How non-profit orgs can get the best out of their people

For some years now, I have been observing HR practices in NPOs (in this column, I will use the terms NGO, Non-Government Organization, and NPO, Non-Profit Organization, synonymously) and the sight has not been pretty. Despite the fact that NPOs depend on the sheer enthusiasm and resourcefulness of their (usually) small teams, they are remarkably negligent about the efficacy of the people practices they follow and of the capabilities of the people they entrust with the responsibility for people management. There are, of course, a few exemplars of HR leadership within NPOs and a growing body of research on what makes for effective people management in non-profits. This column attempts to distill some of these lessons.

The range of NGOs and Non-Profits is so vast that any observations and recommendations made in a column of this length can only apply to a small subset of the spread. As a first step to sharpening the focus, I shall exclude Large International Non-Government Organizations because the ‘LINGO’ they speak is more akin to large for-profit MNCs. Even within the Medium and Small-scale NPOs, perhaps the ones which most need an HR overhaul, are those that have been granted the boon of immortality. Counter-intuitive as it may seem, organizations that do not get culled regardless of how they perform (or don’t), are the ones that continue to display the most egregious and engagement-eroding approaches to managing people. Most NPOs do not have to face the discipline of the consumer or share market to winnow out the weakest. Many of them also have funding from a Government body (foreign or domestic), trust or individual philanthropist that is either virtually guaranteed or in the seigniorage of one or two individuals whose satisfaction with the state of affairs is not necessarily indicative of the NPO meeting its purpose-goals optimally. Having no threat to survival is not, of course, an unmixed blessing. Like the struldbrugs inhabiting Luggnagg¹, immortality doesn’t stop aging, and these organizations continue accumulating the scars and ailments brought on by their judgement errors and poor people-practices. Such protected environments are, of course, the ideal breeding ground for struldbruggian HR managers whose nano-competence is rarely called into question.

NGOs need to build Flexibility, Meaningfulness, Challenge, Variety and Enjoyment into their work design to benefit from people’s intrinsic motivation which can help them turn their paucity of extrinsic motivation levers into an advantage

Bureaucrats, Bypasses & Burnouts

While interacting with those NPO HR managers who have made SNAFUs their SOP, I found them curiously overconfident about their capabilities in HR. It seemed as if they had been placed on this planet with the specific purpose of illustrating the Dunning-Kruger effect² (a cognitive bias in which people of low ability mistakenly assess themselves to be much more capable than they are). This was true regardless of the backgrounds they had. The majority were actually admin managers who had been 'Peterly' promoted³. Then there were the 'has-beens' from the field operations of the NPO who either couldn’t take the strain or were performing too poorly to be entrusted with roles that mattered. The third type were the HR managers who had a burnout of one sort or another in the for-profit space and thought the NPO environment was going to provide a more relaxed environment to recover, lick wounds, and prepare for a re-assay into the hurly-burly of the commercial world. In many ways, this was the most dangerous type for the health of the NPO ecosystem. Part of the problem came from the transitoriness of these birds of passage who were just waiting to get back to the high-bonus world of commercial corporates. Even worse was their attitude that what worked in the commercial world must be applicable to NPOs. Which is why HR systems in NGOs tended to look like small urchins dressed in their parents’ clothing – badly altered.

This brings us to the core of the problem afflicting NPO HR.

It is not just the shortage of quality HR managers but the lack of adequate HR models uniquely crafted for NGO needs rather than ones just made-to-fit from concepts and processes created with commercial organizations in mind.

As Barry Nathan has pointed out, "Failure to recognize this difference will result in misguided efforts by non-profit leaders, and disengage the very professionals they are expected to lead."⁴ The rest of this column will make a beginning in building an NPO-oriented HR model. The idea is not to have a definitive last word as much as start a dialogue which can be refined and completed by people in the NPO space.

Float Like Butterfly – Gather Nectar-Like a Bee

The first advisory I would issue to NPO HR managers off to shop for fully-loaded models of HR, with the bells and whistles of a full-fledged commercial HR machine, would be: don’t. NPO HR has to be frugal to the point of frailty – head for the bicycle retailer, not the BMW dealership! In an earlier column⁵, I have dealt with frugal HR in the context of aggregators such as Uber. For NPOs, frugality is equally important but of a very different complexion.

For NPOs, flexibility and the other components of intrinsic motivation are not just nice-to-have but essential for attracting the right type of talent and have it stick

Frugality does not mean equal scaling-down in all people processes. For NPOs, we can assign some of the heavy-duty lifting work (such as that taken up by Performance Management and Rewards in commercial organizations) to the culture we inculcate. Of course, that demands the type of employees and leaders who are receptive to performing at peak with this switch and this automatically ups the stakes for sourcing innovation as well as a sensitive (yet economical) selection process. The quality of the team cannot be optimized just by good selection. People who do not fit, because they lack the capability, aptitude or values demanded by the NPO, must be ejected. Many NPOs are dragged down for no reason other than their virtually pathological fear of firing anyone, regardless of obvious performance or integrity lapses. 'Weeding' is not a capability NPOs can afford to neglect in the name of caring or frugality.

Equally important is flexibility in every facet of people management. Frugality itself demands minimal rules so that less apparatus is needed to monitor their observance. More importantly, getting adequate numbers of the right kinds of dedicated workers and leaders (both of whom treat conventional rewards lightly⁶) make flexibility of contracts, extremely innovative work scheduling, and unraveling of other red-tape knots absolute imperatives. In addition to Flexibility, NGOs need to build Meaningfulness, Challenge, Variety and Enjoyment into their work design to benefit from people’s intrinsic motivation⁷ which can help them turn their paucity of extrinsic motivation levers into an advantage (since extrinsic motivation is usually inimical to the intrinsic variety⁸). Thus, for NPOs, flexibility and the other components of intrinsic motivation are not just nice-to-have but essential for attracting the right type of talent and have it stick. What kind of talent should this be? 

Missionary Workers – Servant Leaders

While choosing people for NPOs, it is useful to check potential aspirants for the Purpose Pentad apart, of course, from whatever competencies the job demands. The Pentad consists of:

• Being eagerly purpose-driven for the cause which is behind the mission of the NPO
• Responsiveness to intrinsic motivation⁹ and other recognition that is not primarily predicated on 'paisa'
• Having an altruistic drive and empathy that extends (beyond kin, friends and patrons/ clients) to the prime group the NPO supports
• Burning anger against unfairness wherever it exists and (an almost quixotic) keenness to right wrongs
• Ability to oversee and work in teams to get work done by and through both equally opinionated apostles as well as much more selfish people (including corporate sponsors and regulators)

Different job roles and levels in NPOs might demand varying levels of each characteristic but it would be a rare NPO role that didn’t require a minimum level of each of them. There are many ways to measure the Pentad, ranging from an ever-growing battery of psychometric instruments¹⁰ (which can be tailor-made if volumes justify it) through in-depth interviews by experienced HR practitioners to more intuitive judgments by NPO leaders who have honed their judgement skills over the years. 

The bigger challenge is to find an affordable population of candidates who display the Pentad in a higher than average order of magnitude. Hence, sourcing innovation is among the critical competencies for NPO HR leaders. Guidelines are few other than advising against automatically assuming that candidates from commercially run corporations are also suitable for NPOs. Freshers and people who have been in purpose-first organizations (the armed forces and educational institutes come to mind) are obvious fishing pools. Of course, corporate types who have made a conscious decision to turn their skills over to social causes sometimes provide invaluable pickings as do women (and enlightened men) who have made a conscious commitment to bringing up their children by moderating the time they are willing to commit outside the home.

Pentadic people need a distinct type of leader. Of course, the leader must possess the Pentad to a high degree. But that is not sufficient. There are many ways to describe the additional component that NPO leaders need compared to leaders in commercially run businesses. I find the terminology first enunciated by Robert K. Greenleaf most useful for this purpose. Greenleaf, of course, didn’t limit his seminal concept of Servant Leadership to NPOs but I ask you to read this extract from his great essay¹¹ on the subject and say whether it doesn’t precisely capture what a great NPO leader must do: "Who Is the Servant-leader? The servant-leader is servant first … That person is sharply different from one who is leader first… The difference manifests itself in the care taken by the servant-first to make sure that other people’s highest priority needs are being served… Do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? And, what is the effect on the least privileged in society; will they benefit, or, at least, not be further deprived?"

Again, we come up with the challenge of identifying and attracting such leaders to NPOs. Once more, the answer is to look outside of the standard corporate envelope. Of course, in an NPO which has instituted at least rudimentary processes for managing talent and progressing careers, there should be at least some choices available internally who would have been self-selected in terms of their commitment to the cause. 

Cause-centric Culture

Battle lines have been drawn in the last half-century over who should be the central beneficiary of an organization’s existence. To start with, the trophy seemed to be won pretty conclusively by shareholder advocates. As Lynn Stout described it: "… By the 1990s, the idea that corporations should serve only shareholder wealth as reflected in stock price came to dominate other theories of corporate purpose. Executives, journalists, and business school professors alike embraced the need to maximize shareholder value with near-religious fervor."¹²

There were two strong challenges to the orthodoxy that had put the shareholder in pole position. The first challenge came from the movement for customer-centricity which, as the name implies, put the customer at the apex and claimed that once this was done, everything else would fall in place. An even more fundamental challenge premised that it was engaged employees who alone could delight customers and, thereby, ensure shareholder returns on a sustained basis. This viewpoint was strongly espoused by a whole series of highly successful practitioners and academic thought leaders¹³. 

Far be it from me to doubt the claims of any of these orientations or to award just one of them primacy (are you joking? It has to be people first!) in a regular commercial organization. But in the world of non-profits, things are very different. Let’s cast our eyes back at some exemplary mission-driven groups: the Apostles of Jesus, the Janissaries of the Ottoman Empire or even successful modern armies. If we look a little closer at winning military forces, it is obvious they operate splendidly though they don’t have shareholders pressing them for financial returns. While they defer to their customers (who would presumably be political leaders in the case of the military), armies that consider a political leader (or monarch) to be their raison d'être, don’t end up very well. The better ones certainly care for their men. But, when the chips are down, they sacrifice their men too. For the sake of what? The cause they serve, which becomes the ultimate touchstone for planning and judging all the actions they take. While I am not suggesting regular NPOs can match the levels of sacrifice demanded by these exemplars, central to the culture of every successful NPO has to be the cause or purpose it serves. Many commercial businesses also have also attempted such a purpose focus14 but in their case, there is always the slight whiff of suspicion that the true drivers behind the nice sounding phrases are profits and shareholder value augmentation. NPOs have no such credibility concerns. What’s more, they really have no other choice if they wish to be successful in the long run.

Panchofying Purpose-Partners

There is a problem with cause-centric organizations that inspire their Pentadic people to dream impossible dreams and dedicate their lives to fighting unbeatable foes¹⁵. If unchecked, they can be quixotically idealistic and impractical even when it comes to people management and other internal matters. Beyond a point, this can severely impair the efficient functioning of the NPO in the medium to long-term. At the cost of appearing the plodder in the room, the HR manager must often assume the mantle of being the voice of practicality and common-sense in an NPO. While the HR business-partners’ most fraught moments in commercial organizations arise when they have to guard the organization’s values, in NPOs, the leaders’ purpose-partners (business-partnering is not the only kind of partnering for HR) may have their toughest challenge in playing Sancho Panzas to the servant-leaders’ Don Quixotes. Sherwin Klein describes this moderating role well. "Without Sancho Panza … Don Quixote may well have remained an airy idealist. Sancho helps to temper our hero’s foolhardiness or rashness; his sense of courage becomes much more Aristotelian or moderate... it is possible that under Sancho’s influence, he is more capable of learning practical lessons."¹⁶ NPOs that are to be effective in the long term must be led by Panchofied Quixotes who admit, as the man of La Mancha finally did, "that valor not based on prudence can only be termed temerity, and the triumphs of the foolhardy are to be attributed to good luck than to courage."¹⁷ Thus the most valuable contribution HR Heads make to their NPOs may well be the successful Panchofication of the passionate Pentads they themselves recruited to fire up their organizations. 

Reference:

1. Jonathan Swift, Gulliver's Travels: Part III: A Voyage to Laputa, Balnibarbi, Luggnagg, Glubbdubdrib and Japan, Penguin Classics, 2003.

2. Justin Kruger and David Dunning, Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments, Journal of Personality and Social Psychology, 77, 1999.

3. Laurence J Peter and Raymond Hull, The Peter Principle: Why Things Always Go Wrong, Harper Business, 2009.

4. Barry R. Nathan, Employee Engagement in Nonprofit Organizations, Employment Relations Today, fall 2017.

5. Visty Banaji, Minimal HR for maximal effect– Hyper-frugal Resourceful HR in the age of aggregators, People Matters, 12 January 2017.

6. Joseph Lanfranchi and Mathieu Narcy, Effort and Monetary Incentives in Nonprofit and ForProfit Organizations, TEPP - Travail, Emploi et Politiques Publiques Working paper, 2012.

7. M. Renard & R.J. Snelgar, Positive consequences of intrinsically rewarding work: A model to motivate, engage and retain non-profit employees, Southern African Business Review, Volume 21, 2017

8. Alfie Kohn, Punished by Rewards: The Trouble with Gold Stars, Incentive Plans, A's, Praise and Other Bribes, Houghton Mifflin, New edition, 1999.

9. John Tippet and Ron Kluvers, Employee Rewards and Motivation in Non-Profit Organisations: Case Study from Australia, Journal of Business and Management March 2009

10. A Bencsik, Renata Machova, and Endre Hevesi, The Relation Between Motivation and Personality Types, International Business Management, 10(3), 2016.

11. Robert K. Greenleaf, The Servant as Leader, The Greenleaf Center for Servant Leadership, Revised Edition, 2015.

12. Lynn A Stout, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public, McGrawHill Education, 2012.

13. Jeffrey Pfeffer, Shareholders First? Not So Fast…, Harvard Business Review, July-August 2009.

14. Robert E. Quinn and Anjan V. Thakor, Creating a Purpose-Driven Organization, Harvard Business Review, July-August 2018.

15. Joe Darion, The Impossible Dream, from the Broadway musical ’Man of La Mancha’, 1965.

16. Sherwin Klein, Don Quixote and the Problem of Idealism and Realism in Business Ethics, Business Ethics Quarterly, Vol. 8, No. 1, January 1998.

17. Miguel De Cervantes Saavedra, Samuel Putnam (Translator), Don Quixote de la Mancha, The Viking Press, 1949.