Hire Slow.....Fire Fast

Did you know that the median nonprofit spends 73% of it's budget on personnel?   Yep, three quarters of the cost of doing business is your people.  It's another reason why having the right talent in place means more than the right strategic plan or the right social media buzz.

But our experience is that nonprofit leaders (especially in human services or education) are reluctant to do what's best and cut underperforming employees loose.   Oh, there are the toxic employees, but were not talking about those.  It is the ones we like personally...the ones who work hard, get along with others, display all the emotional intelligence called for by management experts.....and yet they're not getting the job done.

In this two minute clip, Ken Schiller, co-founder of Texas restaurants Rudy's and Mighty Fine Burgers, provides an excellent example of well liked and respected employee who was an excellent manager when the company was small but did not grow as the company grew.  Becasue Schiller really liked the guy and appreciated all he had done in the early days, there was severe hesitancy to make the move.  But Schiller learned from this and his advice to us all is Hire Slow, Fire Fast

Is Your Staff Being Quietly Bribed?

Character counts.

 

Yet, one of the disturbing trends the past two decades is the rise of blatant conflicts of interests in nonprofits.  This is more than just the outright fraud, but also the petty mutual relationships which enrich both parties.  Few people seem to understand the seriousness of what's happening.  One way to create a culture of cleanliness is by having a very clear Gift Policy.

 

My most vivid experience about the need for such came one Christmas during the 1980s in the office of an ExecDir of a Community Action agency. Since they acted as fiscal agent for numerous federal $$$ he had a number of subcontractors. His office was stacked with various 'holiday' gifts from various vendors. Some innocuous such as a fruit basket, but some like luxury box tickets to an NHL game. But it never crossed his mind nor that of the Board that this might set up a conflict of interest.

So YES, you do need a gift policy. The Board is the supreme fiduciary authority in the organization and is responsible for making sure all business is done in an ethical and transparent manner.

While corruption can kill a nonprofit, equally damaging can be the mere appearance of impropriety. Your image and reputation translate into community goodwill as well as cash...conflicts of interests put that at risk. Furthermore, if your ExecDir were to conspire to defraud the agency in collaboration with a vendor, one of the things your insurance company will look at is if you had policies in place governing the relationship. Insurance companies have denied claims for less.

Furthermore, if the ExecDir thinks it's OK, then other employees will act accordingly. Thus the vague ethical problems permeate the organization until one day something happens somewhere which winds up on the 6 O'clock news.

Here's one I helped a nonprofit draft back in 2005.  They had no stated policy, but they had an issue arise where the ExecDir was winter storing his camper and boat free of charge in a contractor's warehouse. It came out as part of a story about the contractor and severely embarrassed the organization. 

17. General Policy On Gifts To Any Representative of 'XYZ Nonprofit'

17.1 To avoid a conflict of interest, the appearance of a conflict of interest, or the need for our Board members and employees to examine the ethics of acceptance, XYZ Nonprofit Board members and employees do not accept gifts nor in-kind services in excess of $10 (ten dollars) from vendors, donors, volunteers, clients, suppliers, potential employees, potential vendors or suppliers, or any other individual or organization, under any circumstances.

17.2 Exceptions to this rule are limited to:

• Gifts of food, candy, flowers, etc which can be shared amongst all staff/volunteers. Such gifts must be placed in employee lounge and accessible to all.
• Such promotional items such as coffee mugs, pens, key chains, etc which vendors distribute to all clients as part of their general marketing.
• Invitations to meals at moderately priced restaurants (up to $25) for the purpose of discussing business matters related to XYZ Nonprofit.

17.3 When an invalid gift is received:

When Board member or staff receive a gift which violates this policy, such person shall notify their immediate supervisor and make arrangements to return the gift along with a brief note expressing appreciation for the thought, but that such gifts are not accepted under XYZ policy.

"Today Is Not OK" - Lessons In Driving Change From Martin Luther King

A young MLK explaining why
'We can't wait"

It feels like the ‘Vision’ chapter of every management book sooner or later references Martin Luther King’s I Have a Dream Speech at the Lincoln Memorial back in 1963.  Yes, while it belongs in the canon of famous American addresses, but our focus upon it misses something very important….before he could provide a vision of the future,  MLK spent a decade preparing the ground by educating America about  the problem of the present.

Often overlooked is that Black America in the 1950s was reaping the benefits of the post-WWII economic boom.  Maybe not in the same measure as the majority, but for the average Black American their lives were considerably materially better than the 1940s and substantially better than the depression years of the 1930s.  It is in this environment that Martin Luther King stood up to say that even with the monetary gains, life was unacceptable without civil liberties.

Everybody rightfully lauds the I Have a Dream Speech, but more importantly to King’s work were the hundreds of speeches he gave in the decade preceding the big one, where before crowds large and small MLK explained the problem with the present reality.  In a time where people were feeling more materially satiated, he had to drive them out of their comfort zone until they accepted that their present condition was unacceptable.

If you’re a leader, you can’t move people to a new tomorrow if they believe today is OK.  You can’t get them to ‘there’ unless they agree that continuing to stay ‘here’ is not acceptable.  We live in a time of tremendous transformation, but the natural human temptation is to say, ‘Oh, it’s not that bad’.  It’s this mindset which strengthens the Status Quo.   Your job is to break that mentality so that they understand that The Status Quo Is Not An Option.

So even more important that sharing a 'Dream', Martin Luther King helped people understand that 'Today is Not OK'.

You and the New Transparency

In a conversation at church today, a member told me of a year end gift she did not give to a charity which had been on her giving list previous years.   Her reason made me smile.  In May she attended a session I did with Cheri Freeh, President of the Pennsylvania Institute of Certified PublicAccountants where we emphasized that nonprofits should have a link on their web page to their IRS 990.  This nonprofit did not, so the potential donor didn't waste her time...the dollars went elsewhere.

I’m all for the demands for the new transparency. It is a wonderful way of holding ourselves accountable, being more accessible to our communities, our staff, board and funders.  There is no sense trying to hide  your organization's 990's.  They are online on a number of websites right now, and those forms are being interpreted in good and bad ways, in fair and unfair ways, by both the websites and their readers.

Get your information out first, and get it out fully. Since your information is online anyway, put it on your site along with a commentary about the information within. Turn transparency into a marketing asset, by making the disclosure into an annual report that talks more fully about overhead percentage (see my comments on Charity Case) as well as mission-accomplishments.

Big Data is here to stay.  Research by donors is growing.  If you make it hard for them to find key information, they’ll take their money elsewhere. Remember, the idea that openness is a good thing has to start with the Board.  Create a culture of openess: on your board, within your staff, with you funders and with your clients.

You're known by the company you keep....

“Always try to associate yourself with and learn as much as you can from those who know more than you do, who do better than you, who see more clearly than you.”

- Dwight D. Eisenhower

I've often said if you want to change, you'll hang around people who are changing.  Also true is the corollary if you want to win, you'll hang around winners.

At lunch earlier this week a prominent business owner in the area commented how few nonprofit staff he sees at business social affairs in the area.  He wasn't speaking of the larger charities, but the mid-sized and smaller ones, the ones who "do so much and need to scale their operations".  They stay small because they hang around small people. 

Look, we all know what's coming down he pike in terms of austerity, and it won't be pretty.  There is no more hoping to hold on until the economy turns around.  Grow or die.  It means you have to take stock of who you surround yourself with in your business affairs.  Do yourself a favor and invest more time hanging around the people who are successful.  This means being part of the Chamber of Commerce.  This means joining Kiwanis or Rotary.  This means membership in various business associations.

Eisenhower was guided in leadership by men like Connor, Pershing, Marshall and MacArthur.  His tutelage in planning and logistics came under Mosely.  He sought out forward thinkers in the emerging field of tank warfare like Patton and Brett.  All of those influences came together at the moment of supreme crisis and propelled Ike to forefront of history.

Pause and consider the company that you keep.