Human Resources From Scratch

A growing number of small nonprofit groups are making personnel efforts more professional

The work was piling up on Audrey Alvarado. As executive director of the National Council of Nonprofit Associations, in

Washington, Ms. Alvarado was not just managing her staff of four. She was deciding their salaries, tracking their vacations, and setting up employment policies.

In 2002, the staff of the organization, an umbrella group that provides guidance to state nonprofit associations, doubled — and with that expansion came an increase in human-resources needs. It was too much for her, Ms. Alvarado says. “We needed standard practices,” she says. “We needed to document what the employment procedures were, and there was a need to recognize that someone has the responsibility to be the go-to person.”

Ms. Alvarado decided to do the same thing many other nonprofit chief executives have done: She designated one of her employees to be her human-resources manager, promoting her to manager of finance and administration, but rolling human-resources duties into the position. The new manager was in charge of projects like conducting salary and benefit surveys and pulling together an employee handbook.

Many small nonprofit organizations, like Ms. Alvarado’s, are now placing a priority on building their in-house human-resources expertise. Knowing when to add a manager or create a department to handle benefits, salary data, hiring and firing, and other sensitive administrative issues can be a challenge for a growing organization. Equally daunting, say nonprofit managers who have stepped into the role, is running an operation on a charity’s tight budget — or being assigned the job without having had any experience in the field of human resources.

Gauging Needs

Charities are growing more interested in bolstering their human-resources capabilities because they are facing increased competition in attracting and retaining talented employees, according to Lynda Ford, a human-resources consultant in Rome, N.Y., who has worked with nonprofit clients across the country. Part of that need, she says, stems from the lower salaries nonprofit groups offer, and part involves compensating for those salaries by creating a good work environment.

In the past, she says, “the nonprofits paid lower and made it up in benefits and time off. What’s happened now is that many nonprofits have found they can’t continue to pay below market and still attract the staff they need, so they need an HR person to really help them determine what the market is, and what kinds of benefit packages they can put together to compensate them.”

Personnel managers cannot be fully responsible for attracting and keeping good workers, she acknowledges. But, she adds, “it is human resources’ job to make sure that everyone knows how to do it. And in that case, it’s training supervisors and teaching them about interviewing and coaching and mentoring and reinforcing.”

How big should an organization get before it creates a human-resources department? The Society for Human Resource Management, in Alexandria, Va., recommends that employers add one full-time human-resources employee for every 100 workers.

But many employers need that kind of help well before that point, as Ms. Alvarado of the National Council of Nonprofit Associations discovered. She delegated those duties to an employee after her group reached a staff of eight. Brian Monahan, director of human resources at the Central Association for the Blind and Visually Impaired, in Utica, N.Y., suggests that for every 50 employees or more, a full-time human-resources manager is a necessity.

For many charities, human-resources specialization is something that evolves slowly, until the duties take up most of an employee’s time.

“It kind of happened gradually,” says Kinette K. Cager, director of administration — and of human resources, by default — for A Community of Friends, a Los Angeles group that develops housing for low-income people. “I had been here under two years when I started taking care of the benefits portion — dealing with the broker, finding out what the more competitive rates are. Then it increased to dealing with some of our insurance needs, putting together personnel files or, more specifically, actually trying to create them. Before I was here, those were handled by the accountants and the old executive director.”

Nonprofit organizations should look at their specific needs before hiring someone or assigning an employee the job, says William Coy, former human-resources director at Yosemite National Institutes, an environmental education group in Yosemite, Calif., who now works as a human-resources consultant in San Francisco.

“Do you want someone just doing transactions, like paychecks and plan enrollments?” he asks. “Or do you want them to link to the strategic aims of the organization?”

Learning on the Job

Like Ms. Cager, Wendy-Ann Francis took over the human-resources function of her organization gradually. Five years ago, when she began working at the Computer History Museum, in Mountain View, Calif., she was in charge of payroll and other mundane human-resources tasks.

“There were only five people, and I was the office manager, so I just took all the duties,” she says. “I knew absolutely nothing about it. Because we were so small, not many issues came out — with a five-person team, conflicts don’t erupt quite as easily.”

Now, however, the museum’s staff has increased to 30 people — and Ms. Francis says she has reached the limit of her willingness to wing it. “There’s no way I’m going to do payroll — there’s too many things that can go wrong,” she says. “As far as benefits, I work with an insurance broker.”

Instead of spending her time on payroll and other routine chores, Ms. Francis is working to set priorities within her organization. She helps determine the kind of workers the museum needs to hire, and in setting budgetary priorities for training employees.

Deciding which human-resources functions a smaller organization will delegate to an outsider is often the key decision when it comes to determining the role a just-drafted manager can expect to fulfill, according to Ms. Cager.

“The biggest challenge when you’re untrained but are taking on HR responsibilities is making sure that you’re acting as the appropriate agent for your organization, that you are in a position that you can provide appropriate advice,” she says. “And that includes learning when you need to go for outside help.”

Kim Gilman came to that conclusion recently. An administrator and fund raiser at the Seattle Chinatown International District Preservation and Development Authority, a group that preserves historic buildings and converts them into low-cost housing, she was tapped 18 months ago to coordinate the group’s human-resource duties, a job for which she had no previous experience.

“I wish I’d had a better idea of the amount of risk to the organization that’s involved in this job,” Ms. Gilman says. “You have to deal with so many laws, but they’re not really accessible in one place, because there are state regulations, and federal regulations, and there’s so much to keep track of.”

Reading a book on how to better handle human-resources issues helped, she adds, but it didn’t satisfy the demands she believed she would face. “It was good, but it was also pretty basic, and tended to treat HR as a lot of common-sense notions,” she says. “As I was reading it, questions came up in my mind, and that’s when I decided, ‘I need more training.’”

That can be hard to fit in with all the other demands many nonprofit staff members face. Even at Ms. Gilman’s 59-employee organization, human resources is only part of her job; she estimates she still spends about 30 percent of her time working on administrative and fund-raising tasks.

Nevertheless, she attended a conference this past June devoted to managing human resources at nonprofit groups, and is finding the time to take a two-year certification course from her local chapter of the Society for Human Resource Management.

Dividing Up Tasks

Smaller organizations try to avoid overreaching when they put their human-resources responsibilities in the hands of an untrained employee, says Jean Lobell, a human-resources consultant at the nonprofit Community Resource Exchange, in New York.

“When community-based organizations have an HR person, they usually have someone who’s responsible for payroll, personnel policies, and recruiting,” Ms. Lobell says. “But for strategic planning or management training or even designing team-building drills, they tend to use consultants.”

But it is ultimately up to the employee charged with managing human resources to determine what he or she can handle. Some hand more mundane jobs like payroll and benefits to consultants and instead rely on staff members to deal with human-resources issues that are more vital to organizational planning.

“We planned to outsource from the start,” says Hannah Davidson, director of finance and administration at the Western Rivers Conservancy, an environmental group in Portland, Ore. Ms. Davidson also oversees the human-resources strategy for the charity’s staff of eight.

“It takes an hour a day,” Ms. Davidson adds. “It’s manageable. There are issues I could learn about, and I’m sure I could spend more time on it, but there are time constraints. With new regulations coming out in terms of overtime and other kinds of compliance issues, simply finding out what I need to know can be the biggest time drain.”

Getting Started

Recognizing the need to give novice human-resources managers formal training, some nonprofit organizations and executives are working to provide some support.

For example, Michael Weekes, president of the Massachusetts Council of Human Service Providers, an umbrella group in Boston, is working with nearby Suffolk University to design a yearlong certificate program to help train employees who have moved into human-resources positions at nonprofit groups.

The program is still in the planning stages, but the notion that a formal credentialing process might be necessary reflects the growing need for training. “Other state associations have been doing training in that area, but we want to be more intensive,” he says. “People need to be aware of HR procedures.”

Additionally, the Society for Human Resource Management offers numerous training opportunities through its local branches.

And even if training courses aren’t immediately available to a novice human-resources manager, finding someone to offer guidance can help tremendously, says Ms. Francis.

“Find someone to mentor you,” she suggests. “I didn’t have that. In hindsight, I probably would have put more emphasis on doing that early on. I spent a lot of time spinning my wheels and redoing things because I didn’t know how to do them in the first place.”

Some who have been thrust into the job welcome the opportunity to stretch — even if their new duties weren’t part of their original job description. “I’m extremely busy,” says Ms. Cager. “It’s a lot of work. I like human resources — it’s challenging.” The challenge, she says, is finding ways to turn employees’ expectations into realities.