The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0143-7739.htm
LODJ
28,4
356
Received February 2006
Revised March 2006
Accepted April 2006
Leadership & Organization
Development Journal
Vol. 28 No. 4, 2007
pp. 356-375
q Emerald Group Publishing Limited
0143-7739
DOI 10.1108/01437730710752229
Trading places
Examining leadership competencies between
for-profit vs. public and non-profit leaders
Elizabeth Thach and Karen J. Thompson
Sonoma State University, School of Business and Economics,
Rohnert Park, California, USA
Abstract
Purpose – The purpose of this paper is to identify differences, if any, that exist in leadership style,
behaviors, and competencies to drive performance between public/non-profit and for-profit
organizational leaders.
Design/methodology/approach – The study describes the results of in-depth interviews with
leaders in small to medium-sized organizations in California. Approximately half of the leaders work
in non-profit and public organizations, while the other half work in for-profit companies.
Findings – The findings reveal both similarities and differences between the two groups.
Originality/value – The results are a first step in examining the key leadership competencies
required for success in each sector and serve as a springboard for future research.
Keywords Leadership, Competences, Non-profit organizations, Public sector organizations,
Small to medium-sized enterprises, United States of America
Paper type Research paper
Introduction
Much research has been conducted on the impact of leadership styles in driving
performance in large industry, for-profit firms as well as some studies in large
non-profit government settings (Goleman et al., 2002; Kamensky and Morales, 2005;
Michaels, 2005). However, there is less research on this topic in small to medium-sized
non-profit and for-profit business settings. Moreover, what differences, if any, are there
in leadership style, behaviors, and competencies to drive performance between
public/non-profit and for-profit organizational leaders? If so, knowledge of these
differences can provide guidance for leadership development programs in each sector.
With these questions in mind, an exploratory research study was designed to
determine if differences exist between for-profit and public/non-profit leaders in small
to medium-sized organizations in terms of leadership style, behavior, and competencies
targeted at achieving organizational goals.
Literature review
To guide this inquiry, it is useful to focus on three topic areas in the literature. These
are:
(1) context of for-profit and public/non-profit firms;
(2) leadership focus in for-profit, government, and non-profit firms; and
(3) leadership competencies.
By reviewing these three areas, useful information is identified to frame the purpose Trading places
and impact of this exploratory research study.

Context of for-profit and public/non-profit firms

Differences and similarities in context have been identified in for-profit versus
non-profit organizations. According to Moore (2000), all types of organizations are
created to produce some type of value. However, for-profit organizations focus on 357
strategies to measure this in financial terms, whereas non-profits and government
agencies produce value that lies in the achievement of social purposes. Since direct
revenue is not usually generated from non-profit firm activities, a different type of
cultural context arises within these types of organizations. Therefore, Moore (2000)
argues that leaders in non-profits should focus on the public value to be created and the
operational capacity to deliver that value, as well as providing general support to the
organization. Behn (1998) supports this viewpoint by asserting that the missions of
public agencies are often vague and conflicting, and generally are not provided with
enough resources. This results in a need for leadership that can deal with complex
constituencies and the broader mission of achieving public principles.
The context within for-profit firms is driven by commitment to shareholder goals,
which generally include the goals of owners, debt holders, and stockholders. A broader
emphasis now includes other external stakeholders, such as customers, suppliers, and
community (Hill et al., 2003). Given this context, the primary focus is growth of
revenues (Wilson, 1989). Though resources may also be restrained, they are usually not
as reduced as those of non-profits (Rojas, 2000; Corder, 2001). Therefore, leaders are
called upon to provide strategies and action plans to achieve financial goals, encourage
efficiency, reward performance, and promote risk and creativity to achieve even
greater profits. In addition, meeting the needs of the customer has taken on a large
importance, because they are the purchaser of the products and/or services provided
by the for-profit firm.
The literature does identify similarities in context between non-profit and for-profit
firms. This primarily has to do with situations in which both types of agencies are
involved in similar markets. Indeed, in the last decade, for-profit firms have been
invading the traditional markets of non-profits (Rojas, 2000; Eckel and Steinberg,
1993). As this continues, it is expected that non-profits will have to adopt some of the
more competitive perspectives of for-profit firms (Corder, 2001).

Leadership focus in for-profit, Government, and non-profit organizations

Overall, there has been little research that compares leadership factors and skills
relevant to business, public, and non-profit organizations. However, we can glean some
useful information from the literature in terms of the degree to which leadership is
being talked about and which aspects of leadership seem to be popular relative to each
sector.
The for-profit sector leadership has been examined to a far greater extent than has
leadership in the public and non-profit sectors. The study of leaders in the private
sector began in the 1930’s and blossomed in succeeding decades as researchers delved
into comprehensive analyses of the traits, behaviors, skills, and styles associated with
effective leadership. However, this explosion of research related to business leaders
was not mirrored in the public and non-profit literature. For example, Van Wart’s
LODJ (2003) content analysis of 61 years of articles in the journal, Public Administration
28,4 Review, revealed only 25 articles specifically focused on leadership. Books on the topic
of public sector leadership have come out sporadically since the late 1930s, but these
have been few in number and have tended to be oriented toward the military leader
(Van Wart, 2005). The literature on non-profit leadership has had an even shorter
existence.
358 The dimensions of leadership studied in each sector show great similarity. In fact,
current texts for for-profit and non-profit leaders all seem to use the findings from the
for-profit sector leadership research as the basis for their prescriptions for effective
leadership. We see substantial overlap in the key attributes and skills associated with
effective leadership. There is also the standard division of behaviors into the
task-oriented and relationship-oriented categories. In addition, the texts all address
newer leadership approaches such as transformational leadership, team leadership,
and strategic leadership.
Current research on leadership emphasizes the importance of inspiring passion
in others. Some of the characteristics that leaders can embody to stimulate this
passion are: a positive vision, inspiring core values, emotional intelligence, courage,
and an engaging and inclusive leadership style (Bilimoria and Godwin, 2005). This
approach to transmitting effective leadership is seen more typically in the business
leadership literature. In particular, theories of charismatic (House, 1977),
transformational (Bass, 1985), and visionary leadership (Sashkin, 1988) have
inspired volumes of research and numerous training programs for business
managers. A transfer of these passion-inspiring approaches to the public sector is
seen only to a limited degree. However, the literature on non-profits has grabbed
onto these theories, recommending them as a way to transform the organization
(Santora et al., 1999). Finally, some of the more recent literature on leadership in
non-profit and public organizations has focused on participative management as a
way for leaders to improve organizational performance and employee satisfaction
(Kim, 2002).
The proposition that there might be sector-based differences in leadership
competencies stems from the apparent differences between the sectors themselves.
Organizations in the private and public/non-profit sector vary in terms of goals,
structure, accountability, budgets, and ownership, to name but a few areas of
distinction. Fottler (1981) emphasizes that values, incentives, and internal and external
constraints are key institutional differences between the private and public sectors.
Public (and non-profit) organizations tend to be focused on public interest, while the
goals of private organizations are driven by profits and self-interest (Blau and Scott,
1962; Rainey et al., 1976). Compared to private organizations, human resource systems
in public organizations tend to be merit-based (Ring and Perry, 1985), and performance
incentives tend to be inadequate or absent (Perry and Porter, 1982). Research also
shows that public organizations are more open to environmental influences as a result
of their accountability to multiple constituencies, policy makers, and legislative
mandates (Self, 1977; Ring and Perry, 1985). Along those same lines, Lan and Rainey
(1992) found that public managers perceived a higher emphasis in their organizations
on formalized rules and procedures, which impinge upon their authority. The study
also revealed that public managers perceived stronger goal clarity and greater
effectiveness in reaching goals compared to for-profit managers.
 The effects of these sector-related differences on managers have been tested in a Trading places
variety of ways (see Perry and Rainey, 1988, for an extensive review). For example,
Fottler (1981) discussed how the different constraints characteristic of each sector
would impact the carrying out of managerial functions (planning, organizing, leading,
and controlling). As might be surmised, public managers tend to have less flexibility in
their actions than private managers do (Rainey et al., 1976) and feel they have less
control over what happens in their organizations (Blumenthal, 1983). Lau et al. (1980) 359
showed that public sector managers had to spend more time on crisis management
compared to their private sector counterparts. Furthermore, researchers have
discovered differences in managers’ strategic decision-making processes (Hickson
et al., 1986; Coursey and Bozeman, 1990) and perceptions of ethical organizational
climates (Wittmer and Coursey, 1996). The findings also show that managers in the
public sector have lower levels of job satisfaction (e.g. Rhinehart et al., 1969; Rainey,
1979; Rainey, 1983; Solomon, 1986) and organizational commitment (Buchanan, 1974)
than do private sector managers.

Leadership competencies
A competency can be defined as “an underlying characteristic of an individual that is
causally related to effective and/or superior performance in a job or situation” (Spencer
and Spencer, 1993, p. 9). The critical piece in this definition is that effective
demonstration of the competency should predict who does something well or
inadequately. Indeed, if competencies are to be useful in employee development, then
they must focus on the production of key outputs (McLagan, 1983). Therefore, each
competency should contain an overall narrative definition, plus 3 to 6 explicit ways to
exhibit the competency within the organization (Spencer and Spencer, 1993).
Unfortunately, many leadership competency models developed by organizations –
whether they are for-profit or non-profit – only provide general descriptions and are
not linked to organizational strategy and results (Zenger et al., 2000). In order to be
useful, competency models should provide specific behaviors the individual needs to
emulate, as well as an explanation of the expected business outcomes and benefits
produced by the competency.
In a review of the literature regarding leadership competency models for non-profit
and for-profit organizations, there are hundreds of models which are available.
However, this plethora of models is tolerable, because the best competency models are
linked to the specific strategy and needs of a particular organization (Zenger et al.,
2000). Regarding leadership competencies, however, there are a few areas that have
been proven time and again as mandatory for effective leadership. These include the
competency clusters of vision and goal-setting, interpersonal skills, self-knowledge,
and technical competence regarding the specifics of the business in which the leader
works (Bennis, 1987). Indeed, recent studies have validated this – especially in the first
two areas. Trinka (2004) in a review of 1,000 managers in a large government agency,
and the Corporate Leadership Council’s Learning & Development Roundtable (2003)
with responses from 8,500 employees and managers from for-profit organizations,
found that emphasis on developing others and communication (interpersonal cluster)
and performance management (vision & goal-setting cluster) can help organizations
outperform their competitors.
LODJ In reviewing the various models, the most common leadership competencies for
28,4 both non-profit and for-profit organizations do include these four major clusters
and are most often broken into more precise categories. Though the exact
wordings may vary, commonly referenced competencies include: integrity/honesty,
developing others, technical competence, communication, diversity consciousness,
political savvy, strategic/visionary thinking, customer focus, interpersonal skills,
360 business skills, team leadership, results-orientation, change management,
problem-solving, decision-making, influence skills, and conflict management
(Trinka, 2004; Spencer and Spencer, 1993; Employers’ Organization, 2004;
Guggenheimer and Szule, 1998; Breckenridge Consulting Group, 2004; OPM,
1992). More recent leadership competencies revolve around the areas of emotional
intelligence and social and environmental responsibility (Laszlo, 2003; Goleman
et al., 2002; Thompson, 1985). In addition, humor and innovation are included in
some competency models – depending on the culture of the organization
(Guggenheimer and Szule, 1998).
In examining the various models, there only appear to be minor differences in the
non-profit and for-profit leadership competency models. For the non-profits, these tend
to center around new competencies such as governance effectiveness, boardroom
contribution, and service to community (Chait et al., 2004). Some of the for-profit
organizations tend to emphasize financial responsibility and accountability more than
the non-profits. Government organizations may emphasize political savvy more, as
well as physical health/endurance and building coalitions (Horey and Fallesen, 2003;
OPM, 1992). In general, the literature suggests that there is a set of common leadership
competencies that are appropriate for any type of organization, whether it be for-profit,
non-profit, or governmental. However, there is still room for development in the
competency categories, specifically in the realm of organization- or culture-specific
competencies.
A final caveat on leadership competency models has to do with buy-in and
commitment to the model. Most experts recommend that the top executive team be
involved in the creation of the model (Spencer and Spencer, 1993; Hay Group, 2004;
Thach, 2002). In addition, panels or focus groups of high-performing and average
employees should be involved in order to develop metrics around the specific
competencies. Most important is that accountability needs to be built into the
implementation of the model. Whether the model is used as part of a 360-degree
leadership development process, performance management, recruiting, or evaluation,
leaders should be encouraged to use it and be held accountable if they do not. In a large
study conducted by the US federal government on the effectiveness of their supervisor
development program (US Office of Personnel Management, 2001), one of the major
findings was that the leadership competencies were not being emphasized, and that
technical competence on the job was being rewarded instead. This was of concern,
because future leaders were not being selected or developed in a manner that was in
alignment with the goals of the organization, a trend that could lead to negative
repercussions in the future. Therefore, effective development and implementation of
leadership competencies, including an accountability system, is critical for success. To
facilitate this process for organizations, this study seeks to discover what the relevant
competencies are in two broad sectors: the for-profit sector and a combined public and
non-profit sector. The central idea here is that organizations need to know what
competencies to target before they can develop, implement, and evaluate training Trading places
programs designed to enhance those competencies.

Methodology
A structured interview format was utilized for the data collection portion of this
research. A 17-item questionnaire was developed, which included open-ended 361
questions on leadership style, organizational mission and strategy, and factors to drive
performance. In addition, a list of 23 leadership competencies derived from current
leadership literature was included (Hamlin, 2004; Behn, 2004; Fulmer and Goldsmith,
2001; Goleman et al., 2002).
A total of 300 leaders participated in this study: 142 from non-profit and
government organizations and 158 from for-profit industry organizations. In order to
participate, leaders had to work in a small- to medium-sized organization within the
State of California, and have at least three employees but not more than 1,000 at their
site. Small businesses were defined as having less than 100 employees; and
medium-sized businesses ranged from 101 to 1,000 (SMB, 2004). In addition, leaders
had to have a minimum of two employees reporting to them, and have either a
managerial or executive title, such as Director, VP, Manager, or CEO. Potential
interviewees were identified through web searching and networking.
Participants were contacted by telephone or email to request their involvement in
the study. Participation was voluntary. Once participants agreed to be in the study, an
interview date and time was scheduled at their office location. A team of university
student interviewers was trained to conduct the interviews. Interviews averaged 30-45
minutes in length and were conducted one-on-one in a face-to-face setting. The
interviewer recorded notes for all open-ended questions either by writing in pencil on
the questionnaire or typing responses into a laptop. For the 23 leadership
competencies, leaders were handed a deck of 23 cards. Each card had one
competency listed on it. Leaders were asked first to select their top 7 to 10 competencies
that they believed would drive positive results. Leaders were asked to rank order the
top three competencies and then explain why they selected their top three. The
question was phrased as “Why did you pick . . . as number 1, 2, and 3?” Leaders were
also asked to describe the key factors that helped them achieve positive results. Finally,
leaders were asked to rate the importance of leadership to achieving business results
(on a scale of 1 to 10).

Data analysis
The data for this research study were analyzed using two methods. The first involved
running descriptive statistics on the 23 competencies in order to determine differences
in perception between public/non-profit and for-profit leaders. The statistics include
averages, percentages, and rankings for the competencies.
The second method was qualitative in nature and involved a thematic coding
process to analyze the open-ended comments. This included typing all comments into
Microsoft Word and then coding comments according to emerging themes. Themes
were then sorted by code. Finally, the resulting themes were grouped into categories
and a frequency analysis was performed to determine the most prevalent emerging
themes.
LODJ Results and discussion
28,4 The results of the quantitative data are listed first, following by highlights from the
qualitative analysis. This results section begins with an overview of the sample
characteristics and then illustrates the rankings of the 23 competencies. This is
followed by the qualitative results describing the reasons the leaders selected the top
three competencies, as well as factors that help them drive performance and achieve
362 business goals. This section concludes with the results from a short quantitative
question asking the leaders to rate the importance of leadership to achieving business
results.

Sample characteristics
Interview data was gathered for 300 participants. For the quantitative analysis, some
adjustments to the sample had to be made to keep the data in line with the pre-set
organization size specifications. First, nine cases had to be deleted from the sample
because data on organization size was missing. Second, 51 cases were deleted because
data had inadvertently been collected from organizations having more than 1,000
employees. Four cases also had to be removed from the sample because the leaders
interviewed had fewer than two employees reporting to them. After the adjustments,
there were 236 cases left in the sample. Finally, a few corrections had to be made to six
of the 236 cases because of data entry inconsistencies by the interviewers. In these six
cases, interviewers had listed a range of numbers for two of the independent variables:
number of years experience as a leader and number of employees in the organization.
One example of this was an entry into the spreadsheet as “15-20” years of experience
for a particular leader (instead of the more specific “15” years). Another interviewer
indicated that a leader’s organization had “100 þ ” employees in it. To correct the
problem, a decision was made to take the lowest number in the range provided by the
interviewers.
Quantitative data for the 236 participants was analyzed using the SPSS statistical
software package. Descriptive statistics (see Table I) revealed that 54 percent of the
leaders in the sample were from private organizations while 46 percent were from
public and non-profit organizations. These results also showed that the leaders had an
average of 12 years of tenure at their current organization and 12 years of experience in
a managerial role (including previous jobs). On average, 21 employees reported to the
leaders. The average number of employees across all of the organizations in the sample
was 166. The ANOVA procedure was run to determine if there were differences

Frequency Percent

Organization type:
For-profit 128 54
Public/non-profit 108 46
Leader experience: Average Range
Years as a leader 12.3 years 0 – 42 years
Years in the organization 11.7 years 0 – 40 years
Job and organization characteristics:
Table I. No. of employees reporting to leader 21 employees 2 –400 employees
Sample characteristics No. of employees in organization 166 employees 3 – 1,000 employees
between for-profit and public/non-profit leaders in terms of the experience variables or Trading places
the employee variables. No significant differences were found.

Ranking of the 23 leadership competencies

A central purpose of this study was to discover which competencies for-profit vs.
public/non-profit leaders see as key in performing their jobs. Thus, the first step in
analyzing the interview findings was to rank leaders’ judgments as to the most 363
important competencies for driving results (see Table II). The findings revealed a great
deal of similarity in the skills that these leaders viewed as critical. Overall, the top three
competencies chosen by all leaders in the sample were honesty and integrity, being
collaborative, and developing others. Topping the list, the honesty and integrity
dimension was chosen by 84 percent of the leaders overall. When analyzed by sector,
the data showed that the leaders in each sector had the same top three ratings as was
found for the full sample. This degree of similarity among the private and
public/non-profit leaders is quite remarkable.
How do these results mesh with earlier research on competencies? First of all, the
top three competencies in this study fit comfortably within the competencies
commonly referenced in the literature (Breckenridge Consulting Group, 2004;
Employers’ Organization, 2004; Guggenheimer and Szule, 1998; OPM, 1992; Spencer
and Spencer, 1993; Trinka, 2004). Integrity and honesty, teamwork, and developing
others are typically mentioned in discussions of key competencies. Second, the high

For-profit Public/non-profit
Competency/skill All leaders leaders leaders
% % Rank % Rank

Honesty and integrity 84.3 83.6 1 85.2 1

Being collaborative (team player) 66.1 63.3 2 69.4 2
Developing others 58.9 57.8 3 60.2 3
Adaptability 54.2 51.6 5 57.4 4
Self-confidence 53.0 56.3 4 49.1 7
Positive outlook 50.4 47.7 7 53.7 6
Conflict management 47.9 42.2 9 54.6 5
Customer service 47.5 51.6 5 42.6 9
Strategic thinker 45.8 45.3 8 46.3 8
Time management 43.2 48.4 6 37.0 10
Self-knowledge of strengths and weaknesses 42.8 48.4 6 36.1 11
Emotional self-control 36.9 39.1 10 34.3 12
Being inspirational 35.6 29.7 14 42.6 9
Employee performance management 33.1 37.5 11 27.8 14
Initiative and achievement orientation 30.5 31.3 13 29.6 13
Being visionary 29.7 32.0 12 26.9 15
Influence skills 26.7 28.1 16 25.0 16
Stress management 26.3 25.0 18 27.8 14
Empathy to others 24.6 25.8 17 23.1 17
Political and organizational awareness 22.9 18.8 19 27.8 14 Table II.
Marketing and sales 19.1 28.9 15 7.4 20 Ranking of 23 leadership
Being a change agent 17.4 18.8 19 15.7 18 competencies/skills by
Accounting and finance 14.0 16.4 20 11.1 19 sector
LODJ level of importance assigned to developing others supports the public sector findings of
28,4 Trinka (2004) and the private sector findings of the Corporate Leadership Council
(2003) related to this key competency. Third, this study’s top three competencies can all
be categorized within Bennis’s (1987) interpersonal skills cluster, one of four
competency clusters that he argued was mandatory for effective leadership. It is
interesting to note that Bennis’s other three key clusters were not perceived to be as
364 critical for our study’s managers as were interpersonal skills. In fact, self-knowledge
was selected by less than half of our respondents, being visionary was selected by less
than a third of our respondents, and technical skills (marketing, sales, accounting, and
finance) landed at the bottom of the list overall. These findings may suggest that
leaders in small- to medium-sized organizations have different priorities than those
leaders in large organizations who were the focus of Bennis’s work. Alternatively, it
may be that times have changed and that the competencies that Bennis prescribed in
1987 require some revising.
Differences between the sectors were also discovered on some competencies. These
interesting differences of opinion are illustrated in Figure 1. Although the differences
are not large, a higher percentage (10 percent or more) of for-profit leaders selected the
time management, self-knowledge, and marketing and sales competencies compared to
the public sector leaders. On the other hand, more public/non-profit leaders (10 percent
or more) selected conflict management and being inspirational compared to their
private sector counterparts. One would expect a difference between the sectors on the
marketing/sales competency, as this skill set is typically associated with businesses,
the profit motive, and the growth of revenues (Wilson, 1989). However, the differences
found for time management and self-knowledge are harder to explain. At the surface,
these competencies would seem to be critical for anyone in a leadership role. The
differences in time management might be driven by the different reward systems
characteristic of public vs. private sectors. Since human resources systems in public
organizations tend to be merit-based (Ring and Perry, 1985), there may be slightly less
incentive to be concerned with time management in a public organization than in a

Figure 1.
Differences in
competency/skill rankings
performance-based, private organization. The need to be readily available and Trading places
accountable to many different constituencies that is a common responsibility in public
service (Ring and Perry, 1985; Self, 1977) may also make time management a harder
and less vital goal to achieve in the public/non-profit sector. Indeed, as Lau et al. (1980)
pointed out, public sectors managers have to spend more time on crisis management
than private sectors managers do. Using this perspective, it is easy to see that the
increased need to “put out fires” can throw a wrench in a public leader’s time 365
management plans.
The differences found between the sectors for managing conflict and being
inspirational would seem to be universal requirements for effective leadership. However,
the differences between the sectors are supportive of the literature, to some degree, and
provide good explanations for the greater significance of these competencies for
public/non-profit managers. Because public/non-profit leaders are focused on achieving
social purposes (Moore, 2000), it is to be expected that conflict management skills might
be more relevant as these leaders deal with the needs and demands of multiple, complex
constituencies (Behn, 1998). As far as being inspirational, this competency may be more
important for the public/non-profit sector because:
(1) the social purpose of these organizations is more salient; and
(2) performance-based incentives are minimal or nonexistent.

Perhaps a leader’s ability to be inspirational is also more important for

public/non-profit leaders because:
(1) their employees are probably earning less than they would in a private sector
business;
(2) they must deliver quality service/products on limited budgets; and
(3) in the case of non-profits, they must encourage high performance from unpaid
volunteers.

Inspirational leadership may indeed be a critical job requirement to motivate people

within these contexts. Thus, to some extent, these differences between the two sectors
are a preliminary indication that organization type might influence the types of
leadership competencies that are needed for driving results.
The sample was also analyzed to determine if any competency-related differences
might exist between small and medium-sized organizations. Business size is usually
measured by the number of employees (Miesenbock, 1988). For our study, small
organizations were categorized as having 100 employees or less. Mid-sized
organizations were those having 101 to 1,000 employees.
Table III shows the results of this comparative analysis. Except for the time
management, emotional self-control, and marketing/sales competencies, a higher
percentage of leaders of medium-sized organizations selected each competency than
did leaders of small organizations. Since the complexity of leadership increases as the
number of employees increases, it makes sense that leaders in medium-sized
organizations would assign greater significance to the competencies. In addition,
substantially more leaders (10 percent or more) from medium-sized organizations
selected influence skills, empathy to others, and being a change agent compared to
leaders of small organizations. Here, too, the effects of having more employees to
LODJ
Medium org
28,4 Small org leaders leaders
(n ¼ 148) (n ¼ 88)
Competency/skill % % Rank

Honesty and integrity 81.8 88.6 1

366 Being collaborative (team player) 65.5 67.0 2
Developing others 55.4 64.8 3
Adaptability 53.4 55.7 5
Self-confidence 50.0 58.0 4
Positive outlook 50.0 51.1 6
Conflict management 47.3 48.9 7
Customer service 47.3 47.7 8
Strategic thinker 44.6 47.7 8
Time management 44.6 40.9 10
Self-knowledge of strengths and weaknesses 42.6 43.2 9
Emotional self-control 38.5 34.1 13
Being inspirational 34.5 37.5 11
Employee performance management 30.4 37.5 11
Initiative and achievement orientation 29.1 33.0 14
Being visionary 27.7 33.0 14
Stress management 25.0 28.4 15
Marketing and sales 22.3 13.6 19
Political and organizational awareness 21.6 25.0 16
Table III. Influence skills 20.9 36.4 12
Ranking of 23 leadership Empathy to others 17.6 36.4 12
competencies/skills by Being a change agent 13.5 23.9 17
organization size Accounting and finance 12.8 15.9 18

manage is having an impact. These three competencies can all be categorized as

“people skills” which clearly become more necessary as the number of people in an
organization increases.

Reasons leaders selected the top three competencies

To enhance our understanding of the quantitative results, qualitative analyses were
performed to explore why leaders selected the highest ranked competencies. The
qualitative responses were sorted according to the top three competencies listed in the
quantitative data, with honesty and integrity in first place, being collaborative in
second place, and developing others in third place. The leaders’ comments provided
insight into the significance they placed on their top-rated competencies.
In describing their reasoning for choosing the top-rated competency (honesty and
integrity), leaders in both sectors provided a similar rationale. The list below illustrates
some of the comments regarding honesty and integrity. Both types of leaders admit
that this competency is the foundation for leadership and that leaders who do not
exhibit honesty and integrity will not be followed:
(1) For-profit (83.6 percent):
.
Honesty and integrity because it is the basis for everything. If you don’t have
that, nobody will follow you.
 .
Honesty and integrity: If people cannot trust you, they won’t believe you. If Trading places
they don’t believe you, they won’t follow you. If they won’t follow you, you
will be virtually ineffective and quickly replaced.
.
Honesty and integrity because without them they won’t be together working
towards a common goal.
.
Honesty and integrity because without it there will never be a good business
environment or dependable staff.
367
.
I picked honesty and integrity because without it I don’t think you could
effectively lead at all, or you’d be leading for the wrong reasons.
(2) Public/non-profit (85.2 percent):
.
Honesty and integrity because if you are not honest, you would not have
credibility and no one will follow you.
.
Honesty and integrity (trust) – motives have to be beyond question. People
have to believe you are making an honest outcome/decision. People have to
trust you. You don’t want to work for someone you do not trust.
. Honesty and integrity: You cannot be a good leader if you are not honest to
yourself and others. If you lack integrity you cannot gain the respect and
trust that is needed to be a great leader.
.
Honest and Integrity, because if subordinates can’t and don’t trust their
leader, the mission is in trouble right off the bat.

Regarding the second top-rated competency of collaboration (teamwork), the list below
shows some of the quotations regarding the importance of this area. Again, leaders
from both sectors describe very similar reasons for identifying this competency,
stating the value of encouraging teamwork among employees to achieve goals and
build motivation:
(1) For-profit (63.3 percent):
.
Collaborative because it makes the employees feel like everybody is an equal
member of the team (nobody including the leader is above the team). Builds
trust and motivates.
.
Collaborative because people have to be able to work together otherwise the
goals will never be achieved.
.
Collaborative because it’s necessary in order to work with others and get
anywhere.
.
I picked collaborative as no. 2 because I always felt that workers work
harder for a leader that they like than for a leader that they dislike. A leader
that is a team player will bring everyone around them together and in turn
will increase team spirit and output.
(2) Public/non-profit (69.4 percent):
.
Collaborative (team player) as no. 2 because employees feel that everyone is
contributing towards the success of the company.
.
Collaborative (team player) because nothing gets done unless it is done as a
team.
LODJ .
Collaborative: Every company is a team. Whether you work for a small
28,4 company or a large company, team skills are essential. A good leader will
quickly earn the respect and trust of his/her team. A good leader will work
with the team in a positive and motivating fashion. A leader who lacks the
skill to work with others is bound to fail.
.
Collaborative because it builds better teams and you can get more done.
368 .
Collaborative – must be able to work with others’ ideas and points of view.
. Collaborative (team player) because without followers, there is nobody to
lead.
.
Collaborative because everyone needs to do their part in order for a business
to succeed.

Regarding the third top-rated competency – developing others – leaders in both

for-profit and public/non-profit agencies recognized the importance of this for the
long-term sustainability of the organization. Respondents from both sectors described
how developing others builds strong leaders to keep the business going, and both
mentioned the benefits of training and development. Where there was a slight
difference in the qualitative explanation was with the for-profit leaders who focused
more on developing others to achieve business growth, boost productivity, and meet
customer needs. The non-profit leaders mentioned the employee-relations types of
benefits that accrue from developing others:
(1) For-profit (57.8 percent):
.
Developing others – this is both selfish and altruistic at the same time. If you
don’t develop others, you limit your own, and the organization’s, ability to
grow. By helping to develop others, you create an environment of trust,
success, recognition and possibility. This ultimately leads to greater
commitment and productivity on the part of others.
.
Another key to leadership is identifying the best of the best and developing
them to assume new roles, and eventually yours. A group of high performing
employees with the same mission will take a business to the top.
.
Developing others because growth is necessary to achieve organization
development – particularly in the long term.
.
Developing others because well-trained employees will get the customer the
right products for their specific needs.
(2) Public/non-profit (60.2 percent):
.
Developing others because it is what builds a strong leader and keeps our
business going.
.
Developing others to create a give and take relationship with fellow
employees.
.
Developing others is a very big concern for this organization. It is a good
way of passing along knowledge.
.
Developing others: An integral part of creating new leaders.
 .
Developing others – constant improvement. Reduces complacency and Trading places
turnovers.
.
Developing others – I am a big fan of giving employees the training and
resources for them to succeed.

Factors to drive performance and achieve business goals

Another important qualitative question in this study was designed to explore the issue 369
of leadership style and its impact on performance. During the interview, leaders were
asked “What factors, in your opinion, help you drive performance (revenues) and
achieve your business goals?” The responses were thematically coded and a decision
rule of at least six responses was applied to the data. Table IV illustrates the results for
the top five factors from each sector.
Differences in opinion between for-profit and public/non-profit leaders were
revealed in this analysis. The for-profit leaders identified customer service as the most
important factor driving business results, with people – described as a focus on hiring,
developing, motivating, and retaining the right employees – as the second major
factor. The public/non-profit leaders’ responses switched these two factors, identifying
people as the most important factor and customer service as a close second. This
suggested an important distinction in the priority mind-set of these two types of
leaders. For-profit leaders described their focus on great customer service as the driver
of revenues and profit, as illustrated in the quotation below:
If we provide great customer service, best of class quality, a friendly demeanor, continuous
supply and competitive pricing, our customers will reward us with repeat business, increased
business and long term profits (for-profit leader).
Public/non-profit leaders, on the other hand, recognized customer service as important,
but saw it more as a part of their role as community-service providers. Their comments
revealed that they see their employees as the starting point for good customer service a
reality:
Since our business is service-oriented, our business goals are more about service to the
community, rather than profits (oublic/non-profit leader).

Well-trained employees who are customer-service oriented are a critical factor

(public/non-profit leader).

No. of Public/non-profit No. of

For-profit factors responses factors responses

1. Customer service 45 1. People 30

2. People 38 2. Customer service 27
3. Adv/mkt/sales 22 3. Funding 19
4. Quality 17 4. Goals 13 Table IV.
5. NA – no factors with six or 5. Regulations 9 Factors driving business
more responses performance
LODJ The emphasis on the profit motive with the for-profit leaders was further emphasized
by the next two strongest themes of marketing/sales and a focus on quality. These are
28,4 traditional areas of emphasis to draw in customers and achieve competitive advantage.
However, the public/non-profit leaders identified very different factors for driving
performance, with their next strongest themes being funding, goals, and regulations.
These themes describe the very different organizational model under which
370 public/non-profit leaders must operate. In many cases, they are reliant upon taxes,
grants, donations, fundraisers, and other sources to help support their organizations. In
order to obtain this supporting revenue, they are required to have explicit goals and are
governed by specific regulations. Some of the quotations below describe this situation:
Dependent on funding formula – tax-based, state/fed funding. Politics in the local gov’t.
Ultimately funded by public money that feeds into politics (public/non-profit leader).
Revenue goals are not applicable. Agency goals are set by the management and dispersed
throughout the department. It is then up to each Officer to work towards meeting that goal. It
is management’s responsibility to ensure that each Officer is aware of the goals and that each
Officer is working towards the goal (public/non-profit leader).
There are lots of laws and regulations in our line of work. We’re not as oriented with revenue
as working within guidelines to get the job done right (public/non-profit leader).
Finally, for-profit leaders did not agree on a fifth critical factor, as their qualitative
responses in this category could not be grouped into a theme containing at least 6
similar answers. However, the strength of agreement on the top two factors of
customer service and people are evidence of how critical they believe these two factors
are to driving performance.

The importance of leadership to achieving results

A final question which was relevant to this research was a quantitative rating on the
importance of leadership to achieving results. Leaders were asked “On a scale of 1 to
10, with 1 being very low and 10 being very high, how much do you believe leadership
skills are important to business results? “ On this survey item, the answers were very
similar. The average response for for-profit leaders was 8.9 and the average response
for public/non-profit leaders was 8.7, a negligible difference. The results suggested that
both types of leaders view leadership skills as very important to achieving results,
regardless of the organizational setting.

Implications
The findings from this study suggest substantial similarity among the most highly
rated leadership competencies required for effective leadership in the for-profit and
public/non-profit sectors, signifying the universality of these skills regardless of
organization type. Yet, the results also reveal that some differences do exist among
leaders in the two sectors, and these disparities might merit further attention. For
example, what might explain the differences between the for-profit and
public/non-profit groups in terms of time management and self-knowledge? Perhaps
these skills have been emphasized more in the for-profit sector and in the typical
university’s business school curriculum. Similarly, what explains the differences
between the sectors on the conflict management and being inspirational competencies?
Does the context of public/non-profit leadership demand these skills to a greater
degree? Future studies should delve deeper into these preliminary findings to Trading places
determine if they indicate significant differences between the sectors. If they do,
leadership development programs can be structured to target the relevant
competencies for the particular sector.
The qualitative findings showed that both sectors’ leaders identified customer
service and their employees as major factors in driving business performance.
However, when delving into their descriptive comments about why these factors were 371
important, it was discovered that for-profit leaders emphasized customer service as a
means to achieve revenues and profit, and therefore wanted to ensure that their
employees were trained to deliver exceptional customer service. The public/non-profit
leaders, on the other hand, switched this ranking to focus on employees first as the
foundation for excellent customer service. This difference in mental mindset may
represent an important distinction that can inform the development of sector-specific
leadership training programs. It might also be interesting fodder for future research
into the relative importance of customer service vs. human resources practices as the
primary drivers of business performance.
Finally, leaders from both sectors assigned similarly high rankings to the
importance of leadership skills for achieving business results. This result supports the
premise that leadership skills are important regardless of the type of organization
being managed. The big question is, which skills and competencies are most important
for each sector? While this study begins to answer that question, much more research
needs to be done to ascertain the presence and degree of significant, sector-based
differences.

Limitations
A variety of limitations for this study resulted from data-related issues. Interviewers
did not always gather data in the appropriate format. As discussed in the methodology
section, a few researchers entered a range of numbers for some of the variables instead
of a specific figure (e.g. “15-20” years of experience as a leader or “100 þ ” employees in
the organization). Our solution was to use the lowest number in the range in each case,
but some data integrity was obviously lost in the process. That said, this affected only
about six cases in the sample.
A larger hit to the sample size was incurred by interviewers who inadvertently
selected leaders at large organizations (greater than 1,000 employees). In some cases,
the interviewers simply failed to choose an appropriately small or medium-sized
organization as specified by the researchers. In other cases, the interviewers may have
inaccurately categorized the organization’s size. For example, interviewers who
interviewed leaders at a local post office branch listed the total employee population of
the US Postal Service (800,000 plus workers) instead of the total number of employees
at the branch. The result of these errors was that 51 cases of quantitative data had to be
dropped from the data set. Qualitative data included all managers in the original data
set as the qualitative comments were separated from the quantitative results before
this problem came to light.
Another limitation of the study arises from potential consistency problems in the
research methodology. It is possible that the interviews were not performed
consistently across subjects due to the inexperience of university students in
conducting interviews specifically and research in general. Finally, it would have been
LODJ interesting if the interviewers had captured additional information concerning the
28,4 participants. Such data could include gender, specific job title (to determine leadership
level), types of leadership training available, type of organizational structure (e.g. team
based, traditional, decentralized, etc.), and overall performance of the organization.

372 Future research

Although this study was exploratory in nature, it provides clues that further analysis
into this topic is warranted. Future research can start with a more rigorous analysis of
the differences between public/non-profit and private leadership. To tease out the
subtleties of the competency-related differences, scaled surveys can be used instead of
the simple “yes versus no” approach used here. Subsequent studies might also
investigate any differences in competencies between small, medium, and large
organizations. It is quite possible that the importance of the various competencies may
change as the number of employees expands beyond the 1,000 employee maximum
that was used in this study. Another interesting future study could examine the
differences in competencies among private, public, and non-profit leaders as three
separate groups. Since our study combined the responses from public and non-profit
leaders into one category, we were unable to determine if there were differences
between these groups or between these groups and the private sector leaders. Finally,
as stated in the Limitations section, it would be useful to gather more specific
information on the participants regarding gender, leadership training, and other
distinguishing characteristics.

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About the authors

Elizabeth Thach is a Professor of Management in the School of Business & Economics at
Sonoma State University in Rohnert Park, California, USA. She is the corresponding author and
can be contacted at: Liz.Thach@sonoma.edu
Karen J. Thompson is an Assistant Professor of Management in the School of Business &
Economics at Sonoma State University in Rohnert Park, California, USA.

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