Managing and Leading People in Social Enterprises

1

Managing and Leading People in Social

Enterprises

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Outline

• Volunteers• Staff• Leaders

3

What Affects Volunteering?

• Country-specific effects• Demographics

– Volunteering increases with•Age•Education•Employment•Rural residence•Religion

4

Why Use Volunteers?

Benefits• Service

delivery at reduced cost

• Contact with community

Costs• Control and

reliability• Supervision

and recruiting expense

• Impact on paid jobs

Ref. J-B 22

5

Designing an EffectiveVolunteer Program (1)

1. Staff buy-in2. Clear job design and expectations

– Job categories (direct assistance, administration, …)

– Meaningful and significant– Part-time equivalent– Fits with overall strategic goals

3. Effective recruitment appeals– Importance of job to clients and community– Importance of job to NPO– Importance of job to volunteer

Ref. J-B 22

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Designing an EffectiveVolunteer Program (2)

4. Interviewing and matching– Fit– Fitness

5. Training6. Supervision

– Clear performance standards– Performance measurement and

evaluation– Clear chain of command– Firing volunteers?

Ref. J-B 22

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Volunteer Recruitment

• “Warm body” recruitment– Lots of people, low training and skills– Good for large events– Campaign: mass market to large groups

• Targeted recruitment– Few people, specific skills– Good for long-term volunteer staffing– Campaign: specific, targeted outlets

• Concentric circles recruitment– Steady flow of a few volunteers– Good for smaller organizations– Campaign: Word-of-mouth

Ref. J-B 22

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Volunteer Attrition

• Even if staff don’t know volunteers’ opportunity cost, volunteers do

• Volunteers consider– Market work value– Next-best volunteer effort– Value of leisure time

Ref. Young & Steinberg

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Size of the Nonprofit Workforce

12.6

11.5

10.5

9.2

7.87.2

6.2

4.94.94.54.5

3.73.53

2.42.42.21.7

1.30.90.60.4

0

2

4

6

8

10

12

14

Holla

nd

Irela

nd

Belg

ium

Isra

el

USA

Aust

ralia

UK

Fra

nce

Germ

any

Spain

Aust

ria

Arg

enti

na

Japan

Fin

land

Peru

Colo

mbia

Bra

zil

Cze

ch R

epublic

Hungary

Slo

vakia

Rom

ania

Mexic

o

Perc

en

t of

em

plo

yees

Source: Salamon 1999

10

Career Models

• Steady state: one job, one career• Linear: Job changes serve an

upward progression in pay and responsibility

• Spiral: Job changes serve changing interests and sense of self-development

• Transitory: Job changes for the sake of job changes

Source: Driver 1980

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Nonprofit Staff Motivation

• Reasons for entering NP sector– Commitment to social change: 62%– Commitment to a particular cause:

56%– Hours/location: 32%

• Reasons for taking current job– Interesting, challenging work: 66%– Extend personal skills: 65%– Salary: 19%– Prestige: 14%

Source: Onyx & MacLean

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Problems: Attraction and Retention

Nonprofit hospital executive:• “Competing with for-profits for

top talent is getting harder…• …the “A” talent turns over

quickly...• …but the “C” talent stays

forever.”

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The Compressed Salary Structure

Com

pen

sati

on

Ability

Nonprofits

For-profits

“C” talent has perverse incentives

“A” talent has perverse incentives,and is difficult to recruit

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Hiring and Firing: Laws

• Illegal to make decision:– based on “irrelevant criteria”– based on “inappropriately

subjective” criteria– without making allowances for

disabled applicants

Ref. J-B 23

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Compensation Factors

• Importance of position to organization

• Importance of person to organization

• Internal equity• External competitiveness

Ref. J-B 23

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Compensation Schemes

•Flat•Merit•Seniority•Incentive

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The Merits of Merit Pay

• 90% of nonprofit employees consider their contribution to be “above average”

• Merit pay rewards the truly above average employees

40% of nonprofit workers will feel cheated

• Lower morale, lower productivity

18

Seniority Pay

Advantages• Reliable and

objective• Cheap to

administer• Encourages

long-term retention

Disadvantages• Encourages

survival, not excellence

• Inequities grow regarding merit

• External competitiveness can suffer

Ref. J-B 23

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Incentive Pay

• Skill-based pay• Programs that share cost

savings• Performance bonuses

Ref. J-B 23

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Outline

• Volunteers• Staff• Leaders

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What Do Managers and Leaders Do?

Lessons• In a stable, high-competition environment,

good management is paramount• In a dynamic, uncertain environment,

leadership is key

Kotter, John P. "What Leaders Really Do.” Harvard Business Review (1990)

Function Managers Leaders

Deciding what to do Planning and budgeting

Setting direction

Creating networks of people

Organizing and staffing

Aligning people

Ensure that tasks are accomplished

Controlling and problem-solving

Motivating and inspiring

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The Special Challenge of Social Enterprise Leadership

• For-profit leadership literature assumptions– Power– Autonomy

• Social entrepreneurs must lead from above, but also from below– Persuasion vs. coercion

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What is the Right Nonprofit Leadership Model?

• Percent of nonprofit executives that believe in each model

“Decisive” leader

“Reflective” leader

Collaborative organization

6% 34%

Leader-centered organization

12% 31%

Light, Paul C. Pathways to Nonprofit Excellence (Brookings Institution Press, 2002)

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Leadership Styles

• Coercive leadership• Authoritative leadership• Affiliative leadership• Democratic leadership• Pacesetting leadership• Coaching leadership

Goleman, Daniel. "Leadership that Gets Results." Harvard Business Review (2000)

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Coercive Leadership

• Demands immediate compliance• Can achieve short-term results

– Positive shock to a moribund environment– Key in emergencies

• Can create long-term damage– Defection– Creativity and initiative– Non-financial rewards

• Coercive leadership can lower employee compensation


26

Authoritative Leadership

• Characteristics: vibrant enthusiasm and clear vision

• Encourages people to follow• Motivates people by showing them

how their work fits into larger picture• All evaluation keys on adherence to

vision and mission• Can be ineffective with senior staff


27

Affiliative Leadership

• “People come first”• Strives for happiness and harmony• Results in fierce loyalty, workplace

trust, and a revered leader• May lower overall effectiveness

– Poor performance may be tolerated– Tendency to “groupthink”– Rudderlessness occurs when clear

direction is needed• This style is best when accompanying

another


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Democratic Leadership

• Everybody has a say in the process• Opposing viewpoints are protected

and respected• Builds trust, respect, and

commitment• May be counterproductive

– Can lead to endless meetings– Inhibits efficient decisionmaking– May lead go-getters to defect


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Pacesetting Leadership

• Nobody works harder than the ED

• Pitches in and sets an example• Can create moral problems

among less-able employees• Organization is in trouble if

pacesetter leaves


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Coaching Leadership

• Counsels employees• Highly values human capital, and

looks for individual strengths• Delegates in order to develop

employees• Can be extremely time-

consuming


Managing and Leading People in Social Enterprises

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