People are the heart of every successful not-for-profit (NFP) or community organisation, from managers and employees driving the mission to volunteers providing essential support.
But as anyone who has worked in, or been a member of, an NFP knows, there are certain aspects that are unique to the sector - factors that create both challenges and opportunities in maintaining an engaged, productive workforce.
So we’ve created this resource to help NFP leaders and managers understand the important role of good people management and employment practices, along with tips for implementing them in your organisation. It’s all about creating a solid base that supports each of your team members while making the organisation run more cohesively so you can meet your objectives.
Dealing with fluctuations in funding
Funding is a fundamental issue for NFPs; it can be hard to get and, just as importantly, maintain. Even large, established charities get income from a variety of sources - e.g. government funding, membership subscriptions, donations, fundraising initiatives - and these may change with little warning.
Open communication with the people in the organisation is vital. Everyone should understand where your funding comes from and when funding fluctuates, make sure the team hears about changes from you first, not in the news or on social media. If there’s a plan to try and replace the funding, let your people know.
Often organisations will react by looking to reduce their headcount, but by working with your team, you may find other ways to get through shortfalls, whether that is cutting back hours or making other cost savings.
If it becomes clear that you need to restructure, make sure the process is transparent and robust. Look at your overall goals, structure, and the way roles do the necessary work. How could this change to be more efficient? If you propose making roles redundant, accept that you may have to cut back services or programmes rather than piling the same amount of work on fewer people.
Solid HR oversight will ensure you meet all your legal obligations around restructuring and consulting with affected employees, and will mean you get the best organisational structure to meet your goals.
If you receive funding for a specific project or programme, employing people on fixed-term employment agreements can be useful - you'll be able to tie these to funding by tying the term of employment to the project.
Bear in mind that rules around engaging people on fixed-term contracts changed on 6 December 2023, so you must give a Fixed Term Contract Information Statement (FTCIS) to any employee you're engaging on a new fixed-term contract.
Fixed-term contracts also can’t be for longer than 2 years (including any extensions or renewals), be extended or renewed more than once (even if the total period is less than 2 years), and can’t breach certain limitations on consecutive contracts.
However, these limitations don’t apply if the employee’s position is either completely or partially funded by government funding, the funding is for more than 2 years, and the funding is unlikely to be renewed afterwards.
Meeting employee pay expectations
We all know pay is a big issue for most NFPs, and it’s often hard to compete with private sector salaries when you have a limited budget.
This is where accentuating the unique, attractive features of working for an NFPs can attract the talented, dynamic people you need. This is known as your employee value proposition (EVP).
You probably have a mission and culture that many private firms can’t match, or you may be able to offer benefits and flexibility that employees really value. Career development is also a big plus for people, and NFP employees are often trusted to take leaps not available in corporate jobs.
When it comes to pay rates, honesty is the best policy. Most people working in the community and NFP sector accept they may not get top-dollar rates and organisations should set realistic expectations around pay reviews.
Part of a best-practice approach to transparency is holding regular all-hands business updates so people understand how things are going and won’t be surprised if, at the end of the year, you need to say: “there’s no money for pay rises”.
There’s typically a fair bit of movement in the NFP labour market, and while you may not be able to offer “the next step” to an employee who wants to move up, put your feelers out to the network and see if there’s an opportunity to keep them in the sector. Who knows, your valuable employee might go away, get a bunch of experience, and then come back in a couple of years!
Having solid HR practices and oversight will develop and boost your EVP, helping set realistic expectations about pay, ensuring HR “hygiene” (e.g. documents and processes are managed in a timely way), and providing support and coaching for managers so they can get the best for/out of their people. It also means you’ll be attractive to the skilled people you need to recruit as well as the employees you already have.
Driving performance and development
Managing people in an NFP environment can be challenging. You probably have a passionate, talented team but everyone in the organisation has to perform many roles, with more tasks than time.
In a busy, high-trust working environment, you don’t want team members taking advantage, so building what we call a “values-led” performance culture can really help. This means clearly articulating and reinforcing your values and the behaviour that underpins them. Your people should know what’s expected of them, e.g. “relaxed” doesn’t mean it’s acceptable to be bad at our jobs.
Clear accountability measures are also important, whether that's meaningful performance reviews (supported by professional development plans), or other tools like regular feedback from communities or stakeholders.
If you have performance issues or someone who is taking advantage, tackle the problem early, look for mutually-beneficial solutions, and retain empathy.
A high-performing culture sets up an environment that is self-correcting - it not only empowers people to achieve, but to also assist each other or to call out bad behaviour.
But there’s a balance to be struck, as prolonged stress can lead to burnout, and you also want to ensure your people have time for development and training, and to celebrate success.
Another thing we always emphasise is adhering to the provisions in your employment agreements. Many NFPs are unionised, so always refer to the collective agreement and comply with any union obligations.
Managing complex stakeholder relationships
Stakeholder relationships in NFPs can be complex and time-consuming for leaders (and employees) to manage.
You may have funders who drive certain objectives or initiatives that conflict with the organisation’s strategy. You want to keep your volunteers happy but you also need to manage them so they can best focus their efforts. Then you may have community groups who are driving their own agenda.
NFPs are often staffed by people who are passionate advocates of the cause or sport the organisation is supporting, and their enthusiasm is a valuable asset. However, pouring yourself fervently into the work can lead to burnout or come at the expense of strategic decision-making.
This is where HR skills can help set the schedule or rhythm of the organisation, so you have someone who can say: "okay people, let's get together to look at our strategic plan". It can also help implement strategies to manage tricky relationships
Part of good people management is maintaining oversight of the organisation’s resourcing, so someone is flagging when a team's workload is too high/too low, as well as acting quickly to bring in extra help where possible.
Stress and burnout are also health and safety issues, which the organisation must legally ensure (as far as reasonably practicable). Solid HR backing helps senior leaders be aware of the risks and to mitigate them.
Developing effective leadership and governance
All organisations need good leadership, and the nonprofit sector is no different.
NFP managers often come from within the community, sport, or cause, and may not have had the chance to develop extensive management and leadership experience. This means training and development are key.
We recommend utilising a first-time leaders toolkit to help new leaders understand and implement best practices, as well as building management capabilities in the team and developing your organisational culture.
This goes for board members, too. NFPs are usually governed by a volunteer board, which means you have engaged, passionate people with valuable career experience but they may lack governance experience.
Governance training and support will help develop skills and ensure the board’s focus is on effective strategy and stewardship.
Volunteer management
With fewer full-time employees than public or private organisations of similar size, managing your volunteers (and part-timers) could well be essential to your success.
Remember, that a volunteer is not an employee, and you should ensure there is no confusion around the nature of the relationship. To make it clear (and legal), here are our tips:
- Limit the duration of work and keep arrangements as flexible as possible, without any set hours or days of work.
- Avoid setting an expectation of reward - volunteers shouldn’t expect payment or other reward for volunteering. You can give them gifts but they shouldn’t be explicit or expected. You can reimburse them for expenses, e.g. for work travel.
- The organisation should not gain financially from the work performed by a volunteer.
- Avoid offering work usually performed by an employee - volunteers should be doing tasks employees wouldn’t normally do.
- Create volunteer agreements with terms and conditions that are not suggestive of an employment relationship, and have your volunteers sign them.
Robust HR oversight will ensure you keep your volunteer relationships lawful. It will also help ensure your volunteers are supported, and that relations between volunteers and staff are well coordinated and managed.
If you need any assistance with your people management practices or have a tricky HR issue you need to resolve, don’t hesitate to contact MyHR.
