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Passion, People and Principles

Managing Professionals in Not-For-Profits

post # 464 — November 12, 2007 — a Managing post

A friend called recently and asked whether I thought the principles of managing professional service organizations applied in the not-for-profit sector.

It’s a complex question. Let’s start below the level of the organization and ask whether the principles of managing professionals (not the organization, but the people) differs between for-profit and not for profit.

I suspect that while the principles are the same (manage people through the opportunity for meaningful, challenging work) the actual practices are very different. The monetary dimension in the for-profit sector is both a blessing and a curse.

The blessing is that the availability of money allows generous rewards to be used to attract, motivate and retain talent. The curse is that financial rewards come to be used exclusively as the means to attract, motivate and retain talent.

In the for-profit sector, managers can “get away” with being poor managers, using money to cover up the absence of hands-on managerial skill. In the not-for-profit sector, the need for people management skills is unavoidable.

That’s only one dimension of the not-for-profit difference, but before carrying on with my analysis, let me get yours.

What do the rest of you think? What has your experience been?


Mike said:

My mother is the director of a non-profit health clinic that serves the uninsured with volunteer doctors. She has worked there for twenty years and really enjoyed it even though she is making less than what she would make if she worked a normal registered nursing job.

The executive director of the whole operation (the clinic is part of a neighborhood service consortium) moved on 9 months ago. My mom had worked for him the whole time she was there. A hard charging, “retired” fortune 500 executive was hired as the executive director. The new executive director has a style and expectations that were honed in the corporate world. One director (one of my mom’s colleagues running another service) has quit and my mom is on the verge of quitting even though she plans to retire in a year.

The “ideal” execution of management in the not for profit and the professional service firms has a lot of overlap. Niether organization is building widgets, they are thriving on relationships. The culture of not for profits is a very different animal though and it must be respected. Using dollars as a metric of success (gross revenues, profits,…) is a straightforward method that doesn’t exist in the not for profit world. Defining/measuring success and managing culture are more difficult in the not for profit.

posted on November 12, 2007

Ken Flowers said:

I learned to lead in volunteer organizations. Sloppy leadership techniques cost you volunteers quickly. Building a clear vision and learning to play to your team’s motivations become the keys to success.

I find those same techniques are the key to leadership success in the business world. Business people may not leave you as quickly as volunteers, but they will leave you, even if only mentally. I advocate that every would-be business leader lead in a volunteer situation for a while to hone real leadership skills.

posted on November 13, 2007

Wally Bock said:

Ken has hit something important. Volunteer organizations are only one part of the nonprofit sector, but they’re one of the best places to learn about managing people. Volunteers can and do leave if they’re poorly managed. It’s why I recommend to coaching clients that they get some experience managing volunteers. Some nonprofits, especially trade associations, are very much like businesses. Others, like educational institutions and hospitals have a royalty class (faculty or physicians) that dominate the institution and don’t work “for” anyone, but must still be managed.

It’s worth remember two bits of wisdom that Peter Drucker shared with us. First, he thought managing a hospital was the most difficult management job in the world. And he said something like “Academic politics are so vicious precisely because the stakes are so small.”

posted on November 13, 2007

Jon said:

I used to run a training course in the UK

for aspiring politicians which we called motivating volunteers. The course was, in reality, interpersonal skills training. The point however was that many of those coming on the course and particularly those coming from a business/corporate background, had to learn that there is a different motivation for many people who work or volunteer in the not-for-profit sector. Using the financial reward, appraisal or top-down management tools used in day-to-day business will simply not work with people who can just walk away.

As a caveat though not-for-profit does not and should never equate to amateur, professional standards should still be expected.

posted on November 14, 2007

Shaun Kieran said:

Paradoxically, I’ve worked with some nonprofits blessed with stable, engaged benefactors and deep pockets, and I’ve worked with corporations where it felt like every bean was literally being counted.

The best workplaces convey energy and purpose — to their customers, obviously — but also to their own employees. Money does matter for those wired that way, but a stimulating and appreciative environment is very compelling to a wide range of professionals

posted on November 15, 2007

Jason Schoolmeester said:

Over the last year I have had the opportunity to be involved in the management of a government legal practice and I have been very surprised by the response to even the idea of practice management.

A few recurring themes have emerged over the last year:

1. a government practice is so different from a private practice that there is nothing to learn from private pratice;

2. there is no need to promote the practice within government (ie market);

3. any attempt to develop performance indicators or some measure of value is highly resisted – the view is almost that it is obvious that government services are superior. The basic metric that everyone seems comfortable with is cost per hour, with none of the tension or control over time recording (ie bills are not produced in this practice).

4. practice management is not necessary. If you hire good people then they don’t need management and therefore the expense of practice management can be put to hiring more lawyers.

While it is clear that the profit motive is absent from a government practice, there is still two key requirements:

1. the delivery of an excellent service to meet the needs of government; and

2. receipt of sufficient resources to deliver those services.

I recently read Jim Collins supplement to his book Good to Great looking at the non-profit sector and how he modifies the hedgehog concept to include resources rather than profit. It makes so much sense.

In my view the principles are substantially the same, if only because Government has a choice in the sourcing of its legal advice: in-house or private sector. If in-house is not perceived as providing value for money then Government will make a change.

posted on November 19, 2007