Nonprofit Organizations, and Human Resources Management

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Nonprofit Organizations, and Human Resources Management

Staffing decisions are among the most important decisions that nonprofit organizations make. Just as businesses and organizations of all sizes and areas of operation rely on their personnel to execute their strategies and advance their goals, so too do nonprofit groups. It follows, then, that nonprofit organizations need to attend to the same tasks as profit-seeking companies do when they turn to the challenges of establishing and maintaining a solid work force. To accomplish this, nonprofit organizations have to address the following six personnel issues, as delineated in the Small Business Administration publication Human Resources Management:

Assessing personnel needs
Recruiting personnel
Screening personnel
Selecting and hiring personnel
Orienting new employees to the organization
Deciding compensation issues

"An effective non-profit manager must try to get more out of the people he or she has," wrote Peter F. Drucker in Managing the Non-Profit Organization. "The yield from the human resource really determines the organization's performance. And that's decided by the basic people decisions: whom we hire and whom we fire; where we place people, and whom we promote. The quality of these human decisions largely determines whether the organization is being run seriously, whether its mission, its values, and its objectives are real and meaningful to people rather than just public relations and rhetoric."

ASSESSING ORGANIZATION NEEDS

A key component of any endeavor to build a quality core of personnel is an honest assessment of current and future internal needs and external influences. Leaders and managers of nonprofit organizations should study workload history, trends in the larger philanthropic community, pertinent changes in the environment in which they operate (layoffs, plant closings, introduction of a new organization with a similar mission, legislative developments, etc.), personnel demands associated with current and planned initiatives, operating budget and costs, and the quality and quantity of the area worker pool, both for volunteer and staff positions. Moreover, all of these factors need to be studied within the framework of the organization's overarching mission statement. As many nonprofit leaders have noted, adherence to other general business principles (sound fiscal management, retention of good employees through good compensation packages, etc.) is of little solace if the organization loses sight of its mission—it's reason for being—in the process.

Writing in Human Resources Management, Gary Roberts, Carlotta Roberts, and Gary Seldon noted several fundamental business principles concerning assessment of personnel needs that apply to nonprofits as well. These principles include:

Fill positions with people who are willing and able to take on the job.
Providing accurate and realistic job and skill specifications for each position helps ensure that it will be filled by someone capable of handling the responsibilities associated with that position.
Written job descriptions are essential to communicating job expectations.
Employees who are chosen because they are the best available candidates are far more likely to have a positive impact than those who are chosen on the basis of friendship or expediency.
Performance appraisals, when coupled with specific job expectations, help boost performance.

"The process of selecting a competent person for each position is best accomplished through a systematic definition of the requirements for each job, including the skills, knowledge and other qualifications that employees must possess to perform each task," the authors concluded. "To guarantee that personnel needs are adequately specified, 1) conduct a job analysis, 2) develop a written job description, and 3) prepare a job specification."

RECRUITING, SCREENING, AND SELECTING ORGANIZATION WORK FORCE

Recruiting

For many nonprofit organizations, publicizing its very existence is the most important step that it can take in its efforts to recruit staff and volunteers alike. This is especially true if one wishes to encourage volunteers to become involved. Volunteers are the life-blood of countless nonprofit organizations, for they attend to the basic tasks that need performing, from paperwork to transportation of goods and/or services to maintenance. Writing in Quality Management in the Nonprofit World, Larry W. Kennedy noted that "they supply valuable human resources which, when properly engaged, can be worth tens of thousands of dollars in conserved personnel costs to even the smallest organizations."

Nonprofit groups rely on two basic avenues to publicize their work and their staffing needs: local media (newspapers, newsletters, radio advertising, billboards, etc.) and other community organizations (municipal governments, churches, civic groups, other nonprofit organizations, etc.) Many nonprofit groups have found that contact with some community organizations, particularly churches and civic groups, can be particularly rewarding since these organizations already have members that may be predisposed toward lending a hand.

Screening and Selection

The interviewing process is another essential component of successful staffing for nonprofit groups. This holds true for volunteers as well as for officers, directors, and paid staff. Indeed, Larry W. Kennedy remarked in his book that "volunteers should be recruited and interviewed systematically the same way you would recruit paid staff. An orderly and professional approach to volunteer management will pay off handsomely for your organization. What you do in the recruitment phase of your work will set the standard for volunteer performance. If you are disciplined and well organized, you will often attract more qualified volunteers."

Managers of nonprofit organizations should make sure that they do the following when engaged in the process of staffing, screening and selection:

Recognize that all personnel, whether they are heading up your organization's annual fundraising drive or lending a hand for a few hours every other Saturday, have an impact on the group's performance. Certainly, some positions are more important than others but countless nonprofit managers can attest to the fact that an under-performing, unethical, or unpleasant individual can have an enormously negative impact on organization morale and/or organization reputation in the community. This can be true of the occasional volunteer as well as the full-time staff member.
Use an application form that covers all pertinent areas of the applicant's background.
Ensure that your screening process provides information about an individual's skills, attitudes, and knowledge.
Try to determine if the applicant or would-be volunteer is interested in the organization for legitimate reasons (professional development and/or advancement, genuine interest in your group's mission) or primarily for reasons that may not advance your organization's cause (loneliness, corporate burnout, etc.).
Objectively evaluate prospective employees and volunteers based on criteria established in the organization's job specifications.
Be realistic in putting together your volunteer work force. "Managers cause most of the problems with volunteers by making unreasonable assumptions about their intentions and capabilities," wrote Kennedy. An organization that sets the bar too high in its expectations of volunteers (in terms of services provided, hours volunteered, etc.) may find itself with a severe shortage of this potentially valuable resource.
Recognizing that would-be volunteers and employees bring both assets and negative attributes to your organization, nonprofit groups should be flexible in accommodating those strengths and weaknesses. "If you want people to perform in an organization, you have to use their strengths—not emphasize their weaknesses," said Drucker.

Organizations that pay attention to these guidelines will be far more likely to enjoy positive and lasting relationships with their volunteers and staff than those who fill their human resource needs in haphazard fashion. As Kennedy said, "the time to begin evaluating the probable reliability of human resources is prior to their insertion into your internal structure."

ORIENTING STAFF AND VOLUNTEERS TO THE ORGANIZATION

Training is a vital component of successful nonprofit organization management. But many nonprofit managers fail to recognize that training initiatives should be built for all members of the organization, not just those who are salaried employees. "Specialized training should be designed for every person in the organization, including board members and volunteers," contended Kennedy. "The principles of quality management should be reinforced in each phase of training, with generous opportunities given to the trainees to talk about their questions and concerns…. If we select and train people with well-established and consistently implemented guidelines, we greatly increase the potential for team building. Beyond that, a common objective, a commitment to quality, a sincere concern for the team members, and a dedicated leader can cause wonderful things to happen. When those factors are not present, things can occur that are not so pleasant…. Volunteers who are shoddily intruded into an organization's processes or who are not well managed can create chaotic inconsistency in services. The additional, time, energy, and money needed to clean up well-intentioned but off-target volunteer efforts can quickly offset any gains provided by their services."

Poor Performers

Many nonprofit organizations find that at one point or another, they must address poor performance by a member of the organization. When that person is a paid member of the staff, dealing with the issue is in many respects no different than it would be in the for-profit world. Organizations of all types have a right to assume certain standards of performance from paid employees, and if that standard is not met, they should by all means take the steps necessary to ensure that they receive the necessary level of performance from that position, even if that means firing a poor worker.

The situation becomes more complex when the person is a volunteer, however. The volunteer worker is an essential element of many nonprofit organizations, and the primary characteristics of volunteerism—selfless service—make it difficult to remove poor performers. In addition, insensitive handling of one volunteer can have a negative impact on other volunteers upon which your organization relies. Nonetheless, Kennedy stated that "volunteers should be held accountable just as though they were being paid top dollar to work. This does not mean that you can be careless about people's feelings. Even for-profit managers have learned that managing and supervising requires certain social graces and sensitivity to every individual. However, the reluctance of nonprofit managers to hold volunteers accountable to reasonable levels of performance or to terminate bad volunteer relationships can be their downfall."

Drucker noted that most nonprofits will, sooner or later, have to deal with people "who volunteer because they are profoundly lonely. When it works, these volunteers can do a great deal for the organization—and the organization, by giving them a community, gives even more back to them. But sometimes these people for psychological or emotional reasons simply cannot work with other people; they are noisy, intrusive, abrasive, rude. Non-profit executives have to face up to that reality." If all else fails, such disruptive volunteers should be asked to leave. Otherwise, other members of the organization, including the executive, will find that their capacity to contribute is diminished.

Drucker agreed that dismissing an under-performing or otherwise undesirable volunteer can be a difficult task. "The non-profit executive is always inclined to be reluctant to let a non-producer go. You feel he or she is a comrade-in-arms and make all kinds of excuses," he granted. He contended that nonprofit managers should adhere to a basic guideline in such instances: "If they try, they deserve another chance. "If they don't try, make sure they leave…. An effective non-profit executive owes it to the organization to have a competent staff wherever performance is needed. To allow non-performers to stay on means letting down both the organization and the cause."

COMPENSATING THE ORGANIZATION'S EMPLOYEES AND VOLUNTEERS

Tangible Benefits

As Ted Nicholas noted in The Complete Guide to Nonprofit Corporations, nonprofit corporations may establish fringe benefits programs for their employees. People that can be covered under these programs include not only staff personnel, but also directors and officers. "The benefits," wrote Nicholas, "can be as attractive as those provided by for-profit business corporations. In addition, the benefits can be far more economical for the corporation and beneficial to the employees than any program that could be offered by unincorporated organizations. The nonprofit corporation can establish an employee pension and retirement income plan. It can provide for sick pay and vacation pay. It may arrange for group life, accident and health insurance coverage for its officers and employees. It can elect to cover its employees' personal medical expenses that are not covered by the group insurance plans, provided that the corporation can pay all or part of the cost of the various employee benefits it sets up. It can require some contribution from the employees covered by the fringes."

Bruce Hopkins observed in his Legal Guide to Starting and Managing a Nonprofit Organization that "there is a tendency in our society to expect employees of nonprofit organizations to work for levels and types of compensation that are less than those paid to employees of for-profit organizations. Somehow, the nonprofit characteristics of the organization become transferred to the 'nonprofit' employee." Hopkins goes on to note that while this perception may indeed be a reality because of the budgetary constraints under which many nonprofit organizations operate, in other instances employees do not feel entitled to compensation levels that are offered to employees of for-profit businesses. In fact, some nonprofit groups feel no obligation whatsoever to provide comparable levels of compensation in terms of salary, benefits, etc., relying instead on the altruistic leanings of those who become involved. Organizations that operate under these assumptions are short sighted and run the risk of losing out on many talented people. Indeed, Hopkins pointed out that "many nonprofit organizations, particularly the larger ones (universities, hospitals, major charities, and trade associations), require sophisticated and talented employees. Because these individuals are not likely to want to be 'nonprofit' employees, nonprofit and for-profit organizations compete for the same pool of talented persons. This competition extends not only to salaries but also to benefits and retirement programs."

Experts indicate that although the compensation packages that are offered by nonprofit organizations are constrained by the so-called private inurement doctrine, which holds that the profits realized by a nonprofit organization can not be passed along to private individuals (as dividends are passed along to shareholders in a for-profit enterprise), they can still offer attractive compensation packages to employees provided that they are judged to be "reasonable." When weighing whether it considers compensation to be reasonable, the Internal Revenue Service studies whether compensation arrangements exceed a certain percentage of the organization's gross revenues. Excessive compensation can be penalized by imposition of additional taxes and fines, but the most damage to organizations who do this can often be found in the realm of reputation; few allegations are more damaging to a nonprofit organization's community standing than the charge that it is bestowing excessive compensation (in the form of salary, country club memberships, etc.) to top executives or others.

Intangible Benefits

Successful managers of nonprofit organizations recognize that the people who compose their organizations' work force—volunteers, employees, officers, and directors alike—are often participating in the group at least in part for altruistic reasons. Indeed, Drucker noted that "although successful business executives have learned that workers are not entirely motivated by paychecks or promotions—they need more—the need is even greater in non-profit institutions. Even paid staff in these organizations need achievement, the satisfaction of service, or they become alienated and even hostile. After all, what's the point of working in a non-profit institution if one doesn't make a clear contribution?"

Leaders of nonprofit organizations, then, need to always be on the look out for ways in which they can show their paid staff, their volunteers, and their leadership how their involvement in the organization is making a difference, whether the group is involved with ministering to the economically disadvantaged or devoted to protecting a beloved natural resource. As Father Leo Bartel, Vicar for Social Ministry of the Catholic Diocese of Rockford, Illinois, told Drucker, "We give [volunteers] opportunities to deepen in themselves and in each other the sense of how important the things are that they are doing."

BIBLIOGRAPHY

Bray, Ilona M. Effective Fundraising For Nonprofits: Real World Strategies That Work. Nolo, March 2005.

Drucker, Peter F. Managing the Non-profit Organization: Principles and Practices. Reprint Edition. Collins, 1992.

Hartsook, Robert F. "Predictions for 1997." Fund Raising Management. January 1997.

Hopkins, Bruce R. A Legal Guide to Starting and Managing a Nonprofit Organization. Second Edition. John Wiley & Sons, 1993.

Kennedy, Larry W. Quality Management in the Nonprofit World: Combining Compassion and Performance to Meet Client Needs and Improve Finances. Jossey-Bass, 1991.

Mancuso, Anthony. How to Form a Nonprofit Corporation. Seventh Edition. Nolo, July 2005.

Nicholas, Ted. The Complete Guide to Nonprofit Corporations. Enterprise Dearborn, 1993.

Pakroo, Peri. Starting and Building a Nonprofit: A Practical Guide. Nolo, April 2005.

Roberts, Gary, Gary Seldon, and Carlotta Roberts. Human Resources Management. Small Business Administration, n.d.

Hillstrom, Northern Lights