Turnover at the Top: Investigating Performance-Turnover Sensitivity among Nonprofit Organizations

Abstract

Research has confirmed private firm performance as a predictor of executive turnover, but whether this relationship holds in other organizational contexts—especially those operating without a profit-distribution requirement—is not known. For nonprofit organizations, performance monitoring and governance largely occur behind closed doors under the leadership of a volunteer board of directors. Nonprofits are commonly criticized as inefficient, even ineffective, and the accountability of boards and executives for organizational performance has not been sufficiently investigated. This article engages a unique dataset of 998 U.S.-based nonprofits serving missions related to the arts, health, and human services, and uses a multiple-spell discrete-time hazard model to evaluate nonprofit financial performance and the likelihood of executive turnover. The findings provide preliminary support that tenure in the executive office is sensitive to nonprofit financial performance, and in doing so, they raise new insights about the accountability of nonprofit executives.