Few can argue with the view that a nonprofit’s human capital is its most important resource. The executive director influences the direction, morale, image, and financial stability of an organization. Yet, even the least senior employee can have a significant impact, negative or positive, on the organization. Employees can be creative, nurturing, versatile, ingenious, inspiring, and team building. And they can be disruptive, destructive, infecting morale, and creating scandal that can ruin the reputation of a charity that took decades to foster.
The scandal involving the United Way of America’s CEO, William Aramony, convicted in 1995 on 25 counts of engaging in fraudulent practices and generally living lavishly at the organization’s expense, is just one example of how a single individual can stain an entire sector. The shock waves from the New Era Philanthropy scandal are continuing to be felt. The forced resignation of the American Red Cross’s chief executive in 2001, blamed in part on an alleged policy of deceptive fundraising, was front page news. And so was the forced resignation of the organization’s 5th CEO in six years in November 2007 for alleged inappropriate behavior toward a staff member. More recently, damaging stories in the media about National Public Radio and the Central Asia Institute (run by the author of the best-selling book, “Three Cups of Tea”), the latter the subject of a “60 Minutes” investigation that aired in April 2011, have rocked the sector.
As our society becomes more litigious, poor performance by an employee can have disastrous consequences. Many human services nonprofits that work closely with aging populations, children, and people with disabilities have experience with defending the actions of their employees in court, and they are at risk for damage suits in the millions of dollars. In some cases, poor performance may be a matter of life and death for at-risk clients. The responsibility for choosing staff in a nonprofit should not be taken lightly.
Each hired employee is an investment by a nonprofit not only in the salary paid to him or her. The chemistry of an organization is changed by a new hire, and bad hiring decisions can haunt a nonprofit for many years or destroy it completely.
In recent years, nonprofits have lost the stereotype of having certain characteristics compared to their for-profit counterparts. That stereotype often viewed nonprofits as―
• less hierarchically structured
• less willing or able to fire non-productive employees
• more informally managed
• paying less and providing fewer benefits for longer hours
• more altruistically managed, with less emphasis on the bottom line
• more interested in their employees’ personal satisfaction
This stereotype may no longer be valid, or it is at least becoming frayed at the edges. Nonprofits today face many of the same competitive and financial pressures to succeed as their for-profit counterparts. Nonprofits are becoming more comfortable hiring MBAs and those with for-profit business experience to manage their enterprises, whereas once social work degrees were the educational pedigree of choice.
Many of the jobs available in the nonprofit sector are equally available in the for-profit sector. For example, both often require a CEO, accountants, legal staff, supervisors, receptionists, Webmasters, government relations personnel, public relations officers, administrative assistants, and secretaries. For many of these jobs, the actual tasks performed by nonprofit employees are indistinguishable from those performed by for-profit employees.
Regardless, it is important to recognize that those who apply for jobs offered by nonprofits may retain the stereotypical image. It is useful to consider whether a prospective employee may have an unreasonable expectation of working for a nonprofit. This can be assessed during the job interview.
Hiring requires a positive attitude, which is often missing on the part of the hirer. First, if the hiring is being done to replace a fired employee, or resigned employee, the hirer often is distracted by the disruption caused by the separation. The hirer often is in a position of having to perform a task that is not pleasant―putting aside current responsibilities to perform the job search and interview. Few, if any, managers enjoy this process.
Before embarking on hiring a new employee, it is useful to do some planning that considers:
• What are the tasks and duties the new employee will perform?
• Are these tasks absolutely necessary?
• Could someone already in the organization perform these tasks? Do these tasks require special education, professional credentials, and/or experience that are currently lacking?
• Can we obtain these services through means other than hiring an employee?
• How long will it take to hire a new employee, and will these duties still be required at that time?
• How will these tasks change over time?
• What can we expect in productivity of this new hire?
• What support services will this person require? For example, will we also have to hire a secretary or administrative assistant?
Hired Staff―The Sunday paper classifieds are usually filled with hundreds of job openings from nonprofit organizations that have decided to hire full-time staff.
Advantages: Employees have the most stake in the organization; they tend to be loyal, may work additional hours, and can be flexible in doing tasks not included in the job description when necessary.
Disadvantages: Employees must be paid even when work is not required, require payroll taxes and expensive benefits, are paid for vacations and when sick, possibly disrupting work flow.
Paid Contractor―private for-profit companies and individuals market their services to nonprofits to perform tasks that are intended to obviate the need for hiring full-time workers. Among the most popular services that are outsourced by nonprofit organizations are payroll and accounting. Other services that are often outsourced to private companies are web services, newsletter production and distribution, order fulfillment for goods and services, and fundraising.
Advantages: The nonprofit does not have to withhold income, Social Security, Medicare, state and local taxes, or pay unemployment and Social Security taxes. Contractors can be hired for short-term or long-term projects and can be terminated easily, do not require year-round benefits (although the equivalent is often built into the contract price), and do not obligate payment by the nonprofit unless the job is completed successfully. The contractor may have skills and resources that the nonprofit would not otherwise be able to afford, except on a temporary basis.
Disadvantages: Hiring independent contractors may be legal only under certain limited circumstances. The Internal Revenue Service Publication 15-A (Employer’s Supplemental Tax Guide) provides details on the factors that indicate whether an individual is considered an employee or an independent contractor. This publication can be accessed at: http://www.irs.gov/pub/irs-pdf/p15a.pdf
Independent contractors sometimes charge steeply to cover overhead and marketing, as well as make a profit.
Volunteers―unsalaried workers, some of whom may be there not solely because they are altruistic and want to help, but because they may be fulfilling educational requirements, or disciplinary requirements ordered by a court (see Chapter 13).
Advantages: They do not require a salary, and they are there not for a paycheck but, with rare exceptions, because they want to be.
Disadvantages: They do not have the paycheck as motivation, generally work fewer hours than employees, and may leave the organization on short notice.
Temporary Hires―hiring people for short-term employment without a promise that the employment will continue beyond a certain date.
Advantages: They permit the organization to respond to seasonal fluctuations in workload.
Disadvantages: The recruitment and administrative burden of temp workers can be substantial.
Search Process. Many nonprofits, through their personnel committees, develop a procedure for hiring new employees. Search committees are often authorized by the board to develop job descriptions, prepare job notices, cull through résumés to identify several candidates to interview, and recommend a candidate to the board. Others entirely delegate the process to the executive director (unless, of course, it is a search for an executive director). In either case, the five basic steps remain the same:
1. Prepare a job description. The job description is a useful planning document for the organization. It also allows prospective employees to decide if they are interested in, and capable of, performing the duties expected of them.
2. Prepare a job notice. The job notice provides standard information, such as job title, description of the job, education and/or work experience required, salary range, deadline for application, and the person to contact. Decide whether the notice will request applicants to send résumés or file applications provided by the organization.
3. Advertise the job. Jobs may be advertised in daily newspapers, trade journals and publications, the newsletter of a state association, through the State Job Service, with educational institutions, online through the Internet at general employment sites such as Monster (http://www.monster.com) and Career Builder (http://www.careerbuilder.com), and, most importantly, internally. There are online job boards that target nonprofit sector employment, such as Idealist (http://www.idealist.org), the Chronicle of Philanthropy (http://philanthropy.org), the Foundation Center (http://foundationcenter.org/pnd/jobs/), and Nonprofit Oyster (http://www.nonprofitoyster.com). Many nonprofit organizations also include a current job opportunities listing on their own Web sites, as well.
4. Review the applications. Develop a process for reviewing and ranking for the purpose of deciding who will be invited for interviews. Remember to send a letter to those not interviewed, informing them that they were not successful.
5. Interview candidates. The interview should be a dialogue, not a monologue by the interviewer. Let the candidate talk, so the interviewer can make judgments about how articulate the candidate is. It is useful to be friendly, ask a few softball questions first, and perhaps make a comment about something interesting on the résumé, such as a hobby, professional association membership, or award. Ask about any years that appear to be missing from the résumé.
There are questions that should be asked by the interviewers, and questions that by law cannot be asked. Among the questions that may be asked are:
• What background and experience make you feel you would be suitable for this particular position?
• What is your educational background, and how has that prepared you for this position?
• What has attracted you to apply for a position with this organization?
• What experience, education, or background prepares you for this position that would separate you from other applicants?
• What former employers or teachers may be consulted concerning your abilities?
• What are your long-term professional goals?
• What are the two or three things that are most important to you in a new professional setting?
• What motivates you to perform? How do you motivate those who work with you or for you?
• What are some of your most important accomplishments in your previous position, and what did you do that was special to achieve them?
• Describe a situation in which you had a conflict with another individual, and explain what you did to resolve it.
• Are you more comfortable working with a team on a group assignment, or by yourself?
• What are your significant strengths and weaknesses?
• Why are you shifting direction in employment?
• Where do you see yourself professionally in five years?
• How do you feel about your current/previous employer(s)?
Among questions that you may not ask are:
• questions relating to an applicant’s race, sex, sexual orientation, national origin, religion, or age
• questions relating to the applicant’s physical and mental condition that are unrelated to performing the job
• questions that provide an indication of the above, such as the number of children, the applicant’s maiden name, child care arrangements, height/weight, whether the applicant is pregnant or planning to have children, the date the applicant graduated from high school, and whether the applicant is a Sabbath observer
• whether the applicant has ever been arrested or convicted of a crime, without
proof of business necessity for asking.
6. Select the best-qualified candidate. This is different from selecting the best candidate. The best candidate within the pool of applicants may be identified easily, but if that person is not quite up to the task, it is a mistake to hire him or her. It is better to begin the search again, or try to find another way to have those duties performed without taking a chance that a bad hiring decision will harm the organization, perhaps irreparably.
7. Verify information from the résumé and interviews; investigate references. Under laws in some states, you may not refuse to hire an employee based on a prior criminal conviction, unless that conviction specifically relates to the prospective employee’s suitability for employment. Even in that case, the applicant must be informed in writing of a decision based on that, in whole or in part. For some nonprofit jobs, particularly those involving children, state law requires a State Police background check.
It is not unusual for job candidates desperate to make their résumés stand out to embellish their educational or professional qualifications. A few telephone calls can ferret out many of these. This is a wise investment; someone who is dishonest enough to falsify qualifications on a résumé is likely to be just as dishonest when it comes to other professional issues. Investigating references can often turn up reasons for not hiring someone. It is good practice to request permission from the applicant to check references and to contact previous employers. While a candidate may refuse for personal reasons to permit contact with a previous employer, it is sometimes, but not always, an indication of a flawed relationship. It is also advisable to perform a Google search on the candidate’s name. This will likely give you some idea about the candidate’s background and interests.
Among the questions that are appropriate when contacting prior employers are:
• How long did the applicant work for you?
• What was the quality of this applicant’s work?
• What level of responsibility was the applicant given?
• How did the applicant get along with coworkers?
• Did the applicant show initiative and creativity? In what ways?
• Was the applicant a self-starter, or did he/she require constant supervision and direction?
• Was the applicant punctual?
• Is there anything you can tell me that would be relevant to my decision to hire or not hire the applicant?
8. Make an offer to the candidate and negotiate salary, benefits, and other terms of the offer.
9. Put the offer in writing once the offer is accepted. Use a contract, if necessary or desirable. Once the contract is signed or the offer is otherwise accepted, notify other candidates that they were not successful, and arrange an orientation session for the successful candidate.
Periodic staff evaluations are an important tool for executive directors and human resource managers to communicate important information to staff and obtain valuable feedback. One principal purpose of these evaluations is for the executive director to convey to the employee, in a measurable way, how well that employee is performing with respect to each of several areas of the position. This process is useful to both parties. Most employees want to do as well as they can, and the staff evaluation is an opportunity for the executive director to share potential shortcomings that might otherwise have been difficult to communicate.
The staff evaluation is an opportunity to focus on both strengths and weaknesses. Weaknesses are not necessarily the fault of the employee. In areas where improvement is needed, the executive director can suggest strategies, such as on-the-job training, mentoring, continuing education, and additional supervision, which can assist an employee in improving performance. Many nonprofit executives are reticent about approaching the subject of poor employee performance, and many employees are unaware that their managers feel that improvement is necessary. A regular staff evaluation can put in motion a series of positive steps that assist the employee in addressing shortcomings that might otherwise fail to be communicated. For problem employees, the staff evaluation is an opportunity to formally point out shortcomings in advance of disciplinary action or firing.
Staff evaluations are generally an annual affair, often scheduled a few weeks into a new calendar or fiscal year, or a month before or after the Annual Meeting.
In a typical staff evaluation process, certain questions are addressed, regardless of whether the evaluation is a simple 15-minute, informal meeting between the manager and employee or a formal process that involves filling out survey instruments that become a part of the employee’s permanent personnel record and are the basis for merit salary increases.
There are many different formats, but many organizations have a formal personnel policy that requires all staff members to be evaluated (typically by the executive director, if the organization is small enough), with a written memo summarizing the results of an evaluation interview. The memo is shared with the employee, who signs it, acknowledging that it has been read, but not necessarily agreeing to the content. In many evaluation processes, the employee is provided an opportunity to respond in writing to any of the criticisms included in the evaluation, and this is included with any evaluation that is placed in that employee’s personnel file.
Issues to be addressed should include:
• What goals were the employee expected to accomplish, and how successful was the employee in accomplishing these goals?
• What could have been done by the organization to help the employee accomplish more toward meeting these goals?
• What were the areas that the evaluator found to be the employee’s strongest and weakest areas?
• What can the employee suggest to assist him/her to improve in those weak areas?
• What goals are expected to be accomplished before the next employee evaluation?
• How well has the employee gotten along personally with colleagues?
• How well has the employee worked with colleagues as a team to accomplish organizational goals?
• Has the employee shown loyalty to the organization by cheerfully taking on tasks when needed that may not have been in the job description?
• Has the employee favorably represented the organization outside of work?
• Has the employee demonstrated professional work habits by arriving on time, taking reasonable lunch and break time, and not being unnecessarily absent?
• What can the employee share about organization policies, procedures, and work processes that could be improved?
The task of evaluating the Executive Director is relegated to the Board of Directors. A formal process to evaluate the executive director is appropriate annually. It can be performed by the Chairman, the Personnel Committee, or a group designated by the Board that could consist of an ad hoc committee of board members. While an interview with the executive director is a major component, an evaluation of the executive director should also include feedback from staff members, grantors and other contributors, organization clients, and other stakeholders.
Some of the areas that may be evaluated include:
• success of the executive director in furthering the stated mission and vision of the organization and implementing the organization’s strategic plan
• financial management, including adherence to board-approved budgets, fundraising, and maintenance of financial viability of the organization
• ability to maintain and improve staff morale and teamwork
• ability to communicate with the board, staff, clients, donors, lawmakers and regulators, and the public
• success in maintaining and improving public trust in the organization
• success in collaborating with other organizations, and
• maintaining a highly ethical, credible, organization.
The loss of one’s job is often the most stressful and traumatic event in a worker’s life, with the exceptions of the death of a close family member or divorce. For most managers, having to fire someone is unpleasant at best, and it can be traumatic. In many cases, it represents a failure not just by the affected worker but also by the organization.
Managers must be careful about how the firing is done; employee lawsuits over firings are becoming more common. When a nonprofit is unionized, even firings for the most egregious offenses may be challenged. It is also important to make sure that there is the authority to fire. For example, the board chairperson may not fire the executive director without authority from the board, unless the bylaws provide for that. The executive director may not fire the communications director, for example, unless the organization’s bylaws and/or job description of the executive director make it clear that he/she has this authority.
Planning Issues
Before firing an employee, it is important to do some advance planning. Among the issues to consider are how to deal with the workload performed by the fired employee, the effective date of the termination, what to tell coworkers about the action, how to ensure that the employee will not take away sensitive files and other materials, what to tell the employee about health and life insurance continuity and pension benefits, how to deal with separating personal property and organization property, how and when to terminate e-mail addresses and passwords, how much severance pay and other benefits to offer, and whether any letter of recommendation will be provided.
When to Fire
It is usually appropriate to summarily (without warning) fire an employee for gross misconduct that threatens the organization. Examples of this are drinking on the job, being convicted of a serious criminal offense, the willful destruction of organizational property, stealing from the organization, or causing harm to others (such as clients or other employees). Most unacceptable behaviors that eventually result in dismissal are not as abrupt, and it is only after the manager has attempted a series of mitigation efforts that have failed that the employee is told to leave. Among these behaviors are unexplained absences, chronic tardiness, insubordination, laziness, and general poor job performance. Many nonprofit managers are close to their employees and shy away from taking appropriate disciplinary action. They need to realize that the health of the organization requires discipline and that they are getting paid to ensure that the organization functions. Problem employees inhibit otherwise productive coworkers.
Poor performance on the job may be the result of many factors. These might include personal problems of the employee, miscommunication by the manager, or skills required to perform the task that―for whatever reason―the employee does not have. Each of these has a remedy and, if the manager is flexible, dismissal can be avoided. For example, the birth of a child or serious illness of a spouse or other close family member can leave a valued employee temporarily unable to perform job duties. Some time off, flextime, counseling, or temporarily decreasing duties can all help. Continuing education can improve job skills. Improving communication from the manager, either “coaching” on how to do the job better, or at least providing some feedback on what is going wrong, can avoid the necessity of terminating an employee. Most employees want to do well, and many believe they are doing well but are never told that their professional work is actually considered poor by those who evaluate and manage them. For some employees, however, discipline is required.
• Verbal communication. Short of the gross misconduct referred to in the beginning of this section, this should always take the form of informal communication by the manager. It should be verbal, and one-on-one―definitely not in front of coworkers. The manager should explain the problem and seek an explanation from the employee of what the manager can do to help improve the worker’s ability to perform. In many cases, this will be enough. Make a notation in your records when this communication was provided and what was said, and whether the employee acknowledged the problem and agreed to improve his or her performance.
• Written warning. If there is no appropriate response to the verbal communication (e.g., the employee continues to show up to work late or misses reasonable deadlines), a written memo outlining the problem should be shared with the employee. It should not be accusatory, but should state that the employee is engaging in behavior that is unacceptable, needs to be changed, and that this memo follows up on a verbal communication.
• Written formal warning. This involves a formal memo to the employee from his or her immediate supervisor, similar to the written warning, but notes that this new memo will become a part of the employee’s permanent personnel file. The memo should make it clear that the person’s job may be in jeopardy unless there is significant progress measured by a certain date, and that this progress will be evaluated on or shortly after that date.
• Suspension without pay. Some employees just won’t comprehend the seriousness of being late or being disruptive unless there is a real financial penalty attached. A one-day suspension, without pay, makes it clear that the manager has authority to take action and that permanent suspension (i.e., firing) is possible.
• Firing. This is the last resort. In the larger nonprofit, this may actually have a beneficial effect on other employees if they feel that this troublemaker is hurting the organization. In the smaller organization, firing is rarely beneficial in the short term; a poor employee is often much more productive than no employee at all. In the nonprofit organization, firing should always be for cause. It is not appropriate to fire your administrative assistant who has been faithful, loyal, and productive for 10 years just because the daughter of your college professor moved to town and needs a job, even if the administrative assistant has a contract that provides for employment “at will.” Even if there is no avenue for the fired employee to appeal, a nonprofit manager should be convinced that the firing is justified and could be defended in a court of law, if necessary. Some may have to defend the firing in court or before a grievance panel of some kind, such as a human relations commission. In recent years, courts have considered “wrongful discharge” suits and have awarded damages to fired employees who were dismissed unfairly. If in doubt that the firing is both legal and appropriate, consult an attorney.
• It is common courtesy to make sure that the fired employee is the first to know, other than those up the chain of command who must know or be consulted first to obtain dismissal authority.
• Fire the person in private, in a one-on-one situation, or with another supervisor present, as appropriate.
• Explain to the person why he or she is being fired, and point out the previous attempts to reach accommodation. Don’t turn the meeting into a debate or let the person plead for his or her job. By this time, it is counterproductive to rescind the decision. Explain that the purpose of the meeting, in addition to letting the person know about the firing, is to share productive information about procedures and benefits.
• Explain applicable organization procedures, and benefits, such as severance pay, outplacement services, the effective date of the firing, when to turn over keys and files, and COBRA benefits. COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) permits employees who retire, are laid off, who quit, or who are fired for reasons other than gross misconduct to continue to qualify for group health coverage for up to 18 months after termination, provided they pay the premiums. The manager may make suggestions about other jobs.
• If appropriate, arrange for an exit interview, permitting the employee the opportunity to share information about the organization, job description, coworkers, job function, and so on. While this exit interview may not always be pleasant, the information provided may be invaluable.