Nonprofits Need to Take More Care in Personnel Matters, Says Author

In addition to doing good, nonprofits in the tough economy struggle to do right by their employees—resolving conflicts, setting pay, offering benefits, hiring and (sometimes) firing with care. Jan Masaoka, who took over this month as the top executive at the California Association of Nonprofits, leads nonprofit managers by the hand as they navigate personnel issues in her new book, The Nonprofit’s Guide to Human Resources. Ms. Masaoka, who directed the online magazine Blue Avocado and led CompassPoint, the San Francisco nonprofit consultancy, spoke to The Chronicle about the personnel challenges charities face.

The “accidental HR manager” does seem to be a common story in nonprofits.

It’s the overwhelming story in nonprofits. You know, 96 percent of nonprofits have less than 100 employees. And so people have someone who’s designated as the HR manager, but that got tacked on to their other job, the one they got hired for, so they don’t have a formal background.

What are some of the most common problems nonprofits face because of their reliance on people who are not trained in human resources?

They make assumptions, because they think that they know. And they just stumble into things.

Let me give you one example: A manager is trying to resolve a conflict with a person who reports to him. And the manager says, in this kind of nonprofit spirit, “Well, let’s start by agreeing that we’re both at fault here.” And that was meant in that spirit—and it comes back in a lawsuit.

Having someone who’s a [trained] HR person helps keeps people alert.

What’s your argument to small organizations that may say, “We don’t need to do annual reviews, everybody already knows how they’re doing?”

In many corporations and small businesses, reviews are also not done. There’s sort of a myth out there that everybody does reviews except us. It’s not true.

In a small organization, people’s jobs expand quite a bit in any given year. Review time is the time to document and acknowledge that expansion and change. And I think people appreciate that a lot.

And in a small organization, one bad person makes everyone’s life miserable. I mean, one bad person is bad in any environment, but one bad person in a small organization is crazy-making for everybody. It’s a good idea to have reviews [in case] you need to let somebody go, for cause.

In general, do you think charities are too quick to fire poor performers—or not quick enough?

They’re not quick enough. I would say that it’s interesting because in the for-profit sector, when something goes wrong, it’s “Who’s going to take the fall? Who’s going to get their head chopped off?” While in the nonprofit sector, when something goes wrong, it’s “Oh, we need to look at the system or the process for how this happened.” And I would say the corporate sector needs to look more often at processes, and the nonprofit sector needs to fire more people.

You write that nonprofits don’t do enough to test the skills of job applicants. Why is that?

That’s true for all sectors, actually. Because it feels impolite? Or not team-oriented enough? It just makes people feel uncomfortable.

At Blue Avocado, we published this bookkeeping test, because a lot of times executive directors hire bookkeepers without themselves knowing bookkeeping, so they don’t know if they’re qualified or not. So this was a test and the idea was that you could give it to someone and see how they did. And the author did not want the answer sheet on the Web, so we put this thing up saying you had to e-mail us to get the answer sheet. And we’ve had more than 2,000 people so far ask us for the answer sheet.

Part of it is that people don’t have the tools, don’t know the tools. The thought that you have to give someone a test, and start by making up the test? It’s a lot harder.

You talk in the book about how charities meet the IRS’s standard that CEO compensation be “reasonable.” Compensation consultants, you write, always tell the charity what they are paying is OK.

And if they don’t, you just get another [consultant] at a higher rate. I gave a presentation earlier this year in Washington, to a conference of nonprofit HR people. And I made this point in it. And there were two compensation consultants in the audience. And they both raised their hands—“Wait a minute! I feel like you’re kind of slamming us.” And I said, “I want to know how many times you’ve told a client that their pay was unreasonable.” And they both rather abashedly said, “Well, that’s true, we haven’t done that.”

The whole room was just laughing. It was hilarious.

Why do you think they tend to rubber-stamp pay proposals?

I don’t think they tend to rubber-stamp them. They tend to say that you’re not paying them enough. Because you do what a client wants.

If you’re a compensation consultant and you get a reputation for saying your client’s salaries are too high, what do you think is going to happen to your clientele?