Your Greatest Asset

The unique value of a nonprofit organization lies in its people. Nonprofit executives and employees bring to the table the combined power of a generous spirit and an unflagging commitment to the cause. The paradox arises in that in order to maximize the effectiveness of this nonprofit spirit, you need to “run it like a business.” The nonprofit executive has much to learn from corporate HR models. So whether you hire an internal HR person, use external consultant, or do it yourself, you cannot ignore the need to hire, train, and maintain high- performance people. In some ways, “the people question” is more complicated in the nonprofit world because of the role of mission and generosity of spirit. These add extra layers of complexity to the people question. In this resource we’ll review some basic principles that underlie good HR practices, but especially as they pertain to nonprofits.

Organizational Chart

As you think about staffing your organization, think about roles. Your board of directors should be involved in strategy and oversight, your program people should be creating and executing your program and your development staff should be fundraising. Unfortunately, the Executive Director is often caught doing all of these things, alone! A simple organizational chart will help everyone to stay in their lane and keep a clear division of labor.

Here’s where we can learn from the for-profit world. The great Capitalist manifesto – The Wealth of Nations, by Adam Smith, begins with the concept of “division of labor.” Productivity is multiplied in an amazing fashion when a job is divided into component parts and assigned to different workers who can specialize in their own area. The same is true of running a nonprofit. Efficiency and effectiveness in a nonprofit organization comes from proper division of labor. If the Board of Directors is micromanaging the Executive Director, and the Executive Director is involved in the minutia of programming, the organization will suffer. This is where job descriptions and organizational charts come in handy.

To put it another way, see your org chart as containing three horizontal bands. Starting with the top, the Board of Directors is like the will of the organization, guiding it’s movements with very high level strategic decisions. The next layer, the executive layer is like the brains of the organization, giving shape and substance to the will of the board, and finally, the staff layer is where the “hands and feet” of the organization carry out the will of the Board in the plans of the executive.

If you don’t have job descriptions, have your employees write their own. Compare their descriptions to what is going on in your organization. Then, fit the descriptions into the simplified organizational chart on the right, which is the outline for most nonprofit structures. Job descriptions should be appropriate to each category.

In the nonprofit world we need to understand the value of the division of labor. That generous spirit we talked about can really work against us otherwise. The nonprofit culture is going to tempt many people to say “I’m a servant,” and “I will do whatever is needed.”

That’s okay as a cultural mantra, but when “I’m here to serve” becomes an excuse to do other peoples’ jobs or to get your hands in everything that is happening – this mindset will result in a significant loss in efficiency.

Hiring

The process of hiring in a nonprofit organization is as grueling and time-consuming as a regular for-profit business – or at least it should be. Finding the person that will fit into your organization’s culture and also meet the skill requirements for the job is very difficult. All enterprises face the culture/skills question – but with nonprofits, there is the added dimension of the question of mission. Will your new hire embrace the mission of your organization? This is important, because nonprofits generally pay less, but the reduced scale salary is made up for by the intangible benefits that go with fulfilling your particular mission.

When all of these factors are put together, it makes hiring much more complex than many people realize. Consider this brief case study:

The Seventh Street Soup Kitchen provides free meals to the homeless, children, and the elderly. Most of the people who come into the shelter are grown men, but many of the workers and volunteers are women. The volume has nearly doubled in the previous year, and coordination of staff and clients has gotten extremely complicated. The Kitchen has decided to hire a new General Manager for a full-time, paid position. They have narrowed down the selection to two candidates:

• JoAnne is a retired lawyer who has volunteered at the front desk of a nursing home for the past 5 years. Her referrals are all excellent, portraying JoAnne as very kind and always putting the residents of the nursing home as the top priority. In her interview, JoAnne said she wants to work at the Soup Kitchen because she “has a heart” for downtrodden and wants to help the vulnerable people of the community.
• Kent recently managed a very successful restaurant in downtown Chicago. His referrals are excellent, but they portray Kent as a tough boss, who is goal- oriented, driven, and loves a challenge. He is not near retirement age, but he is burned out on the restaurant culture and is looking for a change of scenery. He doesn’t really need the money, but wants to keep busy.

This is a very complex decision, but for most it would seem easy. JoAnne is the perfect fit for the nonprofit culture, and she has said the magic words, “I have a heart for the mission.” While that is all very important, and JoAnne will likely do a fine job, mission should not trump everything, though too often it does. It is comforting to know that JoAnne will mesh easily with the existing culture, and completely embrace the mission. She is certainly the less challenging candidate. But choosing the person who is more aligned with the mission, like JoAnne, can sometimes be an expensive mistake. If a person does not have the required skill set for the job, there will be problems down the road.

On the other hand, hiring based on skill alone can also lead to problems. Kent may manage the kitchen well, but will he care about the people being served? He is looking for a change in scenery, but if he doesn’t need the money, will he stick around? The question of who to hire is complex– we don’t necessarily know the answer either.

As a general guideline, we recommend finding someone with the right skill set, who is at least mission-neutral. This person may not go out of their way to talk with every person who walks through the door of the Soup Kitchen, but they will make sure that people are fed a good meal, in an organized fashion, and the kitchen is always up to health code and standards. Those are all very important things. And what’s more, these kinds of people often fall in love with the mission over time. On the other hand, someone who has a heart for the mission, but does not have the skill set will rarely develop critical skills no matter how long they stay on the job. Avoid hiring directly for mission, but also steer clear of potential conflicts of interest with your mission. Finding the right employee is essential to maximizing the capabilities of your organization.

Training

Nonprofit organizations tend to try raising money based on program, spending hours on the Program Description piece of the grant proposal, but only spending 15 minutes total on the rest of the pieces such as budget and organizational information. Nowadays, foundations are giving based upon the whole organization – operations, program and development. Most foundations treat their donation as an investment, so they value an organization that is well-run and properly funded. Keep this same concept in mind when training a new employee. Be careful not to train only on program and mission. Properly training new employees on the operations of the organization is essential. This is when that employee handbook comes into play.

The employee handbook doesn’t have to be long, and it may take some time to perfect, but starting one now is a great basis for growth. Also, having written workplace policies is important in order to avoid potential legal issues and ensure that employees understand policies which conform to current regulations. There are great templates for handbooks on the web, which will give you a good start. The goal is to make sure that every employee signs the handbook, stating that they read it and will abide by it. Once a year, the handbook will probably need tweaking, so make sure that you take a look at it. The handbook should be easily accessible to everyone.

According to the Nonprofit Risk Management Center, written policies are the starting point for ensuring that personnel dilemmas are resolved consistently and fairly. Several federal and state laws require that workplaces distribute or post certain written policies. Up-to-date, legally sound personnel policies are so significant that many insurance companies, funders and potential board members look to a nonprofit’s personnel policies as an indicator of security or risk. To ensure that your organization’s policies are current, schedule a policy review on a regular basis.

Make sure your people get training in the hard skills. If they are fundraising, train them in proper fundraising techniques, or if your organization is in the AIDS ministry, train them on blood borne pathogens. Spending the time up front to thoroughly train new employees will set the right premise for their future performance.

Managing Employees and Maintaining Boundaries

Hiring and training the right employee are only the first steps to maximizing effectiveness within your organization. Managing employees is a day-to-day event. One of the pitfalls that arises in today’s culture is getting too chummy. Gone are the days when you addressed your superiors as “Mr.” or “Sir,” but the breaking down of formalities has created a blurring of personal and professional lines. This is especially true with nonprofits, when the mission bonds everyone together. Because of the nature of nonprofit work, controversial conversations can come up – such as discussions on race, faith, justice or poverty. These can easily lead to personal issues.

The best thing for a manager of employees to do is remain professional boundaries at all times during the workday, and whenever employees are present. Employees are best managed when boundaries are set and maintained.

Executive Directors should set their own personal boundaries and encourage employees to set boundaries as well. There is a tendency for employees and management of a nonprofit organization to give more than they are getting paid for because they feel strongly about the mission. But this is not healthy. Consistently working long hours and devoting all your energy to your job can lead to burn-out and poor health. Most people know this, yet get so caught up in their work, that they forget to think about the things the human body requires to function at full capacity, such as sleep and a healthy diet. In order to avoid this, set boundaries such as “No Sundays or holidays” or “Only one weekend dedicated to this job per month.” Everyone should be encouraged to maintain a balanced life outside of the organization, no matter how strongly they feel about the mission.

Volunteers

Think of your volunteers in the same sense as your donors. Volunteers are people who are willing to donate their time for your mission. They are great to have for backup support, but their duties and input should remain as supplemental support. It is rarely effective to make a key aspect of a program or project dependent upon a volunteer. For events, a paid employee of the organization should oversee the volunteers. In the office, it is best to avoid giving volunteers essential duties. Remember, just because someone will work for free, doesn’t mean they necessarily should. Take care of your volunteers like you take care of your donors.

A lot of nonprofits think they are going to impress donors by having a lot of volunteers. In the end, having many volunteers without the paid staff to oversee them, makes you look like a kitchen table nonprofit. Donors are not impressed by the fact that no one is getting paid. They think If they run hungry, why feed them? The healthiest and strongest nonprofits are those whose key employees are paid industry standard wages, and that should be your goal. This doesn’t mean that you don’t need volunteers, or shouldn’t use volunteers. Just be sure your volunteers are used in the right context, and rewarded as well.

In conclusion, throughout the development of the Human Resources side of the organization, remember to document everything. Keep your employee handbook updated. When problems arise, write it down, sign and file it. Also, there are many valuable tools available to improve the functionality of human resources within your organization.

One example, the Job-Person-Environment-Assessment, is a great resource for maximizing the effectiveness of your employees. According to www.jpea.com, success in a job ultimately depends on whether you're being energized, excited and engaged - as opposed to being drained. When you know what gives you, your team, and your employees energy, you can make better decisions. This useful assessment screens potential candidates, helps individuals find the right fit, identifies the challenges at work that drain employees' energy, all while targeting opportunities to maximize success.

Articles for Further Reading

1. JPEAssessment: www.jpea.com 
2. Nonprofit Employee Staffing: http://www.managementhelp.org/staffing/specify/specify.htm
3. Best Practices for Nonprofit Employee Handbooks: http://www.navref.org/bestpractices/hr_employment_handbook.htm

For more information, please visit the Giersch Group at www.gierschgroup.com or contact us at prosper@gierschgroup.com.