The Importance of Human Resources Literacy For Nonprofits

Transcription

1 HUMAN RESOURCES LITERACY for the Nonprofit Sector Why HR Professionals Make Great Board Members Presented by A joint project from

2 Library of Congress Cataloging-in-Publication Data Human resources literacy for the nonprofit sector : why HR professionals make great board members / by BoardSource. p. cm. "A Joint Project of BoardSource and The Taproot Foundation." ISBN Nonprofit organizations--personnel management. 2. Nonprofit organizations Management. I. BoardSource (Organization) II. Taproot Foundation. HF5549.H dc BoardSource and Taproot Foundation. First Printing, November 2010 ISBN Published by BoardSource 1828 L Street, NW, Suite 900 Washington, DC THIS PROJECT WAS FUNDED BY CHEVRON. BoardSource and the Taproot Foundation appreciate Chevron s deep commitment to building the capacity of the nonprofit sector through this and other projects.

3 TABLE OF CONTENTS FOREWORD FROM CHEVRON III INTRODUCTION V Aaron Hurst, President and Founder of Taproot Foundation, and board member, BoardSource About HR Literacy for the Nonprofit Sector: Why HR Professionals Make Great Board Members PART ONE For HR Professionals: Introduction to Nonprofit Boards and the Nonprofit Sector PART TWO For Boards and Chief Executives: How Nonprofit Boards Can Benefit from Including HR Professionals APPENDIX Interview Subjects for This Project APPENDIX Survey Methodology and Results: The HR Professional and Board Service APPENDIX Understanding HR Appendix The Strange and Wonderful Chemistry of the Boardroom Resources BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR i

4 FOREWORD FROM CHEVRON At Chevron, we have an unwavering commitment to being a good partner focused on building productive, collaborative, trusting, and beneficial relationships with governments, other companies, our customers, our communities, and each other. That s why we are so delighted to partner with BoardSource and Taproot on this important project: to help connect qualified, interested human resources professionals with nonprofit boards the quintessential community service. In this handbook, you will learn about the nonprofit sector how it exists solely for the social benefit; how important it is to our national; well-being and how there is so much more to be done, especially in these turbulent times. You will learn how the boards of directors of these organizations unpaid volunteers who believe passionately in the mission of the organization they serve comprise a strategic force for good as they oversee the organization s activities, set direction for its future, and ensure the sufficiency of its resources. And who are these board members? Ordinary people like you, and like us. People who care and who want to give something back to their communities. They do important work with limited resources. With this project, Taproot and BoardSource have teamed up to discover how more people with needed, professional skills might be inspired to fulfill that desire, by serving on nonprofit boards. It is our fond hope that, whether you are an HR professional who is wondering whether nonprofit board service might be a good fit for you, or a board member or executive of a nonprofit organization seeking committed, passionate people to serve on your board, you will find the answers in this slim handbook, and make the connection that will help move the sector forward. Your commitment to the betterment of society is evidenced just by picking up this book. May it make a difference! Thank you. Matt Lonner Manager, Global Partnership and Programs Chevron 2011 BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR iii

5 I started the Taproot Foundation in 2001 with a vision to ensure all nonprofits had access to the quality pro bono resources they need to thrive. As a social entrepreneur working to build an organization that could have a measurable impact in our society, I faced many challenges. The greatest ones were not fundraising or program design. They were building and managing a team that could achieve our audacious goals. How do we build the right culture? Whom should we hire? How do we effectively use volunteers? What is a great manager? Whom do we need on the board and how do we structure it? How do we attract the best people? One of the best decisions I made was to bring HR executives onto my board to help counsel me in these areas and to bring pro bono HR resources to the organization to build and improve our systems. They have made me a better manager and leader and made Taproot the organization it is today an organization known for its exceptional talent. But we still have a lot of work to do to retain this culture and this talent and to increase the impact of both our board and volunteers. On all these fronts, our HR board members are a tremendous source of counsel and resources. They also make sure the board doesn t undervalue the people part of every decision, and has HR literacy, in addition to the financial literacy we all seek in board members. When talking to other social entrepreneurs and nonprofit executive directors, I found that many of the best nonprofit executives had also discovered the power of having HR professionals on their board, and like me, many identified them as among their most engaged and effective board members. It makes sense. This is the people sector, meaning that people are our greatest assets, often our greatest expense, and strategic oversight of this resource is uniquely suited to HR professionals. In our work with thousands of nonprofit executive directors across the country we have consistently heard that after fundraising, people management (from volunteers to staff to the board) is the area of greatest need and also painfully underresourced. For these reasons, I am incredibly proud to be able to partner with BoardSource and Chevron to help not only get more HR professionals onto boards but also to help them put their skills and networks to work to ensure all nonprofit boards and executives are HR or people literate, and that they have access to pro bono HR resources to build their capacity to engage and leverage their greatest resource people in the enactment of their missions. One day HR professionals will be just as sought after on nonprofit boards as financial professionals are now. Collectively, this group will help make the nonprofit sector the employer of choice for the best and brightest in our society. Let s make one day today. MAKE IT MATTER. INTRODUCTION Aaron Hurst President & Founder Taproot Foundation 2011 BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR v

6 HOW TO READ THIS BOOK TO THE HUMAN RESOURCES PROFESSIONAL You have the greatest profession in the world. Your specialty is people endlessly fascinating, inexhaustibly complex, sometimes irritatingly frustrating, but always valuable beyond measure. As a human resources professional, you ve seen it all. Well, maybe not ALL. With this small book, we d like to introduce you to the world of nonprofits, and particularly, the boards of nonprofits, where your talents and expertise will be invaluable. They need you. Find out why in Part One, For HR Professionals: Introduction to Boards and the Nonprofit Sector. TO THE BOARD AND STAFF OF NONPROFIT ORGANIZATIONS Nobody knows better than you that nonprofits need great boards to help them with their strategic direction, ensure they have the resources to take the organization in that direction, and oversee their progress. Great board members come from all areas and possess a myriad of knowledge and competencies. But one professional skill that has been largely overlooked when boards seek new members is HUMAN RESOURCES. HR professionals, who run the gamut from selfemployed human resources consultants to vice presidents of large corporations, all share one thing in common: They focus on the human capital aspect of an organization. These folks make engaged, focused, and knowledgeable board members. You need them. Find out what HR professionals can do in Part Two, For Boards and Chief Executives: How Nonprofit Boards Can Benefit from Including HR Professionals BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 1

7 WHY HAVE WE BROUGHT YOU TOGETHER? The purpose of this handbook is to connect these two incredibly important groups: leaders of nonprofit organizations who need creative, insightful board members who understand that the human capital of an organization is invaluable and precious, and HR professionals who live and breathe that understanding every single day. We believe it s a match that s long overdue. An organization s people are its number one driver for success and its number one cost. Not only that, but the number one source of litigation in the sector is personnel matters. Chief executives report that, after fundraising, their next most critical need is help with staff issues. Who is giving them that help? For organizations that have HR staff, certainly that staff is their first line of assistance. Smaller organizations that do not have human resources staff may utilize volunteers, either board members or pro bono volunteers who offer their assistance on large projects such as writing personnel policies or doing comparative research on insurance plans. But, these projects are by their nature managerial and are best suited for staff. Where the board of most organizations comes in is in an advisory capacity. Why do many, if not most, boards think we need a lawyer and a financial expert on our board and overlook other professionals like human resources? Nonprofits are about people; an HR professional on the board will see issues through the people lens, and raise the vital importance of seeing through that lens for the rest of the board imparting what we re calling human capital literacy. This handbook gives an overview of the nonprofit sector and board service, and shows, through the results of a survey and interviews with HR professionals, that the skills and competencies of this group comprise an ideal fit for nonprofit boards. Board members come to nonprofits through a variety of onramps, but especially through volunteerism. BoardSource s partner in this project, the Taproot Foundation, specializes in a particular form of volunteerism pro bono service. In addition to raising the level of human capital literacy for the board, another great value of having HR professionals on the board is to help secure pro bono HR resources. This book tells you how to secure these important resources to build HR capacity BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 3

8 It is our hope that boards will begin to recognize the value of broadening the literacies they seek on their boards, including human capital literacy, and that nonprofit professionals will recognize that nonprofit board service is a valuable outlet for their talents, their interests, and their altruism. The time is now. The nonprofit sector faces challenges like never before with increased need for services and decreased financial resources. The sector cannot afford not to leverage the strengths of individuals who are talented, willing, and able to make a difference. Human resources professionals and nonprofit boards: Come together, right now. 4 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

9 PART ONE: FOR HUMAN RESOURCES PROFESSIONALS Introduction to Nonprofit Boards and the Nonprofit Sector

10 NONPROFIT ORGANIZATIONS......span a wide spectrum of mission areas, resources, values, history, and stakeholders from small, local homeless shelters to large, international trade associations; from community foundations operating within a geographic region to educational institutions that attract students from around the country. Nonprofits are a vibrant, essential element of our social landscape. They struggle to reduce poverty and bring an end to homelessness. They strive to build safe places to learn and play, create inspiring art and music, and protect natural resources. A lot of the work of nonprofits is done by volunteers, folks from all walks of life who feel passionate about what the nonprofit does. And there are many, many ways to express that passion.

11 TEN THINGS YOU NEED TO KNOW ABOUT THE NONPROFIT SECTOR 1. MISSION is the motive, not money. There are no shareholders or owners of the organizations in nonprofits. 2. Nonprofit organizations exist to serve a social purpose, a constituency, or a cause. They are NOT prohibited from creating excess revenue over expenses, but any surplus must be used to support the organization s mission. 3. Nonprofit funding may come from just a handful of sources, like a foundation, or from an array of charitable contributions, membership dues, grants, fees from programs and services, and more. 4. The sector goes by many names: the not-for-profit sector, the third sector, the independent sector, the philanthropic sector, the voluntary sector, or the social sector. Outside the United States, nonprofits are called nongovernmental organizations (NGOs) or civil society organizations. 5. The sector is HUGE. In 2009, there were more than 1.7 million tax-exempt nonprofit organizations registered with the IRS under the 501(C) tax code. About 70 percent of those are public charities. And most of them are nonprofit corporations also governed by state laws. 6. The tax designation for a public charity is 501(C)(3), meaning these organizations are tax exempt; therefore, you can donate to them and take a charitable deduction off your taxes. 7. There is accountability. Regardless of their level of revenue, all tax-exempt organizations are required to file reports annually with the IRS. 8. Religious organizations are also public charities but they re not required to register with the IRS, although, about half of the country s estimated 350,000 religious organizations do. 9. In 2008, the nonprofit organizations in this country employed 10.5 percent of the country s work force close to ten million paid workers. 10. All nonprofits must have a governing board. Sometimes the board members are called directors, sometimes trustees. In case you didn t notice, MISSION is the number one thing. Every nonprofit has a mission, and everyone who works with a nonprofit staff, volunteers, and board of directors needs to CARE about that mission. Passionately. 8 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

12 WHY DO NONPROFIT ORGANIZATIONS NEED BOARDS? LEGAL REASONS State laws require that nonprofit corporations have a board to assume the fiduciary role for the organization s well-being. These laws assign overall responsibility and liability to that board. In addition to the board s responsibilities as a governing body, individual board members are bound by their legal obligations: the duties of care, loyalty, and obedience. The articles of incorporation and bylaws define the internal authority within the nonprofit and clarify the board s role on top of the decision-making hierarchy. Federal law is less specific about board structure, but it does expect the board to serve as the gatekeeper for the organization. When applying for recognition of tax-exempt status, board members for a nonprofit must be listed to allow the IRS to determine whether proper oversight has been established. ETHICAL REASONS The board functions, in part, to assure the public and all stakeholders that the organization is in good hands. It assumes responsibility for the organization s achievements or lack thereof. It goes beyond the legal requirements to ensure that the organization not only does things right, but does the right thing. The board acts as the agent for the organization s constituents. Board members are not there to benefit personally from their affiliation; during decision making they are expected to place the interests of the organization above any other considerations. Oversight is the board s primary duty. It works closely with management to ensure that goals are met and that ethical principles guide all activities. PRACTICAL REASONS A board is made up of individuals who, at one time or another, dedicate their efforts to help the organization get its work done. Detached from daily affairs, the board is able to differentiate the trees from the forest to look at the organization as part of its larger sphere and not just as an office that carries out the strategic plan. Individuals come and go, but the board as an entity remains. When good practices are institutionalized, the changing of the guard does not adversely affect the good work that has been accomplished BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 9

13 TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARD MEMBERS 1. Determine mission and purposes. Why does the organization exist? Whom does it serve? 2. Select the chief executive. Arguably one of the most important roles: the board delegates management of the organization to the chief executive. 3. Support and evaluate the chief executive. Develop a strategic partnership, and hold the executive s feet to the fire. 4. Ensure effective planning. Is the organization on track? Where will it be next year? In three years? Ten? 5. Monitor and strengthen programs and services. Bring your expertise to the table. What s working well? How is the organization delivering on its mission? 6. Ensure adequate financial resources. Examine both sides of the coin: both earned and contributed revenue (if the organization raises money; not all do). 7. Protect assets and provide financial oversight. Make sure all the finances are in order. Be a prudent fiduciary. 8. Build a competent board. This is an ongoing process. The board should always be the RIGHT board for the organization it oversees, with a well-targeted range of perspectives and competencies. 9. Ensure legal and ethical integrity. Comply with the laws and go above and beyond in ethical standards. It will return to you, and to the organization, a thousandfold. 10. Enhance the organization s public standing. Be a mission ambassador. Keep confidential matters confidential while eagerly advocating for the organization. Source: Excerpted from Richard T. Ingram, Ten Basic Responsibilities of Nonprofit Boards, Second Edition. BoardSource, HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

14 GOVERNANCE IS NOT THE SAME AS MANAGEMENT BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 11

15 Without a doubt, the board is accountable for what the organization does. Board members must answer to the stakeholders the nonprofit serves, to funders, and to the public. To carry out their governance roles to the fullest extent, board members should do the following: Understand the respective roles of board and staff. Distinguishing what is strategic the board s role and what is administrative the staff s role helps keep each party focused on its responsibilities. Board members who become involved in operations tend to lose objectivity about personnel, programs, and organizational performance. And chief executives who attempt to control policy development through withholding of critical information or sheer force of personality get in the way of board decision making. Defining these boundaries sounds easier than it is. The responsibility for fund development, for example, may rest with a staff member but board members are expected to play a significant role in that area. If an organization is experiencing internal turmoil or transition, the board may exert its leadership by implementing policy as well as developing it but it should accept such a hands-on role only as an interim measure. Board oversight should not be confused with board interference. While boards are accountable for an organization s decisions, they are not responsible for managing the programs or the people who carry out those decisions. To clarify the distinction, the board and chief executive should openly discuss their roles and agree upon where to draw the line in each case. The discussion should be ongoing: Roles are sure to change as the organization evolves, grows, ages, and reinvents itself. There s a line between governance and management. Not a bright line, but a line nevertheless. And it s not always easy for a board to see that line. When boards overstep the line between governance and management, they can easily become MICROMANAGERS. A micromanaging board steps out of its governance role and gets caught up in the actual operations of the organization. It forgets that the chief executive is responsible for daily management according to the guidelines set by the board. Micromanaging boards want to both set strategic direction AND actively oversee the implementation of the details. BUT IT DOESN T HAVE TO BE THAT WAY. Boards that draw the line will do a better job at their top three roles: setting organizational direction ensuring necessary resources providing oversight There is an EXCEPTION to this rule, and that s for organizations that have no paid staff, known as all-volunteer organizations. Boards of these organizations will act as both volunteer managers and board members. In most nonprofits, as soon as the situation allows, the board hires the first staff member often a chief executiver and delegates the daily affairs to him or her, with the necessary support and guidance. At this point the board can devote its time to governing, providing direction, and ensuring that the mission of the organization stays on course. 12 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

16 THE NEED FOR LITERACIES ON THE BOARD To help boards make the best decisions possible, they need diversity of thought, perspective, demographics, background, experience, and most important of all, competence. Boards seek members who have the competence they know they need: legal expertise, perhaps; but almost always financial expertise. FINANCIAL LITERACY All board members are expected to have, or obtain once on the board, financial literacy. The accountant or financial expert on the board is expected to weigh in with special authority on matters of money, and by teaching and example, raise the level of financial literacy of the board. That individual is a fully functioning member of the board and involved in all aspects of board work, but might, for example, be an exceptionally fine audit committee chair, or investment committee member, thereby utilizing his or her special expertise to full advantage, while sharing it with the board. INTRODUCING HUMAN RESOURCES LITERACY Would anyone argue that the employees of an organization are less of an asset than its finances? As a human resources professional, you understand the importance of human capital as one of the most critical resources of the organization, and as a board member, would raise awareness of how important human capital is to be understood, nurtured, and overseen by the board. That s why an HR professional makes an ideal nonprofit board member: not to perform HR functions for the nonprofit, but to help the rest of the board understand how important human capital is, in all its forms. HR professionals have the expertise to raise the level of the board s you guessed it human capital literacy, just as the financial expert raises its level of financial literacy. And why not? Humans are far more important than money. Human resources literacy. You have it. Every board needs it. Ninety-six percent of HR professionals serving on boards said it was important to have an opportunity to share their human resources expertise with their organization BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 13

17 FOUR WAYS HUMAN RESOURCES PROFESSIONALS CAN HELP A NONPROFIT In the classic movie, Fame (not to be confused with the 2009 remake), Irene Cara asked the musical question: Sometimes I wonder where I ve been, who I am, do I fit in? Professionals ask themselves this question for many reasons. Maybe they are looking for a way to give back to their community. Maybe they are looking to meet new people for personal or professional reasons. Maybe they are looking for a way to hone their professional skills. Enter the nonprofit sector. There are four main ways for a professional to fit into the sector, and they are not mutually exclusive. All of the quotes are from HR professionals who have worked with nonprofits in various capacities. BOARD SERVICE The highest level of volunteer engagement; participating in the strategic planning, oversight, and development of the organization Having an HR professional on the board would ensure that the HR strategy and management of talent is linked with the overall business plan and is also tied to changes in the external environment. Nonprofit organizations may not have the resources to hire the specialized consultants, or commission surveys to understand market dynamics and best practices; hence, the presence of an HR board member would really help. PRO BONO SERVICE Using your professional skills for free for a project or on an ongoing basis (contributing your expertise in accounting, marketing, or HR) There s always a need for pro bono. I ve never met a nonprofit organization that isn t stretched beyond full capacity. Two pieces that are needed: (1) a compelling case made for pro bono service to be provided to the nonprofit organization; they need to be made aware of the necessity and the potential value of a pro bono consulting engagement, and (2) both parties need to be clear in contracting what are the roles each side needs to play to have a successful outcome. Nonprofit readiness is key. SKILLED VOLUNTEERISM Performing a service for the nonprofit that not everyone could do (tutoring at an after-school program) Volunteering is a phenomenal way to build your career portfolio. Based on my experience in conjunction with nonprofit volunteer work, I now have enough specific skills on my résumé to meet the requirements of a new job position. HANDS-ON VOLUNTEERISM Short term projects that don t require specialized skills (beach cleanup, serving food at a local shelter) In my capacity as an HR professional, any kind of exposure to nonprofits we can provide to our employees is valuable; encouraging individual employees to involve their teams here with their own volunteer work with nonprofits is something we want to see more of. 14 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

18 Taproot Foundation created this diagram for their work with corporations to show the relationship between the various methods of service, employees engaged, and the corresponding magnitude of impact. As an individual, this could be useful when considering the range of volunteer activities you could participate in, and their short and long term impact on the organization and issue BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 15

19 TEN WAYS HR PROFESSIONALS CAN DRIVE IMPACT FOR A BOARD While all HR professionals from generalists and recruiters, to organizational designers absolutely can bring the following skill sets to nonprofit boards, it is critical to the understanding of nonprofit governance that no board member is ever on the board to do just one thing board service is not a job. Board service offers board members a wealth of opportunities, and board colleagues want and expect each other s full commitment and intellect as the board discusses and engages in wildly diverse topics: the strategic value of current programs; whether or not to buy a building; the organization s financial position and investments; whether to merge with another nonprofit with a similar mission; developing a fundraising policy for the board ad infinitum. All board members should be fully engaged in those discussions. There are many different HR specialties and not all HR professionals engage in all HR activities. We have generalized here, with the understanding that each individual brings a different skill set to the boardroom, depending upon his or her specific HR focus. What all HR professionals do have in common is bringing a specific and highly valuable lens to the boardroom. Here are 10 ways a board can engage and leverage the talents of a human resource professional. We ve included comments from survey respondents and interviewees about their own experiences.

20 1 PREACH THE GOSPEL OF TALENT MANAGEMENT PLANS. Nonprofits often live in a make do with what you have type of environment. Many are woefully under-resourced and understaffed, which can create a variety of challenges, including staff burnout and turnover, lack of adequate expertise in key areas, and lowered expectations or goals, to name just a few. The sad reality is that too many nonprofit organizations lack the human time, talent, and skills they need to achieve their missions. You can help the organization identify the importance of managing the talent of the organization, all the way from the board to the chief executive to the staff to the interns to the volunteers, starting with a talent management plan. A talent management plan doesn t eliminate staff burnout or magically identify dollars to bring new talent into the organization, but it does help the organization think strategically about how it can fully leverage the time, talent, and skills available to it. A talent management plan seeks to identify the human needs of the organization and build its capacity for recruitment, retention, professional development, and performance management to ensure that the organization is fully leveraging the dollars it invests in talent, however limited those dollars might be. A talent management plan also helps to identify innovative ways that organizations can bring talent into the organization, which is not limited to paid staff. Volunteers, interns, and pro bono consultants can be an integral part of an organization s talent pool, possibly freeing up staff time to focus on other priorities, or even allowing the organization to eliminate certain positions and add or upgrade other positions. In addition to highlighting the importance of a talent management plan, you can serve as a resource to the chief executive as they develop and maintain the plan. Whether or not the organization has a paid HR professional, you can serve as a confidential sounding board for the chief executive on some of the tough questions around organizational needs, assets, and vulnerabilities. The creation of a talent management plan, combined with thoughtful input from well-informed board members, can help ensure that a nonprofit organization is not allowing a lack of staff resources or talents to limit its fulfillment of its mission. Talent management means making it happen, not making do. Sounds a lot more compelling, doesn t it? Many nonprofits lack the financial resources and knowledge to optimize the capabilities of both staff and board members. An HR executive could provide the perspective and tools to guide the nonprofit to improved performance. 18 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

21 FIND ACCESS TO PRO BONO HR RESOURCES. 2 What if nonprofits had access to the same HR resources as corporations? Imagine how helpful these might be in board recruitment, performance management, HR systems, and staff development for the organization. As an HR professional, you have the ability to help assess an organization s HR needs and suggest where pro bono could be of most value. Setting the scope for the engagement is a critical step. You can leverage relationships within your HR network or at your company to help your nonprofit address its most pressing HR needs. Seek out an internal functional champion and find out who s already doing pro bono work within your company. Determine the right fit perhaps a team of professionals dedicated to mapping your organization s current and future staffing needs, perhaps a coach or mentor for the HR manager, or maybe a loaned employee dedicated to a large-scale HR project. Finally, ensure there is proper support for the engagement. A few words of caution. Pro bono isn t free it s an investment of time, energy, and talent. Your nonprofit must be ready to spend the time necessary to support its pro bono talent, and must understand that the project will be done in pro bono time, which is almost always slower than paid consulting. However, if managed effectively, pro bono has the potential to infuse valuable resources and long-lasting, invaluable relationships. Remember, the role of a board member is to help get your organization the resources it needs, and pro bono is no exception. Tap your network, help scope the project, screen the talent, and support the pro bono engagement but don t micromanage it. Use Taproot s tools listed in the Resources section of this handbook to help your organization get the pro bono resources it needs to thrive. Human capital is a horrible thing to waste. Too often nonprofits struggle with limited or no access to technicians that can enable their cause BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 19

22 3 COUNSEL THE CHIEF EXECUTIVE DURING PERSONNEL CRISIS SITUATIONS. The role of chief executive can be a lonely one. Unlike most of the individuals affiliated with an organization, the chief executive is without a peer. Despite its role as the chief executive s supervisor, the board can play an important role of peer and colleague to the chief executive, creating a sort of kitchen cabinet for him or her to help talk through or address issues with which the chief executive might be struggling. You can be an extremely valuable member of this kitchen cabinet for the chief executive, particularly providing counsel and feedback on crisis situations with personnel. Imagine how helpful it would be to the chief executive who is most likely not an HR professional to be able to speak openly with a board member about planned layoffs in the organization s future, and how best to handle them with both the affected employees and those who will remain. Or the comfort that it would provide to be able to talk through the potential firing of a top employee. Without someone in this advisory role with the chief executive, these types of decisions would likely be made independently by the chief executive, or be brought into a group setting with the board, both of which can create some very specific challenges. Decisions made in isolation and without consultation or input from others can be skewed, impulsive, or illconsidered. Decisions made in a group setting especially HR decisions can be susceptible to dramatic overstatement, competing motivations and loyalties, and confidentiality breaches. Taking this advisory role can go a long way to ensuring that the chief executive is not isolated in his or her decision making as it relates to organizational staffing issues. And that makes for better decisions, less drama, and a happier chief executive. I assisted in an emergency board meeting and helped investigate a sexual harassment case between an employee and program manager. 20 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

23 CHANGE MANAGEMENT. 4 Change is hard. Even small changes can create confusion, anxiety, and distress among groups of people. You are used to managing change within organizations, and are masterful when it comes to understanding and finessing the wide range of human reactions to change. You understand that the organization has to invest time and energy into managing the change, otherwise you risk having to invest more time and energy into managing noncompliance, low morale, and turnover. This perspective on change management can be very valuable within the boardroom, where you can help ensure that decisions made account for the necessary investment in change management. Consider, for example, a board decision about whether or not to change the location of an organization s headquarters from one city to another. Certainly, most if not all board members would understand that doing so would likely result in a significant change in the makeup of the staff. There would be staff members who would not want to make the move, and therefore would leave their position with the organization. But you could help the board think through how best to manage that change, focusing on the importance of effective communication about the decision, innovative ways to staff the organization during the transition, and helping to create a budget that gives the chief executive the resources he or she will need to aggressively court star performers to make the move with the organization. Similarly, you can help manage change within the board itself. Consider an organization that has grown its staff and now has the staff resources to fully manage and execute the programs of the organization, but had previously relied on individual board members to fulfill those functions. The board is now grappling with the fact that it has board members who feel displaced or underutilized, and are not interested in taking on a more governing role with the organization. At its core, this change management scenario is a question of human resources. What human resources does this board need to succeed in its new governing role, how does that align with the existing set of board members, and what is the plan for addressing any necessary realignment? You can help focus the board on those key questions, and ensure that the conversation remains focused on the needs of the organization, rather than devolving into a debate over the value or contributions of individual board members. Change management falls into the category of easier said than done ; fortunately, that s your specialty. I could help [the board] to understand the impact of change and how to drive desired change in the organization BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 21

24 5 SERVE ON THE GOVERNANCE COMMITTEE. Governance committees are a relatively new phenomenon in nonprofit governance, and they are helping to revolutionize the ways that boards work. In many boardrooms, they have replaced the nominating committee, the compensation committee, or even the human resources committee. Bottom line: Your service on the governance committee can provide better, faster, and more relevant guidance to the organization on critical issues related to people and performance. And that s just the kind of efficiency and effectiveness that any HR professional can appreciate. The governance committee is responsible for guiding the recruitment and orientation strategy for the board, as well as helping the board to critically self-reflect on its own strengths, challenges, and weakness as a board. In short, the governance committee is a nonprofit board s version of a human resources department, managing the people and performance of the board. Given all that, it s clear that HR professionals would be naturals to serve on the governance committee. It requires all of the same skills in terms of understanding people and talents, handling sensitive issues of performance, and helping the board value the people that it takes to do the important work of the organization, both at the board and staff level. I ve found my work on the governance committee very rewarding. Being a seasoned organizational development professional, I feel I have been utilized in the organization s efforts to transcend its business as usual and to create a sustainable legacy. 22 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

25 LEVERAGE THE TALENTS AND SKILLS OF BOARD MEMBERS. 6 HR professionals are sometimes accused of being the touchy feely folks. The reality is, HR professionals are all about the bottom line: Work doesn t get done without people to do it. And it can t be just any people, it has to be the right people, with the right skill sets, and the right level of motivation and commitment. You can have the greatest mission or idea in the world, but if you don t have the people whom you need to work toward your goals or implement your work, you don t have much. And the work of your board is no different. You need a strong and skilled board, not because the IRS requires it, but because you cannot fully achieve your mission without passionate, strategic, and forwardthinking leadership, both in the boardroom and in the CEO s office. And that s the job of the board, and each individual board leader. But, just as there is with any position or role, individuals need to understand the opportunities, responsibilities, and expectations of board leadership. And you are a pro literally when it comes to formalizing the expectations of a position, building on the skills of a diverse set of employees, and finding ways to help individuals find the right role for them, even if it s not within the organization. HR people don t just lead the camels to water, they identify what kind of camels are needed, find them, train them, and motivate them to not make them drink. It s not for the faint of heart, but it s a role that you take on each and every day. Companies are now recognizing the importance of HR, how well companies engage their talent; at nonprofits, you have the ability to demonstrate the differences between passive HR policies and proactive HR policies BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 23

26 7 HELP WITH HIRING AND, WHEN NECESSARY, FIRING THE CHIEF EXECUTIVE. The board is responsible for ensuring that the organization has the right chief executive on board. Few would disagree with the view that a strong chief executive is critical to the success of an organization. The chief executive is the leader of the staff, the implementer of strategy, and the highest-ranking individual who dedicates 100 percent of his or her professional energies to the success of the organization. There s no question that if the organization doesn t have the right person in the chief executive s office, it is severely hindered in its ability to fulfill its mission. You can help guide a needs assessment to ensure that the board is seeking out candidates who have the skills and talents the organization needs in a chief executive. legal landscape as it relates to termination of employment and have knowledge of and access to search resources and skills. Finally, one of your fundamental skills, that of recognizing talent, will be extremely useful in succession planning looking beyond the current chief executive to senior management to identify the line of succession temporary or otherwise in the event of a departing chief executive. Some for-profits have an organization committee that connects the board to HR staff, who report on up-andcoming talent; there s no reason why you couldn t encourage your organization to emulate that model. You can also be extremely helpful when there are transitions in leadership, whether as the result of the chief executive choosing to leave the organization, or a chief executive who has been removed from the position by the board fired. The latter, in particular, requires tact and discretion. In either case, you can help the board handle that transition professionally, confidentially, legally, and strategically. You understand the [The board member with human resources expertise] was on my search committee and was very integral in the process. Our most valuable resource is human capital and this person puts us in a position to attract other leaders with competency and strategic direction. 24 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

27 HELP WITH MANAGEMENT AND REGULAR ASSESSMENT OF THE CHIEF EXECUTIVE. 8 Some board members think that management of the chief executive kicks in only when there s a leadership transition or when a chief executive is leaving the organization. But the reality is, the board is the chief executive s boss, and that s an ongoing, day-in, day-out responsibility of the board, not an episodic engagement every few years. Board members can feel uncomfortable about this role of managing the chief executive, and that s a way in which you can make a big difference. Chief executives are like any other employee; they need ongoing feedback and engagement on performance, goals, compensation, and professional development. As an HR professional you understand the importance of effective management of employees, and can help the board understand and fulfill its management role with the chief executive. You can be an internal advocate within the board for the importance of evaluating the chief executive, as well as helping to guide that process in a way that ensures that it accomplishes its goals of increasing communication and performance. You can share your specialized knowledge of best practices as it relates to employee performance management, as well as experience handling delicate or sensitive issues ethically and confidentially. Setting goals and honest conversations about progress toward those goals is a basic element of performance management and employee success. The board as the official boss of the chief executive is responsible for engaging the chief executive in regular conversations about his or her performance, ideally through regular and formal performance evaluations. This is the kind of thing you re accustomed to doing every day, and can help the board develop its own comfort level around the process. The board recognized that the executive director s performance wasn t where it needed to be...[but if] performance expectations are not clearly outlined [it is] impossible to approach [the] individual to assess [his or her] performance BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 25

28 9 HELP DEVELOP COMPENSATION PHILOSOPHIES AND POLICIES, AND DETERMINE CHIEF EXECUTIVE COMPENSATION. Whether the board has a separate compensation committee for handling the chief executive s compensation package or the process is handled by the entire board, there s no place your skills and expertise could be better leveraged. Determining appropriate levels of compensation is a high-stakes venture, particularly in an era where nonprofits are scrutinized by donors, legislators, and regulators alike, based on the compensation of their top paid employee. You understand that appropriate compensation is both a science and an art. You know how to use benchmarking data on compensation, as well as the more subjective variables around specialized skill sets, reputational capital, and the costs associated with transition and staff changes. You also understand the sensitive nature of all issues related to compensation, and the importance of fairness, respect, and confidentiality, and how personal the issue of compensation can be, feeling to some like a numeric indicator of their personal value and worth. You are comfortable when it comes to weighing the combined or even competing variables of organizational needs, personal emotions and motivations, and the realities and trends within the bigger, broader world. Helping the board develop a compensation philosophy and policies that embody the organization s overall culture, values, goals, and mission and gaining agreement that they will be followed will ensure that stakeholders both within and without are in agreement with the board s compensation decisions. I was able to help with researching best practices, contribute to developing a contract for [the executive director] and also look at salary levels to inform the appropriate level of compensation. I wanted to make sure that we had good retention strategies in place because she works really hard and we need to do right by her. It would be devastating to lose her for a lack of proper policies or noncompetitive salary. 26 HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 2011 BoardSource and Taproot Foundation

29 HELP LEAD THE BOARD THROUGH A SELF-ASSESSMENT PROCESS. 10 Just as it is important to assess and evaluate the chief executive, the board needs to assess and evaluate itself. The board is its own boss, and it is responsible for holding itself and its members accountable. But self-assessment can be a tricky thing to maneuver successfully. What s to stop board members from giving themselves high marks, just to keep things easy and peaceful? Or, conversely, how does the group navigate conversations about a selfassessment that calls into question the effectiveness of an individual board member or the board as a whole? You can help the board navigate these tricky waters. You can keep the group focused on the goals of the selfassessment: to understand areas of strength and challenge, and to help the board strengthen its role in supporting the organization s mission. You can also help identify land mines and ensure the proper resources or approaches to dealing with them, whether it s encouraging the board to hire an external facilitator to help guide them through a conversation about the self-assessment, or establishing ground rules for the group conversation to ensure that board members are respectful of each other. A successful self-assessment needs to focus on organizational performance and goals, but do so in a way that values and respects the people involved. Sounds like a job description for a position in human resources, doesn t it? Because of the very nature of HR, you re always thinking about what else needs to be done what could I do to improve this process, what can I bring to the table? I don t know if other people, besides HR professionals, come to the board with that mind-set BoardSource and Taproot Foundation HUMAN RESOURCES LITERACY FOR THE NONPROFIT SECTOR 27