Managing and Leading People in Social Enterprises

1. Managing and Leading People in Social Enterprises

2. Outline • Volunteers • Staff • Leaders

3. What Affects Volunteering? • Country-specific effects • Demographics • Volunteering increases with • Age • Education • Employment • Rural residence • Religion

4. Why Use Volunteers? Benefits • Service delivery at reduced cost • Contact with community • Costs • Control and reliability • Supervision and recruiting expense • Impact on paid jobs Ref. J-B 22

5. Designing an EffectiveVolunteer Program (1) • Staff buy-in • Clear job design and expectations • Job categories (direct assistance, administration, …) • Meaningful and significant • Part-time equivalent • Fits with overall strategic goals • Effective recruitment appeals • Importance of job to clients and community • Importance of job to NPO • Importance of job to volunteer Ref. J-B 22

6. Designing an EffectiveVolunteer Program (2) 4. Interviewing and matching • Fit • Fitness 5. Training 6. Supervision • Clear performance standards • Performance measurement and evaluation • Clear chain of command • Firing volunteers? Ref. J-B 22

7. Volunteer Recruitment • “Warm body” recruitment • Lots of people, low training and skills • Good for large events • Campaign: mass market to large groups • Targeted recruitment • Few people, specific skills • Good for long-term volunteer staffing • Campaign: specific, targeted outlets • Concentric circles recruitment • Steady flow of a few volunteers • Good for smaller organizations • Campaign: Word-of-mouth Ref. J-B 22

8. Volunteer Attrition • Even if staff don’t know volunteers’ opportunity cost, volunteers do • Volunteers consider • Market work value • Next-best volunteer effort • Value of leisure time Ref. Young & Steinberg

9. 14 12.6 12 11.5 10.5 10 9.2 7.8 8 7.2 6.2 Percent of employees 6 4.9 4.9 4.5 4.5 3.7 4 3.5 3 2.4 2.4 2.2 1.7 2 1.3 0.9 0.6 0.4 0 UK Holland USA Brazil Peru Israel Spain Ireland Mexico Austria Japan Finland Belgium Hungary Australia France Slovakia Colombia Romania Germany Argentina Czech Republic Size of the Nonprofit Workforce Source: Salamon 1999

10. Career Models • Steady state: one job, one career • Linear: Job changes serve an upward progression in pay and responsibility • Spiral: Job changes serve changing interests and sense of self-development • Transitory: Job changes for the sake of job changes Source: Driver 1980

11. Nonprofit Staff Motivation • Reasons for entering NP sector • Commitment to social change: 62% • Commitment to a particular cause: 56% • Hours/location: 32% • Reasons for taking current job • Interesting, challenging work: 66% • Extend personal skills: 65% • Salary: 19% • Prestige: 14% Source: Onyx & MacLean

12. Problems: Attraction and Retention Nonprofit hospital executive: • “Competing with for-profits for top talent is getting harder… • …the “A” talent turns over quickly... • …but the “C” talent stays forever.”

13. The Compressed Salary Structure “C” talent has perverse incentives For-profits Nonprofits Compensation “A” talent has perverse incentives, and is difficult to recruit Ability

14. Hiring and Firing: Laws • Illegal to make decision: • based on “irrelevant criteria” • based on “inappropriately subjective” criteria • without making allowances for disabled applicants Ref. J-B 23

15. Compensation Factors • Importance of position to organization • Importance of person to organization • Internal equity • External competitiveness Ref. J-B 23

16. Compensation Schemes • Flat • Merit • Seniority • Incentive

17. The Merits of Merit Pay • 90% of nonprofit employees consider their contribution to be “above average” • Merit pay rewards the truly above average employees • 40% of nonprofit workers will feel cheated • Lower morale, lower productivity

18. Seniority Pay • Disadvantages • Encourages survival, not excellence • Inequities grow regarding merit • External competitiveness can suffer Advantages • Reliable and objective • Cheap to administer • Encourages long-term retention Ref. J-B 23

19. Incentive Pay • Skill-based pay • Programs that share cost savings • Performance bonuses Ref. J-B 23

20. Outline Volunteers Staff Leaders

21. What Do Managers and Leaders Do? Lessons In a stable, high-competition environment, good management is paramount In a dynamic, uncertain environment, leadership is key Kotter, John P. "What Leaders Really Do.” Harvard Business Review (1990)

22. The Special Challenge of Social Enterprise Leadership For-profit leadership literature assumptions Power Autonomy Social entrepreneurs must lead from above, but also from below Persuasion vs. coercion

23. What is the Right Nonprofit Leadership Model? Percent of nonprofit executives that believe in each model Light, Paul C. Pathways to Nonprofit Excellence (Brookings Institution Press, 2002)

24. Leadership Styles Coercive leadership Authoritative leadership Affiliative leadership Democratic leadership Pacesetting leadership Coaching leadership Goleman, Daniel. "Leadership that Gets Results." Harvard Business Review (2000)

25. Coercive Leadership Demands immediate compliance Can achieve short-term results Positive shock to a moribund environment Key in emergencies Can create long-term damage Defection Creativity and initiative Non-financial rewards Coercive leadership can lower employee compensation Goleman, Daniel. "Leadership that Gets Results." Harvard Business Review (2000)

26. Authoritative Leadership Characteristics: vibrant enthusiasm and clear vision Encourages people to follow Motivates people by showing them how their work fits into larger picture All evaluation keys on adherence to vision and mission Can be ineffective with senior staff Goleman, Daniel. "Leadership that Gets Results." Harvard Business Review (2000)

27. Affiliative Leadership “People come first” Strives for happiness and harmony Results in fierce loyalty, workplace trust, and a revered leader May lower overall effectiveness Poor performance may be tolerated Tendency to “groupthink” Rudderlessness occurs when clear direction is needed This style is best when accompanying another Goleman, Daniel. "Leadership that Gets Results." Harvard Business Review (2000)

28. Democratic Leadership Everybody has a say in the process Opposing viewpoints are protected and respected Builds trust, respect, and commitment May be counterproductive Can lead to endless meetings Inhibits efficient decisionmaking May lead go-getters to defect Goleman, Daniel. "Leadership that Gets Results." Harvard Business Review (2000)

29. Pacesetting Leadership Nobody works harder than the ED Pitches in and sets an example Can create moral problems among less-able employees Organization is in trouble if pacesetter leaves Goleman, Daniel. "Leadership that Gets Results." Harvard Business Review (2000)

30. Coaching Leadership Counsels employees Highly values human capital, and looks for individual strengths Delegates in order to develop employees Can be extremely time-consuming Goleman, Daniel. "Leadership that Gets Results." Harvard Business Review (2000)