Earlier this year, we surveyed nearly 300 nonprofit leaders and HR professionals about their most pressing talent priorities. There is a severe shortage of data available about nonprofit talent, and our newly released Nonprofit Talent Management Priorities survey is one of several new data initiatives we are developing to fill that gap. The resulting data both inform our approach to serving the nonprofit sector and help nonprofits like yours set accurate benchmarks and priorities relative to peer organizations.
We shared the results in a public data portal several weeks ago, but here are five key takeaways worth exploring in more depth:
1. Diversity Trumps All
The 2017 Nonprofit Talent Management Priorities Survey found that nonprofits are placing a significant emphasis on workplace diversity this year. The top talent acquisition priority of 43 percent of the nonprofits we surveyed (the largest plurality on any of the questions) was attracting a diverse workforce.
One of our earlier nonprofit talent surveys, the 2016 Nonprofit Employment Practices Survey, found that only 41 percent of nonprofits had a formal diversity and inclusion strategy in place. If diversity remains a top priority for nonprofits in 2017, that’s a number that can be expected to rise.
While a variety of factors likely contribute to the emphasis on diversity, more than one organization has linked their focus on hiring diverse employees to the 2016 election cycle and the current political climate. Following the election, nonprofits are facing the unpleasant reality that some segments of the American population and government are actively hostile to differences in race, creed, gender and more. That’s prompting a closer look at some organizations’ existing commitments to inclusivity, and at ways to strengthen those commitments.
Nonprofits that make a shift toward stronger diversity commitments are moving in the right direction—diverse workforces tend to outperform their more homogenous counterparts.
Takeaways for your organization: As more organizations prioritize diversity in an active and visible way, it will become harder to compete for top talent without doing the same. Increasingly candidates want to understand prospective employers’ approach to diversity, equity and inclusion, and being silent or having no clear plan of action to foster an inclusive workplace could create a disadvantage to you as an employer. Diversity, equity, and inclusion standards shouldn’t just be internal guidelines. Embrace them publicly and proudly and you’ll strengthen your organization’s competitive advantage.
In addition to a meaningful diversity statement, pursue concrete measures like representation requirements on boards and decision-making bodies, diversity standards for vendors and donors, and accessibility measures in both digital and physical spaces. Top talent will be looking for proof in action, not just a stated commitment to diversity.
2. The Big Obstacle: Funding
Funding and budget considerations enter into every aspect of nonprofit management and operations. Talent and hiring priorities are no exception. When we offered our survey participants an open-ended question about the biggest barriers to achieving their talent priorities, “funding” was the most commonly used word in their responses.
That shouldn’t come as a surprise to anyone with experience in the nonprofit sector, where talent underinvestment has long been the norm. In recent decades, investment in nonprofit talent actually fell, dropping from 1.4 percent of total nonprofit grant dollars in 1992 to just 0.8 percent in 2011.
Nonprofit leaders and those who support them must actively push back against this trend. Human capital is your organization’s most valuable resource, and you won’t be able to fully realize your your mission until you’re able to make meaningful talent investments and tie the results of those investments to organizational strategy.
Takeaways for your organization: With changing government priorities—and more nonprofit funding cuts likely looming, your organization may be asked to do more with less in the coming years. Attracting and retaining a talented team will become more critical than ever and making sure that you hire the right people for the right roles at the right time will be essential. Even as your overall budget faces new pressures, boards and leadership are going to have to not just defend, but actually fight to expand, talent investments.
If your organization is struggling to hire or retain skilled individuals, consider how you can reframe conversations about talent investment with your board, funders and other decision-makers to tie in directly to mission attainment. The case for talent investments is a business case not an emotional one.
3. Structure & Process Challenges at Larger Organizations
While funding presents challenges for organizations of all sizes, those challenges understandably seem to decrease as organizations grow. Nonprofits with operating budgets over $20 million cited standardizing their internal talent-related processes (not funding) as their key roadblock to realizing their talent priorities.
Word clouds representing obstacles to talent and hiring priorities at small budget nonprofits (left) and large budget nonprofits (right).
Put another way, as nonprofits (and their budgets) scale up, the overall effectiveness and accountability of talent management becomes a bigger concern.
It’s not unusual for HR and talent management structures to develop in an ad hoc manner when organizations are small and still finding their feet. However, as an organization grows, it becomes increasingly important to standardize those structures or they will become obstacles.
Takeaways for your organization: The longer an organization goes without standardized talent management processes and a concrete talent strategy, the more complex an eventual fix will be. Start developing strategic plans and corresponding process documentation early, and assume these things will need to evolve substantially over time. If your organization is struggling to standardize its internal processes or build a strategy that will grow with you, consider partnering with an outside talent management firm or consultancy.
4. The Search for Meaningful Performance Management
Performance management is one area where nonprofits seem to be catching up with their for-profit counterparts. A majority respondents to the 2017 Nonprofit Talent Management Priorities survey indicated they already have a system for performance management in place, and they’re interested in improving the model.
Only 12 percent of respondents indicated a need to implement a formal performance management system, compared to 40 percent who had one but wanted to prioritize a restructuring of the system, and a further 31 percent for whom shifting to a continuous feedback model was a top priority.
That’s good news, as it means that most nonprofits are recognizing that performance models of 10 and 15 years ago are evolving from being static, event-driven systems to systems that need to foster more frequent, multi-directional feedback mechanisms. The high level of priority nonprofits placed on improving their performance management models tells us that most organizations aren’t happy with the impact of their current systems on individual and organizational performance.
Some nonprofits may be looking to make shifts similar to the ones led by companies like Google, Adobe, and Amazon, all of which have recently done away with their annual performance reviews, a historically interesting but structurally dubious anachronism dreaded by managers and employees alike. In place of that model, many forward-thinking nonprofits are implementing performance management systems that emphasize an individual’s daily contribution toward organizational goals and give feedback on a continuous basis rather than at set points throughout the year.
Takeaways for your organization: It’s critical to remember that performance management is a means rather than an end. In an ideal world, performance data should connect in a meaningful and transparent way to employee motivation and rewards. A process that doesn’t differentiate meaningfully between high and low performers isn’t achieving that.
If your nonprofit is looking to restructure its performance management process, take a goal-oriented approach: what behaviors is your organization trying to incentivize in its employees? How do those behaviors align with your organization’s values and contribute to your mission? What information does leadership need about employee performance that it isn’t currently getting? How do performance gaps inform your training and professional development investments? Processes that neither motivate nor inform in meaningful ways can likely be discarded, streamlined or revised.
5. Using Talent Metrics
Survey respondents are also focused on finding ways to take data they already have and turn them into tangible benchmarks for talent management. 38 percent of respondents listed benchmarking existing HR/talent metrics as their top priority for talent-related analytics. Only 22 percent prioritized implementing the reporting of those metrics, and 14 percent prioritized the expansion of existing metrics. That tells us that many nonprofits already have HR and talent data on hand, and are looking for ways to use them more effectively.
Organizations that expand their data-based benchmarking are ultimately turning passive numbers into active goals. For example, if your nonprofit looks at data on recent hires in one department and determines they’re far less diverse than the rest of your workforce, that can (and probably should) impact the team’s upcoming hiring decisions and approach to how and where it cultivates talent. It may also point to a needed HR intervention, particularly in cases (like diversity in hiring) where an outlying data point potentially indicates a chronic or organizational cultural problem.
Sometimes, better benchmarking is just a matter of looking at the right data. Headcount and turnover are obvious priorities for many organizations, but digging a little deeper into other internal metrics like employee tenure and promotion wait time can help identify needed structural and hiring changes. As key metrics shift, keep an eye on what the rest of the data are doing, too. Correlation isn’t necessarily causation—but it’s rarely entirely coincidental.
Takeaways for your organization: HR and talent data should be used actively, not just gathered and reported. Look for areas where your organization’s talent results are strong and areas where outcomes could be improved, and turn them into benchmarks or goals to be met. If your organization is consistently coming up short on a key metric, talent management and hiring processes need to be adjusted to prioritize improvement in that area.
Diversity, talent funding and structure, performance management, and data tracking are some of the topics nonprofits are thinking about most as they weigh their priorities for 2017. If you’re not already focused on these areas, consider whether your priorities need to shift as the year progresses.