He never mentioned IBM and advises others: “Don’t make assumptions, anticipate preconceived notions, and be an agent for discussion and change.” Small things made a difference: "I had an open door policy and made a point to spend time with colleagues at all levels," he says.

How many American baby boomers—and how many retiring MBAs—will go to work for social change? The answer is uncertain, but the idea has already started to take off among nonprofit funders, say Laura Robbins and Brian Hofland of Atlantic Philanthropies, a Purpose Prize sponsor. The Bermuda-based institution began a $30 million-a-year funding program in civic engagement four years ago as part of its U.S. aging program. While only a handful of other foundations had similar efforts, Robbins says, 32 grantmakers in the aging field expressed interest in a recent survey. “There is a real hunger and recognition for the role of civic engagement and the role of older adults.”

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FEATURES IN THIS ISSUE

 

Applying MBA Principles to Development in East Timor
Barry Thomas, MBA ’68

by Kathleen O’Toole

When his twin children were finishing college, Barry Thomas, MBA ’68, left his management job in the paper industry for the adventure of business development in Russia. It was exciting but he found that he “wanted do something of a more direct service to society.” Thanks to lifetime health coverage, savings, and a frugal lifestyle, he decided he could afford to adopt more altruistic goals and work in the nonprofit sector.

Yet making the switch is not simple, he cautions other MBAs who dream of it. “I used to be a hospice volunteer and was president of a board that created a full service home health organization, but when it came time that I wanted to focus my attention on hospice outside of financial management of it, I found that in most states, I had to have a license and master’s degree.”

Thomas enrolled in a conflict resolution program and earned his master’s online from Antioch University in 2003. In the process he met Nobel laureate José Ramos-Horta, then foreign minister and now prime minister of East Timor, a society that clearly needed conflict resolution after living through a brutally violent 24-year occupation by Indonesia that ended in 1999. “In East Timor, I haven’t met anyone who has not experienced rape, torture, or murder in his/her immediate family,” Thomas says.

He began working on conflict resolution but increasingly was drawn into business development. “The UN and other aid organizations concentrate on human rights, gender, health care, and building the rule of law to the neglect of economic development,” he says. “Meanwhile, an overwhelming percentage of East Timor’s youth are unemployed or underemployed, and it is getting worse every day,” he said this summer, following an outbreak of violence in May.

In a society with few formal organizations beyond clan and village, Thomas looks for any group that might take leadership in producing economic value. Could a martial arts club become a road maintenance contractor or could a women’s group develop bamboo as a construction material? How could a village community concerned about childhood nutrition organize to grow, process, and add value to sunflowers or peanuts so they have a surplus to utilize or trade?

Thomas says that “peace, justice, and economic development” depend on building local organizations. “Execution is the challenge, and I am reminded daily about that matrix in the MBA strategy class that says even a not-so-good strategy can work if the execution is good, but if you have bad execution, even the best strategy will fail.”