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Guest Blog: Deborah Kerr – Nonprofit Talent Management

Deborah L. Kerr, Ph.D. is a performance measurement expert and a co-founding partner of Affintus, a pre-employment assessment company based in Austin, Texas. Her work in performance measurement and management has been written Deborah Kerrabout in Financial World magazine and has been cited as “best practice” by SHRM. Her approach and success with organizational measurement were featured in Paul Niven’s 2002 book Balanced Scorecard Step by Step and Mohan Nair’s 2004 book Essentials of the Balanced Scorecard. Deborah led the development of the one of the nation’s first public sector balanced scorecards and in 2004, that measurement system was recognized as one of the world’s best when it was elected to the Balanced Scorecard Hall of Fame. She is on the graduate faculty of Texas A&M University where she teaches management, public policy theory, and organizational performance measurement. Her teaching has been recognized with the University’s 2008 Distinguished Achievement Award for Teaching (based on nomination and support from current and former graduate students) and with the 2009 Silver Star Award given by the Class of 2009 for outstanding service and dedication.

Nonprofit Talent Management

Employee costs generally make up more than 50 percent of a nonprofit’s budget so nonprofit talent management is critical to the health of every nonprofit’s “bottom line”.  This will be highlighted as the economy continues to grow and nonprofits face two major workforce trends:  the need to add staff to meet demand and the reality of losing experienced staff to retirement or “better” jobs.

Adding nonprofit staff has been a trend for the last three years.  Nonprofit HR Solutions’ 2013 survey of 588 nonprofits found that 40 percent added new staff in 2012 and 44 percent plan to create more new positions this year.  Turnover is expected to remain at 17 percent in 2013, the same as 2012, but voluntary turnover and retirement now account for 11 percent of total turnover.  This may grow as the economy’s recovery leads to more job options for good employees.

After hiring, retention of good employees is key to sustainability, but in the Nonprofit HR Solution study 90 percent of respondents reported they have no retention strategy even though they see it as a challenge.  Losing good employees is expensive.  Writing for http://www.philanthropy.com, Raymund Flandez found the average tenure of a fundraiser is only 16 months and the direct and indirect costs of replacing that fundraiser add up to a staggering $127,650!   For other employees hiring costs range from 25 percent to over 100 percent depending on the job and responsibilities.

Here are strategies that work to improve hiring decisions, reduce voluntary turnover, and improve workforce retention.

Hire the right person in the first place.

Most organizations have made at least one hiring mistake in the last 12 months and report spending thousands of dollars to fix it. Hiring mistakes are not only expensive, they negatively affect the morale of other employees and can damage donor relations.  Hiring the right person, on the other hand, results in 10 percent – 50 percent higher productivity and revenues.

Why is hiring so hard?  Most nonprofits base hiring decisions on resume reviews and interviews.  Yet over 50 percent of resumes contain erroneous information and applicants can be coached on interviewing tactics, so decision data may be flawed.  The best way to get objective, accurate talent data is to use pre-hire assessments – candidates can’t “fake” assessment responses as they can fake interview responses or experience on a resume.  Be sure to use an assessment validated for pre-hire use, one that matches job requirements with applicant preferences and strengths.

Pay attention to pay

In a 2012 study, Penelope Burke of Cygnus Applied Research surveyed 1700 fundraisers and 8000 nonprofit CEOs.  She found that good fundraisers begin to be recruited away after only three to six months in a position!  She reports that it would cost about $46,000 to keep a good fundraiser happy by providing better salaries and other benefits like more vacation… a bargain compared to $127,650!

The best pay strategy is to match the market rate for the job whenever possible.The closer pay is to the market rate, the less likely an employee will think about quitting.  When employees find the work interesting and feel valued, most will not look for a new job as long as the pay is competitive in their geographic area and the industry.

Pay is not the most important factor in most decisions to stay in a job or to quit, but it is one of the top reasons employees choose to stay when they are offered another job.  Fundraisers are an exception – most report that higher pay is the number one reason they leave current jobs.  Helping someone decide to stay rather than take a new job saves money every time.

Be flexible

Research has repeatedly found that a flexible work schedule is a key reason for staying with the current organization when an employee is offered employment by another organization.Flexible work schedules improve employee satisfaction and productivity while helping to reduce absenteeism.

Let managers to handle employee scheduling requests on a case-by-case basis or permit cross-trained employees to “trade” hours as needed to meet both business and personal demands on employees.  The key is to be as flexible as possible while meeting the needs of the business.

The bottom line?  Talent management is an increasingly important driver of nonprofit sustainability and every investment in hiring and retaining good talent goes straight to the bottom line.  With projections for increased service demand in 2013, nonprofits must continue to grow the workforce while trying to hire and retain high performers. Now is the time to review talent practices and make the changes needed to reduce costs and improve bottom line performance.

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So is it possible that it is time for us as nonprofit leaders to refuse to play nice?

May 25, 2013 2 comments

The reality for most nonprofit executives is that we have fewer resources and more competition for those shrinking resources than ever before. But it’s not going to change anytime soon. So it is up to nonprofit leaders to embrace and adapt to that new reality. Instead of beating our heads against the wall of change, let’s adapt to meet it.

In fact, it is time for a new kind of nonprofit leader, one who has the confidence, ability, foresight, energy, and strength of will to really lead the nonprofit sector forward. That requires skill at having the tough conversations. For example, what are you going to do about the Board leader who will only give their time, rarely gives their talent and refuses to give their treasure (money)?

So is it possible that it is time for us as nonprofit leaders to refuse to play nice? The culture of nonprofits is one of collaboration and diversity. We bend over backwards to make sure everyone has a voice. And that is a very good thing. The new leader, however, may need to overcome the nonprofit norm of politeness at all costs and gets real with funders, board members, or staff who are standing in the way of the mission and impact of the organization.

It is called tough love. It isn’t always easy but it works.

Are we creating heartfelt experiences at our nonprofit or not? Is that experience stunning?

May 16, 2013 5 comments

There comes a time where we have to make a decision. What will we invest in? It is a serious question and not a budget exercise. If we are going to be intentional and proactive, we need to make an investment. At first that may be just time. Eventually it will be about people, our processes, our strategies and our technology. If we don’t become intentional in our approach to our digital constituent experiences we will continue to be haphazard in our approach; reacting, responding, solving toxic experiences in real time. This intention however must be about heartfelt experiences. It must create a passion for our mission.

There is of course, a very real cost to reacting. Scrutinize your budget and you will see that most of our fixed expenses are reactionary. What if we invested in proactive and intentional experiences of the heart up front? Could we radically reduce our reactionary and bloated fixed expenses? In fact, my guess is the reactionary expenses vastly exceed proactive expenses. I know nonprofits that are ramping up their expenses in reactionary engagement and relationships. The good news is that they are succeeding in shifting the negative to neutral or even the positive.

So what is the outcome of taking a negative and balancing it with a positive? Is it engagement or damage control? So what is the cost and value of neutralizing the negative? Shouldn’t we start with the amazing? What is the return on that investment in the stunning? What is probably most concerning is that most nonprofits are not measuring much of this. And why are we struggling to raise more money? Now think about that question. Why is our revenue flat? Why are donors not engaged and renewing their contributions?

Is the experience we are creating wonderfully sharable? If not, what is our investment over the next 3 months going to be in changing that? We must invest in not only a positive experience but an experience that screams out for our members, volunteers and donors to share it with everyone they know. That encourages others to join in. It also offsets any negative experiences anyone else has shared. Think about it. We all read the ratings and comments. If there are 100 over the top ones we can ignore the one that is virally negative writing it off to a weirdo.

What is the biggest deal? Trying to offset the negative experiences or proactively creating amazing ones? Creating amazing ones is everything. That is not an exaggeration. You know, from your own experiences that it is true. The cost of reacting is always eclipsed by the upside of the stunning.

Think of what you want. You are a consumer. You are the constituent who wants something from your nonprofit. Are you looking for the ordinary? No, you are looking for an experience, no, the experience.

Any nonprofit that recognizes you, remembers you, and gives you an amazing service experience will win your heart. And it is all about your heart. You will be loyal to them no matter what. That is what we know as relevance. A passion of our heart that transcends anything else.

And so, that heartfelt experience is not just a so-so something. It is everything. That kind of vision is the father of innovation. Who needs the mother of invention in that kind of world?

Why is your nonprofit struggling to bring money in the door?

The majority of nonprofits struggle to bring money in the door. And they often don’t know why. When you are on the inside of an organization that is used to doing things a certain way it can be nearly impossible to see new opportunities, to understand what you could do differently. There can be many reasons why a nonprofit doesn’t bring enough money in the door.

Here are several things to think about:

Too Many Programs Drain Money From Your Organization. It sounds like a truism — you struggle with money because your programs cost money. But the reality is that few nonprofits analyze their programs to determine each one’s individual impact on the bottom line. Often they will add a new program because it has an impact on the mission (or because a single funder wants the program), without understanding how the new program fits into the organization’s overall financial picture. The end result is an organization that is stretched to the breaking point. Nonprofits must analyze all of their programs to understand their impact not just on mission, but also on finances, then they can make decisions about where to more sustainably focus resources.

You’re Leaving Money Up to One Person. The financial engine of a nonprofit must be a team effort. Yes, it is important, if you are large enough, to have a staff member whose sole job is to think about money, but you cannot leave it all up to her. The entire organization, from the front line program staff all the way up to the chair of the board must understand the critical importance of money and what role they individually play in securing it. Although program staff won’t actively solicit donors, they can still share client stories with donors, write blog or newsletter articles, participate in program tours with donors, and even suggest new ideas for tying money to their programs. And there are countless ways for board members to bring money in the door, but you have to make sure they are aware of and doing their part.

You’re Not Effectively Telling Your Story. It is so common for nonprofit staff and board members, who believe so passionately in their cause, to think that it’s obvious to outsiders why they should get involved. But it isn’t. And in an increasingly crowded social change marketplace it is more important than ever that nonprofits be able to articulate, in a compelling way, what value they are providing a community.

You’re Doing What Everyone Else Does. If you are struggling financially and witness another nonprofit’s fundraising activity and try to replicate that perceived success, without analyzing if it makes sense, will it work for you? Just because it looks like a recent gala or a new thrift store rakes in the money doesn’t mean a) that it did actually make a profit for the nonprofit and b) that it would make a similar profit for your nonprofit. The key is to make the best use of your specific assets as an organization. Think about what value you have to offer and who might be interested in paying for that value. For example, a homeless shelter could financially partner with local businesses to move people away from storefronts and into more stable and life-changing accommodations. You have to analyze what you have to offer and who specifically would be willing to pay for that value.

You’re Not Investing In Your Money Raising Function. If you don’t have enough or the right kind of staff in place to raise money it is little wonder that you struggle. And if you’re not giving them effective tools they will be at a loss. Think about your financial engine and the various revenue streams you employ. Do you have the technology, staffing, systems, materials, space you need to raise money well in those ways? For example, if you want to raise money from individuals you need an effective database system that tracks contact information, interactions, history, interests. Whatever ways you bring money in the door, you need to ensure you have enough and the right kind of tools to do it well.

Some basics of nonprofit grantwriting

Many nonprofits can’t afford a full time grant writer. Odds are that at some point in your career it may fall to you to do it. There are some basics.

Seek support for a “fundable” project: Grants are usually awarded to projects, not to unrestricted annual support. Funders will want to measure the project’s success, not that of the organization. And, just because a foundation believes in your mission doesn’t mean they are going to say yes to your request. Identify projects based on your organization’s goals and objectives that align with the funding priorities of local grantmakers.

Identify suitable funding prospects: Having a board member that sits on XYZ Foundation doesn’t ensure funding success. And, if the “fit” isn’t right, it might put that board member in an awkward situation. Capitalize on connections you have, but take care to match your project to funders who support similar needs. Most states, often in partnership with the Foundation Center, publish comprehensive funder directories. Typically available online, these are excellent sources of grantmakers and their priorities. .

Focus locally first: This increases the likelihood that you will find a connection to champion your efforts. And, there is less competition for these dollars. Finally, a smaller local funder may have a simpler submission process than that of a national profile one.

Follow the directions: Make sure you submit the right information to the right person by the right deadline. Don’t give the funder a reason to eliminate you from the consideration process before they even read the proposal. Consider how you evaluate cover letters and resumes: Misspellings or missed deadlines make it easy to trim your list. Grantmakers will do the same.

Write, re-write and proofread: If you are not a good writer, find someone on your team who is. Proposals have to be well written. This goes beyond just correct spelling and good grammar. You need to clearly articulate your project in a sincere and compelling manner. This is the quintessential sales job—and you want the reader to buy what you are selling. All of the clichés hold true: tell a story, paint a picture. At the end of the day, you want the funder to invest in your organization. They aren’t going to do that if you haven’t touched them.

Submit required reports: Every funder has reporting guidelines. Do not overlook this step! Mark your calendar, gather needed information and do not ask for an extension on the due date. Most funders will be open to ongoing relationships with organizations they have funded. Don’t close this door because you missed a deadline.

Does your nonprofit face a fundraising generation gap?

While this is data from the UK, I think it is worth considering. Has your nonprofit done any studies to understand this? In the UK, older donors give 38 per cent more than baby boomers, according to a report by the fundraising software company Blackbaud. Charities are facing a generation gap in fundraising, with older donors giving 38 per cent more than the post-war ‘baby boomer‘ generation, research suggests.

The report, The Next Generation of UK Giving by the fundraising software company Blackbaud, surveyed 1,498 UK donors of all ages about how they give and engage with charities.

According to the report, not enough is being done to address a potential long-term donations deficit in which older donors, born in 1945 or earlier, give 27 per cent more each year than those from ‘Generation X‘, people born between 1965 and 1980.

More here: Charities face fundraising generation gap, giving survey says.

How to build a great nonprofit Board of Directors

April 15, 2013 1 comment

Identifying and recruiting board members can be a daunting task, especially if an organization is new or reshaping itself. Either way, existing members of the board and community have a challenge ahead of them when identifying and recruiting qualified candidates. Blue Avocado, a nonprofit magazine for nonprofits, compiled a list of the Ten Biggest Mistakes Boards and Executives Make. Some of the mistakes mentioned can be avoided by trying out a couple strategies.

One of the more overwhelming challenges is determining the “Who,” “What,” and, eventually, “How” of establishing a board. Who do we want? What is actually necessary? How do we even find them?

More here: Building a board | MSU Extension.

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