People Blog & Insights

The ways in which leadership communicates (or not) with staff can make or break an organization’s culture. When your staff members are unhappy or feel left in the dark, “toxic” or “problematic” are words that can quickly start buzzing around the office or Slack chat rooms. And while there are some organizations that meet those definitions, a mistrust of leadership can sometimes leave staff feeling that way even when an organization’s culture is relatively healthy. This is when transparency can be a leader’s friend, particularly in nonprofit organizations. However, with transparency comes the need to draw boundaries.  

 

So how can nonprofit management manage the delicate balance of openness with parameters? Keep reading to find out! 

 

Fighting Systems of Power Externally…and Internally 

 

For many nonprofits in social justice or grassroots movements, fighting imbalances of power and questioning authority are critical parts of their day-to-day work. And often, this same skepticism can turn inward. An inherent mistrust of those in power can lead staff to believe that leadership is intentionally working against, to exploit or to mislead staff. These beliefs can quickly erode the relationship between leadership and staff and negatively impact an organization’s ability to execute its mission. 

 

While there are spaces within the nonprofit sector that are truly broken and have damaged their staff, reputation, and mission, a knee-jerk assumption that all management is nefarious doesn’t leave room for the majority of leaders who are principled, ethical, and good at what they do. Additionally, staff members who are quick to point out where management can “do better” may not have the knowledge, experience, or insights to understand why a leader makes the choices they do or recognize that sometimes an unpopular choice may be the right one.   

 

Facing Criticism with Transparency 

 

For a management team facing disgruntled staff, transparency is often the first strategy employed to address and mitigate challenges. After all, helping staff understand what’s happening within an organization and how they fit into it, can create trust and bolster a sense of accountability for all.  

 

But transparency can be a slippery slope. For example, a leader may want to quiet the rumor mill when a staff member is fired by sharing some of the details, but that could breach confidentiality and leave an organization open to liability. Or, if leadership involves staff in every decision, an organization can quickly get stuck in a cycle of consensus paralysis.   

 

Transparency with Boundaries  

 

One of the most impactful ways that management can “do” transparency is by setting clear expectations about what transparency looks like within the organization. In other words, doing the literal act of defining (and sharing out) what transparency means to and across your organization. Staff doesn’t have to agree with an organization’s definition of transparency, but it is critical that they understand it. For example, transparency could mean that leadership clearly and frequently shares decision making processes, including who is involved, when a decision is being made, and the impact of those decisions. This may not mean that every staff member is part of the process or agrees with the decision, but they do have a sight line into the process. 

 

There will be moments when leadership does need staff input to influence or inform decisions. When that happens, it’s important to be transparent about how and if their input will be used. Management can let their staff know they’re considering multiple perspectives but that they may not be used to make the final decision.  

 

It’s also important for leadership to be clear about what they can and cannot share. Hiring or firing processes, pay, or funding decisions are sensitive topics that a management team may not want to share intimate details about. However, sharing policies and procedures around these situations can help staff understand how these choices are made. 

 

Power and Transparency Can Co-Exist 

 

To be effective, a leadership team needs to make quick decisions and judgment calls that can affect the entire staff. There will be instances where some staff members don’t agree with a decision. And that’s okay. Transparency isn’t about making everyone happy all of the time or involving every staff member in every choice. Instead, it’s about setting expectations around what level of details will or won’t be shared and how decision making happens. And when leadership is genuinely transparent in its policies, staff can trust in the process, even if they disagree with the outcome.  

Private jets, lavish vacations, mansions with glittering pools. We’ve all read the headlines about “perks” like these afforded to high-ranking executives at large corporations, while the rank and file barely get by. As CEOs’ salaries continue to soar, the average worker’s is in decline, sparking conversations around equity and how we can ensure the average worker is able to do more than make ends meet.  

One solution that has garnered attention is the implementation of pay ratios between the highest and lowest paid employees – setting a cap on how wide the disparity between those salaries can be. This tactic is meant to rebalance the scales and minimize the widening pay gap that is rampant across corporate America. This concept is also gaining popularity in the nonprofit sector as their leaders work to ensure equity and transparency across their organizations.  

But are pay ratios the right solution for Executive Directors in the nonprofit sector?  

Apples to Oranges 

For-profit companies have the freedom (and budgets) to set the direction and guidelines on how (and how much) to pay their executive leaders and employees. But nonprofits are in a different position. IRS guidelines on reasonable compensation, funder requirements and historic and prevalent sector practices often dictate how nonprofits spend their dollars, with the lion’s share going to programmatic activities and a small amount to salaries, benefits, and overhead. This means that most organizations pay below market rate for just about every position, including the executive director. So if a nonprofit is already paying lower salaries, and then layers on a pay ratio, that could leave executive directors with the opposite problem of corporate CEOs – being insufficiently compensated for their work and responsibilities. And with events such as the pandemic, the Great Resignation, and inflation changing how and why we work, nonprofit leaders and staff are no longer willing to take a pay cut to do good work. They want to do good and live good. 

The corporate sector is influencing pay in the nonprofit sector, increasing pressure to compete with for-profits that typically pay better wages and can offer more attractive benefits and perks.  But, just because nonprofits need to compete doesn’t mean we need to take on every corporate practice. Our solutions will need to be different to fit our context. If nonprofits want to stay competitive and attract the best talent, they have to find ways to invest in their staff and pay equitably across the board. 

Change the View

So if not a pay ratio, then what? The sector is at a crossroads where a mindset shift could change everything. Rather than accepting below market pay as the standard and looking to band-aid solutions like pay ratios, we can create a more equitable system where everyone is paid to market. Where we’re truly valuing staff members’ talents, contributions, and responsibilities. For executive directors, who handle a myriad of responsibilities, their pay should be higher than the most junior staffer. But, in this model, that junior staffer is paid at market rate so we can worry less about policing the pay gap. The nonprofit sector is bigger than ever, contributing an estimated $1.5 trillion to the US economy in 2022 and composing 5.6 percent of the country’s gross domestic product. That means we have the resources and opportunity to make this kind of change.  

Funders are facing pressure from leaders and advocates to shift their grantmaking requirements and nonprofits are in a position to push back on funding restrictions. For example, funders can, and should, move away from restricted funding to general operating support, leaving the experts to determine how best to disperse the money they receive within their organizations.

Additionally, nonprofit leaders can approach their budgets differently, prioritizing not only programmatic work but ensuring that the right infrastructure and systems (such as salaries and overhead) are in place to execute the mission effectively. 

Focus on External and Internal Values 

Nonprofits exist to do good work and that mission has to translate to internal operations, too. People get the work done, and to attract, retain, and care for the best talent, nonprofits must pay at least a living wage. We don’t have to choose between doing good work and being able to support ourselves and our family. 

Let’s look away from the for-profit world for solutions and focus inward on the changes our field can make to pay everyone in an organization equitably. Whether it’s shifting the funder paradigm or how leaders approach their budget, it is possible to practice our values in every way. 

The pandemic taught us many tough lessons, one being that employees are sick and tired of being sick and tired. The Great Resignation demonstrated that staff want more – from flexible schedules to healthier cultures. And that means that employers must find ways to respond accordingly to attract and retain talent, and achieve their mission.

An HR function plays a critical role in shaping the practices that create the organizational culture everyone swims in. These practices can either help a nonprofit more effectively achieve its mission, or, they can contribute to a crash and burn. Many nonprofit leaders know that traditional HR approaches are no longer working, and while a people-centered ethos is gaining traction, opinions differ on what this looks like in practice. As CEO and Senior Partner of Ascend People – a firm that takes a radically different approach to HR – we’ve put a stake in the ground and believe nonprofits need values-based HR that puts people at the center of the organization.

What do I mean by “values-based HR”? We define it as the management of staff contributions to the organization that ground progressive, shared beliefs and assumptions in leadership, decision making, and practices. It recognizes that nonprofits need their people to achieve their mission and staff need policies, practices, and solutions that are human-centered so they feel valued, heard, and engaged. 

Does my org really need values-based HR?

The nonprofit sector has long operated within a scarcity mindset that emphasizes working hard for little pay, “making do” with underdeveloped internal systems and culture, and working with limited resources – all in the name of doing good work. For many nonprofit teams, this is their daily norm, but these dynamics can create a culture where staff feel used and unfulfilled. As a new generation of workers wakes up to the realization that these assumptions don’t have to be standard operating procedure, and demands healthier cultures, nonprofit leaders will need to shift this mindset. Fortifying (or in many cases completely re-imagining) internal systems to create an environment that centers staff will be critical to nonprofits’ more effectively achieving their mission. 

When we work with a client, one of the first places we often start is with a values alignment exercise that helps leaders see whether or not their internal practices align with their external values and ways of working. This can be a critical first step on the journey to becoming a people-centered organization. For example, if your organization is dedicated to increasing transparency in governments, but your staff has no insight into how promotions are granted, that’s a misalignment of values. And whatever values are driving your internal policies, practices, and approaches, they directly impact your staff. That impact can either keep staff engaged and help move the work forward, or it can lead to a toxic workplace where staff is miserable and the mission suffers.

Nonprofits can reap additional benefits from a values-based HR approach, including stronger trust between staff and management, better collaboration, staff feeling valued, and higher staff productivity and engagement.

Traditional HR isn’t working

While HR began, and has continued to evolve, as a function concerned with worker well-being, larger world contexts in which it operates has shaped the practice. For example, American values of capitalism and productivity above all else have resulted in HR operating as an ancillary risk management function whose main imperative is to avoid lawsuits, minimize risk, and protect the company. In these environments, staff is viewed as an asset to be used to achieve the mission or bottom line, and relations between staff and management are typically fraught with tension, mistrust, and unease. Even progressive, mission-driven organizations whose bread and butter is human-centered, equitable work have been brought to a screeching halt by staff and management turmoil exacerbated by these dynamics. 

In my own professional experience as an HR leader, I’ve seen the harm that traditional approaches can cause. Day-to-day work, the budget, or the mission gets put ahead of people, leaving staff feeling burned out, leveraged, and used. Workplaces can transform into toxic environments with tension and conflict, and a loss of mission-critical knowledge due to damaging staff turnover. In some cases, these issues can lead to funder concern and even limits of future investments. 

For most organizations, the events leading up to these types of outcomes are not maliciously intended. Instead, it’s often a competency challenge – leadership simply doesn’t know how to develop or implement the types of practices that center their staff. Running a nonprofit is no easy task and leaders can lose sight of the value of their team in the face of board management, fundraising, and managing community work. 

What needs to change?

One of the first steps to developing values-based HR practices that create a more human-centered organization is a mindset shift. Nonprofit leadership must flip the hierarchy of needs from the organization first, to people first. It’s important to remember that staff is composed of thinking, life-living adults with varying needs. Traditional HR has adopted a one-size-fits-all approach which helps to reduce risk and ensure compliance. However, this doesn’t work when it comes to staff management and treatment. Everyone needs something just a little bit different. 

We must shift from an equality lens – where everyone gets the same thing – to an equity lens when approaching HR. We have to take into consideration the variety and differences of the people who work in an organization and consider what each of them might need to do their best work. This isn’t to say that HR practices should cater to every single individual all of the time, but the people that are most impacted should be at the forefront of their design. It is possible to walk the tightrope of balancing the needs of the organization with the needs of the people. 

This shift also comes into play when approaching problem-solving, challenges, or decision-making within an organization. Many organizations reactively focus on their HR policies once staff has complained or a challenge has come into view, leading to hastily pulled together solutions. And while these solutions might ease the immediate challenge, they rarely solve the issue in a meaningful or sustainable way. A people-first approach, on the other hand, can help nonprofit leaders proactively design the processes and structures that support staff – before issues arise. And this approach can help nonprofits shift from that scarcity mindset to a better understanding of what is possible, even with limited resources, and how they can bring staff into policy creation and decision making. 

We often ask our clients to consider the following when taking on a values-based HR approach:

  • Are our internal and external values in alignment?
  • What kind of an organization do we want to be?
  • Who is most impacted by HR practices and how can we develop the best solutions? 
  • Is leadership/management bought in to ensure transformational change?
  • How can we balance the realities of operating a nonprofit organization with the change we hope to implement with our staff?

We’re ready for change. Now what?

The shift from traditional HR approaches to a transformational, values-based model that centers staff is not easy, nor does it happen overnight. It’s a journey that requires deep reflection, a willingness to change, intention, and sustained work.

That’s why I created Ascend People, to leverage my expertise and walk this journey with nonprofits that are really ready to center their staff and more effectively achieve their mission. We always tell clients that while we can’t do this work for them, we can support them in the development of strategies and a roadmap to get from point A to point B to reach an ideal future state. Through discussions and deep partnership, we help our clients understand what their organization really stands for, and how they can leverage that to influence decisions and practices that put their people first. And, in doing so, help the organization thrive.

A values-based approach can be infused in all things HR, and we help clients in three main areas: 

  1. HR Effectiveness. Developing and strengthening functions, practices, and processes to meet the needs and expectations of both your staff and the organization.

  2. Compensation. Analyzing and designing compensation programs and practices that help you equitably reward your people.

  3. Outsourced Recruitment. Providing full-cycle recruitment capacity and management to identify, attract, and hire quality diverse talent for your organization.

One of the most important reminders we offer clients is that this work is never done. Yes, you’ll meet objectives and “get there,” but those are temporary and ever-changing goalposts. A solution that works today may not work tomorrow as your organization evolves and as staff come and go. And that’s a good thing! A dynamic organization reaches a level of comfort in the change and builds it in as part of its strategic plan. Nonprofits are experts at nimbly navigating and adjusting to multiple outside forces. To stay relevant, and to keep doing your important work, you have to change. You can’t achieve your mission without your people. It’s time to put them first.

If you’re ready to learn more about how your organization can better achieve its mission with a values-based HR approach, let’s talk and see how Ascend People can help. 

As the new year approaches, we know that your organization – and most other organizations – are preparing and finalizing 2023 budgets.  A big piece of this work is determining salary/payroll budgets and making decisions on pay increases for your staff.  As our country experiences the highest inflation in 40 years, we know that organizations are contending with what are appropriate and feasible levels of pay increases for this upcoming year.

Traditionally, annual salary budgets and staff adjustments have averaged around 3%.  In the past, depending on the type of organization you are, your current organizational life cycle (new, emerging, growing, or stable), your size and your budget, organizations have varied in their ability to increase annual pay around this amount.  Now, with inflation in the high single digits for most regions – double digits in some places – the long-time status quo is flying out the window.

Across organizations, for 2023, we are seeing projected salary increases – or cost of living adjustments (COLA) – between 3-5%, targeting around 4% on average.  We recognize that these projections are way less than inflation growth and your staff is likely to have concerns that pay increases in this range virtually represent a pay “decrease” given their actual increases in costs of living expenses.  We recommend the following to manage your increases for the new year:

  • If possible, include an increase of 3-5% in your payroll budgets for 2023. Your organization, of course, can decide to pay above or below this range based on your organization’s compensation philosophy and financial feasibility.
  • Consider equity in the distribution of these increases across your staff. Typically, your lower paid staff feel the brunt of our economy more severely, so you might consider higher increases for them and lower for leadership or standard flat dollar amount raises that represent a higher increase for lower paid staff.  Of course, an across-the-board percent increase or merit-based raises that are tied to performance are appropriate in many instances as well.
  • Be transparent with staff about the organization’s decision on increases – what went into the decision, the outcome and impact it will have on staff, and any future plans to do other types of rewards. Acknowledge how inflation is outpacing the pay increases and consider other non-financial ways that your organization can show staff that they are valued (e.g., year end time off, growth and development opportunities in the new year, new or evolved benefits, etc.).

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