Hire the Best – Be the Best, A Call to Action for Nonprofits
Do Nonprofits Need to Update the Way They Hire and Develop Talent?
Hiring an effective and inspirational leader has the potential to transform an organization. Conversely, research indicates that $100 billion is lost annually by organizations making the wrong hire1. With nonprofits playing an increasingly important role in society, the focus on successful talent acquisition and selection is paramount to accomplishing their important work and avoiding costly selection miscalculation. Whether that means recruiting talent from industry, or selecting from within the nonprofit talent pool, the greatest impact stems from securing the leader and senior team that can best accomplish the mission. With the implementation of new best practices nonprofits can greatly enhance their ability to attract and retain talent who contribute to accomplishing their mission.
Do It Right The First Time - Make a Great Hire
What’s the cost of the wrong hire for any organization? Research indicates that at least half of hires made from outside an organization will fail within the first 18 months. Even a conservative calculation by the U.S. Department of Labor of the direct cost of replacing a leader is estimated at 30% of annual earnings and a 17+ week timeline to replacement2. The downside stemming from lack of productivity and lost revenues can be even more staggering: up to a 298% loss in opportunity costs and return on investment3. The math is especially compelling when you consider an ineffective hire and/or loss of a fundraising officer, a main revenue source for nonprofits4. The Advisory Board estimates that for each major gift officer vacancy, an organization can lose as much as $2.6M annually in funding support5. The return on investment in making and retaining the best hire is clear.
What Do Leading Organizations Promote That Fosters Excellence in Human Capital Management and Can Nonprofits Afford These Best Practices?
Whether governmental, nonprofit, or corporate, successful organizations strategically align talent management programs with organizational goals and objectives. There is a culture of excellence inspired by Boards and executive leadership, and an appreciation that human resources are critical to the success of the organization. As Jack Welch said, “Talent management deserves as much focus as financial capital management in corporations.” The same holds true for all institutions – as a practice, leading organizations invest in their people, believing they are the future.
Aspiring organizations hone their craft internally in key talent management disciplines while seeking outside expertise as needed. They are open to adopting processes that in the end, reduce costs and improve efficiencies—they are not fearful of change but embrace it as a positive step to advance their mission.
As a leading talent management expert suggests: “The truly game-changing play for driving organizational effectiveness is to work across organizational boundries to establish an integrated strategy.”6
Let’s review some of these opportunities:
TALENT ACQUISITION: Leading organizations are focused on identifying talent that will accomplish established goals. With increased competition for talent and rising acquisition costs, they build internal recruitment capabilities to ensure talent pipeline development and utilize specialized external search expertise for hard-tofill and high-impact roles. They use up-to-date technology and social media tools, including comprehensive applicant tracking systems. To be effective, internal recruitment programs must be well-resourced in terms of level of expertise, volume-based headcount, and visibility in the sectors they serve.
SELECTION: Transformative organizations seek transformative leaders and they aspire to hire the best. The selection process creates an opportunity to evaluate the talent pool and make the “best” hiring decision possible. Industrial psychology research7 indicates that interviews, whether in person or by video, are a biased form of selection. Aspiring organizations are thus incorporating new tools to enhance transparency and consistency. These include data analytics, including customized candidate assessments and evaluation grids as well as training supervisors on how best to calibrate candidates and holding them accountable for such proficiencies.
REWARDS AND RECOGNITION: Compensation parameters continue to significantly impact the hunt for talent, including for nonprofits. Successful organizations adopt a market-driven approach to developing rewards programs rather than benchmarking against current industry salary bands. Though nonprofits have often disallowed incentive-based compensation they are increasingly providing them for high-impact roles including for chief executives and fundraisers. Ethical guidelines are important to review and incorporate. While the immediate impact of elevating salary bands will increase costs, in the long term it enables nonprofits to attract and retain key staff and leaders and ultimately reduce cost-to-hire metrics due to lower vacancy rates. At minimal expense, nonprofits can enhance recognition programs as well.
DIVERSITY AND INCLUSION: A talent pool that reflects a range of perspectives greatly enhances an organization’s success, with those businesses in the top quartile of staff diversity being 35% more likely than their less-diverse peers to out-perform industry competitors8. For leading nonprofits, embracing and advancing a diverse workforce reflects their values and often is consistent with a mission focus. Nonprofits can extend proactive recruitment outreach to specialized networking groups and by transitioning non-traditional hires into new roles where possible. Using a competencybased hiring model will become the norm for nonprofits as will implementing strategic and intentional onboarding programs associated with mentoring and career advancement opportunities.
PERFORMANCE MANAGEMENT: Key to advancing an organization’s mission is the transparent, consistent, and measurable evaluation of its staff, along with feedback and accountabilities to motivate toward goals. No matter how complex, if a performance management system is not rooted in insightful and fair assessments, it will fall short of motivating employees and leaders to succeed. Nonprofits should embrace the notion that those staff and leaders who have advanced their mission to the greatest extent be rewarded with career advancement opportunities and elevated compensation. Measurable accomplishment, rather than simply tenure within the organization, must be the principal indicator of success.
LEARNING: Professional development is both one of the most mature areas of talent management and one of the most innovative. Professional learning efforts have increasingly adopted technological solutions and have embraced social collaboration to aid outcomes. However, investment in technology for learning can be significant and training is most effective when linked to a broader strategy that maps out desired behaviors, skills, knowledge, and career development. Nonprofits offering robust in-classroom and virtual training programs can assist staff and aspiring executives in identifying which programs are the most appropriate based on an individual’s development plan and chart a learning map to ensure support.
CAREER DEVELOPMENT AND SUCCESSION PLANNING: Private industry places a significant value on the identification of high-potential performers. Successful organizations deploy them strategically throughout their career to maximize leadership contributions. Utilizing customized assessment tools and actionable performance reviews from a range of stakeholders, nonprofits will gain additional insights on top performers and where to target precious resources for further advancement. Employing a 9-block model, nonprofits can chart an intentional career path for its most promising executives and ensure the talent pool exists for effective leadership succession.
A Call To Action
Historically light on strategic planning and slow to adopt operational best practices, nonprofits can transform their delivery of services by selecting a team to innovate and deliver the knowledge and services to advance their missions. With the exciting development of technological and process tools to inform all aspects of the talent management discipline, including the critically important recruitment and selection process, it makes sense that nonprofits utilize the best solutions available. As stewards of their organization’s resources, transformational nonprofit leaders are as critically important as their private industry counterparts to advancing their organization’s mission and goals.
Nonprofits can adopt and adapt the best practices discussed and many would argue, it has become an imperative to ensure longevity and success. The work of universities, medical centers, museums, humanitarian relief, scientific research, conservation, and other missionbased organizations has become an integral and critical part of civilized society. We owe a debt of gratitude for their work and our promise to contribute to their survival and growth.
5 Advisory Board, Resource: Cost of Turnover Calculator, December 2014.
6 Mary Beth Mongillo P.h.D, President Factor5 Consulting
7 Iris Bohnet, Alexandra van Geen, Max Bazerman “When Performance Trumps Gender Bias: Joint vs. Separate Evaluation”. Management Science 62(5) (2016):1225-1234.
Scott Highhouse. “Stubborn Reliance on Intuition and Subjectivity in Employee Selection”. Industrial and Organizational Psychology 1 (2008) 333-342.
Lauren A. Rivera. “Hiring as Cultural Matching: The Case of Elite Professional Service Firms”. American Sociological Review 77(6). (2012) 999-1022.