BUS603: Managing People

Mike Markovits: There are two parts of human capital management that seem to challenge nonprofits more often than the corporations I've worked with.

One part is actually recognizing how important and critical focusing on human capital management is to the accomplishment of their missions. In contrast, at GE and IBM the importance of human capital was reflected throughout the organization: in hiring, evaluations, promotions, and in the way the leadership spent its time. It was not unusual to see senior leaders, including the CEO, spending 30 to 50 percent of their time on human capital issues. It was part of the culture. Companies began to invest in human capital when they realized that not doing so would actually be the more expensive and risky path forward; many nonprofits are just now having that realization for the first time, and it takes time for that shift in priorities to work its way through the organization.

Second, and not surprisingly given the first, nonprofits are generally not aware of the many lessons corporations have learned about how to do human capital management better and less expensively. For example, at GE we learned that pulling managers out of their jobs, putting them into a cohort-based management training, and then sending them back to their business units was not the most effective method for leadership and professional development. When managers returned to their business units, the organizations had a hard time embracing the new methods the leader had learned. We also found that if the leader didn't actually use a piece of the training within a month or two, the knowledge was mostly forgotten. At most, 30 percent of what the managers learned was remembered and implemented. We had much better results when our development efforts focused on stretch assignments, formal and informal coaching, and highly tailored just-in-time training. There are dozens of practices like these that we have successfully adapted for use by nonprofits and that are readily accessible to, but still largely unknown by, nonprofits.

Tom Eddington: While human capital management can help any sized organization, the biggest impact is likely at those with at least a few dozen employees. Most of the leaders of these larger nonprofits experience human capital management challenges regularly but they may not use those words. They might say that they have lots of first-time managers who don't know how to manage, or that their senior leadership team is not working well together, or that the culture does not support accountability and results. More importantly, they are not aware of the decades of learning and the billions of dollars spent in the for-profit sector finding systematic ways to build stronger leaders, teams, and organizations, nor are they aware of the ways hard-won best practices can be tailored to address nonprofits. As Mike said, there's a huge opportunity to transfer knowledge and experience.

The knowledge transfer has not yet happened for a variety of reasons. One is that, historically, there haven't been a lot of nonprofit leaders who have worked in both the for-profit and nonprofit sectors. Another factor is the absence of human capital management experience on the board of many nonprofits. The board is oftentimes comprised of people with other important skill sets. Lastly, many of the nonprofit HR roles have been scoped and filled by strong administrators who have different, important contributions to make. The end result is that the executive director doesn't have access to this information.