Challenges in Managing Employees of an Altruistic Organisation
V Santhakumar1
The challenges in managing employees of not-for-profit organisations (NPOs) are discussed in the literature. However, most of these are in the context of the developed world. This article identifies certain challenges and how these are addressed based on the experience of certain philanthropic or altruistic organisations in India. This article is organised in the following three major sections: (a) the nature of work in NPOs; (b) challenges that these pose in managing employees; (c) the possible ways of addressing these challenges as evident from the perspective of a few organisations in India.
A. Nature of work in NPOs
The features of work may determine the effectiveness of different ways of managing employees in any organisation. Hence, some of the specific features of the work in NPOs which have a bearing on personnel management are discussed below.
NPOs may have intangible outcomes
The output of each employee of an NPO may be somewhat intangible. Moreover, the outcomes could be long-term in nature. There could be many factors which are beyond the control of the organisation or each employee which may determine the outcomes. All these make the accounting of the contribution of each employee towards the organisational goal difficult.
However, such an issue of the measurement of performance can be there for employees in for-profit firms too, like those whose work contributes only indirectly to the bottom-line or profit. For example, the work of software engineers in an Information Technology firm contributes to its profit through the work of the sales teams. In other words, it is difficult to attribute the failure/success in terms of the bottom line to one or a set of employees. However, this is more the case with NPOs since their bottom line itself may be intangible.
Employees may have to use their own knowledge in detailing tasks
As in the case of many other knowledge workers2, there may be a need for these employees to define their task in detail in a given circumstance by keeping the overall goal of the organisation in mind. They may need to have a higher level of information on what should be done in each circumstance. It is also good for the organisation to utilise this information rather than narrowly defining the task of each employee.
Need for intrinsic motivation
It is generally noted that the role of intrinsic motivation is higher in not-for-profit organisations3. Though employees in all organisations – for-profit and not-for-profit – look for certain non-monetary ways of gratification, the importance of these could be much higher in the latter. As noted by Drucker (1990) employees `need achievement, the satisfaction of service or they may become alienated and even hostile. After all, what’s the point of working in a non-profit institution if one doesn’t make a clear contribution?’.
Need for public service orientation
The work in most NPOs needs a public service orientation. In that sense, NPOs may be closer to public organisations. Public service orientation is needed even if such services are owned and operated by private or non-governmental organisations (like charity hospitals). There may be a need for affective commitment on the part of employees of such organisations. Such commitment may enhance the performance of employees, (Sharma and Dhar, 2016). These characteristics of NPOs may determine the challenges in managing their employees and some of these are mentioned in the following section.
B. Challenges in managing employees
Getting the right employees
Objectives: Career growth, money, position, status or pride may drive people to join a corporate firm. Along with the monetary compensation, non-material features, like independence or autonomy, possibilities of learning, alignment between the vision of the individual and the corporate, the importance of their role within the organisation may guide the choice of occupation even in the for-profit sector. Similarly, people have multiple objectives in working with NPOs. The desire to use one’s own skill/ expertise for the benefits of the wider society, certain level of autonomy in work, the need to pursue a job which is not just for making money (for oneself or the organization), achievement of a certain social recognition, emotional attachment to a section of society (poor, under-privileged children, sick patients), or the motivation arising out of certain religious, cultural or ideological orientations may encourage people to seek jobs in NPOs. Hence, they may select an NPO based on its vision, how established it is, the potential role on offer, and so on.
Growth and funding: In the case of a small altruistic or non-governmental organisation run/owned/managed by one person, there could be different opportunities and challenges for the growth of an employee, and these may influence the decision to work there. The source and nature of funding could be another consideration. For example, the availability of a substantial amount of resources on a long-term basis may attract people to philanthropic foundations because the uncertainties related to funding is a major source of concern in the not-for-profit sector, especially in developing countries. Most of the NPOs may get funding for specific projects, and hence, may not be able to signal the stability of employment to employees. The inadequacy of resources may also affect the social security benefits or support for medical expenditure and so on.
Meeting employee expectations: Some of these organizations may not be able to meet the various requirements of their employees. People can misunderstand the stated purpose of an organisation or they may have underestimated the difficulties in their roles. The management of large NPOs may have several routine tasks, which may disappoint employees who may have a romantic or glorified vision of such organisations. Similarly, each individual may have to carry out a set of pre-determined tasks even in such organisations, which may not meet the requirement of autonomy/independence for individuals.
NPO locations: These organisations may work in some of the relatively underdeveloped parts of the country. There may not be enough well-qualified people in such locations because of the educational underdevelopment there and the migration of people in search of better career opportunities. People from other places may not want to move to work in such small towns/cities where there may not be enough employment opportunities for spouses, good schools for their children and social networks. Those who are willing to work in these places, may not be highly competent. All these factors determine the nature of employees and the bearing this has on the performance of the NPOs.
Competence: It is not true that the basic skills of a domain are enough to work in NPOs, as is generally believed. What is required is for domain experts to be willing to repurpose and reorient their skills and knowledge to suit the unique requirements of the NPO they are working with. This requires more than competence in a domain. Competence is only one of those qualifications which are required to work in difficult social conditions.
Passion or social empathy:4: In working in the social sector, it is important to understand and be sensitive to the difficult conditions under which other stakeholders in the same domain work so as to partner with them effectively for the realisation of overall social goals. A higher level of passion on the part of an employee (if it is oriented to the social purpose of the organisation) would also reduce the need for supervising him/her. This would reduce the internal energy of the organisation substantially. However, competence and passion are present in people in varying degrees. The emphasis on one over the other could be a problem. Getting people with an appropriate combination of these two traits is difficult.
These factors may lead to a situation where an organisation may not get enough people with adequate competence and readiness in all its locations. The lack of trained people will impact performance in terms of expected tasks and effectiveness. Capacity-building of people available could consume a significant amount of time and internal energy of the organisation. All these could lead to delays in realising organizational goals.
Intrinsic motivation: Even those who join with high intrinsic motivation may not continue to be so over time. They may look for satisfaction from a higher level of autonomy (having the freedom to select what they want to do from a wider set of tasks), and whether organisations like philanthropic foundations may be in a position to provide enough opportunities for such people5 could be yet another challenge.
Performance assessment
There is a major challenge in carrying out performance assessments and determining monetary rewards for employees based on such assessments in NPOs. Due to the intangible nature of the work, it may not be possible for the organisation to provide very clear signals on what is expected from each of its employees. Though one may think that employees can be evaluated based on the processes in which they are involved (rather than the final outcomes which are intangible and of long-term in nature), there could be challenges in this regard too. The management or the supervisors may not be able to fix in detail the tasks or monitor the performance since certain discretion in fixing tasks has to be left to the employees themselves.
The factors mentioned may lead to a situation where the monetary compensation of people working in an NPO may be less than that for occupations which require comparable qualifications in the private sector 6. This could be the case even when the base compensation is the same or comparable because there may not be any substantial increase in the monetary reward in an NPO based on the assessment of performance, as in the case of a private company where the firm’s performance in terms of profit can be measured.
A lower compensation may facilitate the self-selection of employees by which those with intrinsic motivation and public sector orientation may decide to join a not-for-profit organisation (Leete, 1999, Coomen et.al., 2011, Bacchiega & Borzaga, 2001, 2003). However, this lower compensation may also encourage people who are somewhat `lazy’ or not very competent to be part of these organisations7. For some of these people, the salary received from such a social-sector organisation could be the best that they can earn. There can also be another set of qualified people who, having worked at corporate jobs, may see the job in NPO (with a lower salary) as a space for a relaxed career. It may not be possible always to screen out such people (who are either not very competent or who want a relaxed job) at the time of recruitment. There can be issues of information asymmetry here which cannot be solved by a few interviews or other forms of evaluation. What should be the nature of the recruitment process or the performance assessment to address this issue, is a challenge faced by NPOs.
Challenges in nurturing intrinsic motivation and public service orientation
It is recognised in the literature that the need to focus on or nurture intrinsic motivation among employees may warrant changes in the power structure of the organisation (Alatrista and Arrowsmith, 2004). This may have something to do with the culture or hierarchy in organisations. The culture or hierarchy in various organisations can be different based on their activities and the sector they are in. The nature of a mass-production manufacturing company may be different from that of an IT software company. There can be differences between different manufacturing firms producing/selling different products. The internal processes of a private hospital (a service-provider where the employees like doctors have a much higher level of discretion) could be different in yet another way.
Hence, the organisational culture of an effective NPO has to be different from that of a for-profit firm. How serious the organisation is about its vision and mission may determine the culture of the organisation. These need not motivate the employees if these are seen to be just for public relations and for rhetorical purposes (Drucker, 1990). All managers who are successful in for-profit firms may not succeed in managing a not-for-profit organization, which may require a different attitude and set of values. Hence, it is likely that those who have that set of values manage such organizations.
The culture-building of an organisation is a two-way process. People who join the organisation at the middle or lower levels may also shape the culture in the long run. On the one hand, they may `teach’ the leaders or top managers the importance of having a more equitable relationship between the leaders/supervisors and the employees. On the other, the undesirable behaviour on the part of one employee can have a significant negative externality on the organisation. As noted by Kennedy (1991) `an under-performing, unethical, or unpleasant individual can have an enormously negative impact on the organization’s morale and/or reputation in the community’. Such a negative impact could be higher in the case of a social-sector organisation, partly due to the public’s expectations from such organisations.
There is not enough scope for using monetary incentives (such as periodical and/performance-based bonuses) to motivate these employees. Though there could be an annual increment in the salary, and it can be indexed to some measure of performance, it is not adequate to work as a monetary incentive. There is also a concern that such monetary incentives, even if these are used, may work against intrinsic motivation (Frey, 1997; Borzaga, and Tortia, 2006).
The scope of extrinsic, non-monetary incentives, such as the promotion to a higher position with associated privileges (may include the size of office, company car, and so on, which are available in a public/government organisation) is also limited in NPOs. All these could be serious hurdles in motivating employees.
Career progression
Not-for-profit organizations may not have a number of conventional avenues for career progression for each employee. NPOs may need people who can coordinate different functions in a specific area (geographical or substantive issue). People with domain expertise need not necessarily have the inclination to do such coordination. Those who carry out this coordination, need not have expertise in a particular domain. For all these reasons, career progression in an NPO cannot be like in a public-sector organisation, where a person attains seniority by supervising more and more people. Hence, career progression in a conventional sense cannot be an adequate incentive to motivate employees in NPOs.
This may have a number of implications. On the one hand, it may enable the creation of a less hierarchical organisation. However, it can also create problems if people who come to leadership positions treat other employees as mere subordinates. While employees may have to be respected for their possible contribution in a particular domain, they may have to be nudged towards a collective purpose coordinated by a supervisor. If a mid-level supervisor fails in this regard, it may lead to frustration among employees who are working with him/her. Then, the higher-level supervisors may have to intervene.
Competent but difficult people
The challenges in the social sector are such that the isolated actions of one individual, however knowledgeable he/she is, may not be adequate to make a sustainable impact. There could be competent people who join NPOs and who are passionate about their own contribution to the purpose of the organisation. However, a few of them may find it difficult to work with others in the organisation or the organisation may find it difficult to accommodate them with their `angularities’. Yes, this could be an issue in any organisation, and not necessarily at an NPO. However, such people may pose a greater challenge for an NPO as evaluation of their performance in a for-profit organisation may be easier – based on their contribution to the bottom line – and hence, both the organisation and the person may find it easier to make decisions based on it. However competent the person is, he/she may not be accommodated if his/her work does not add value (in measurable terms) due to his/her angularities in a for-profit firm. Moreover, such measurability may also give a clearer signal to the person either to change his/her behaviour accordingly or quit. However, the problems of measurability may complicate this issue in an NPO. Some of these people can also be closed to any feedback on how to enhance their effectiveness within and for the organisation. Or they may not see the need for improvement for themselves. This could be partly due to the psychological or emotional attitude of people, as noted in Kennedy (1991): `they may be noisy, intrusive, abrasive, and rude’.
One way to understand this issue is that people with a higher level of knowledge can also exercise certain power, which derives from their knowledge/competence. Hence, the exercise of power need not necessarily flow from holding a hierarchical position. People with a higher level of intrinsic motivation may get demotivated by the visible exercise of power, whatever be the source of this power. Moreover, their demotivation may affect performance, which may be less visible in an NPO due to the difficulty in measuring such performance.
In general, NPOs may find it troublesome to work with people with ego or self-absorption. They may be more comfortable with ‘ordinary people’ who are willing to learn and change and work effectively in teams to further the purpose of the organisation. One may think that such a pattern is visible in all organisations irrespective of whether these are for-profit or not-for-profit. However, the non-use of the matrix of money as an outcome leads to a situation where it may become difficult to tolerate highly performing but difficult people in NPOs. In other words, such people may have a higher negative impact on the performance of other employees. What they may focus in an NPO could be their own interpretation of or contribution towards social purpose, and they may not bother whether others agree with this interpretation or if the manner of their contribution works against other people’s contribution. This could be a barrier in attracting highly accomplished but egoist people to NPOs (unless they are the founders).
Leaving an organisation
People may leave an organisation both voluntarily and involuntarily. The organisation may want to retain some employees for their contribution. In the Indian context, women deciding to shift the place of work after marriage is common. There may be others who are valuable, but their material expectation cannot be met by the organisation considering its overall strategy and purpose. There may be others who may leave due to their disillusionment with the strategy of the organisation (which the organization may stick to due to historical reasons).
C. Possible ways to address some of these challenges
There is a need to have a set of employees who can be motivated to do their work even without such additional monetary incentives (other than periodical increases in salary to meet the increase in the cost of living) or other extrinsic rewards. They may need to have a certain level of detachment towards power and other extrinsic rewards, which is why intrinsic motivation is important.
Intrinsic motivation can be strengthened by two factors – the joy in enhancing and using one’s proficiency in a domain and the perception that one’s work contributes directly to a social cause. To some extent, these can be the driving forces of the employees of NPOs.
Sustaining intrinsic motivation requires a conducive organisational environment. On the one hand, a certain level of hierarchy and centralisation in decision-making cannot be avoided for the purpose of the effectiveness of the organisation. On the other, such hierarchy and centralisation should not lead to a non-egalitarian structure; organisational territories controlled by a few individuals; and a perception among employees that they have no say in operational plans. NPOs have to balance this need for effectiveness and for a relatively egalitarian culture of the organisation. When some people develop a sense of entitlement and seek organisational or hierarchical privileges, it may have a negative impact on the others.
Towards an appropriate recruitment process
It is obvious that the recruitment process in an NPO requires careful consideration of its specific requirements. As noted by Kennedy (1991), there may be a need to determine if the applicant is interested in the organization for legitimate reasons (professional development and/or advancement, genuine interest in the mission) or for those reasons that may not advance the organization’s cause (loneliness, corporate burnout, etc.)
All constraints and features of social sector organisations have to be considered in recruiting its employees. It may not attract many highly competent people who have demonstrated their expertise in a narrowly defined domain, especially to work in places far away from metropolitan cities. The main criteria for the selection of an employee could be the workability or the potential for development. All employees of social-sector organisations need not have expertise in specialized domains. There may be people who can move from one (geographical or otherwise) to another. Hence, these people can be evaluated at the time of recruitment in terms of a broader set of expectations.
As usual, this recruitment process has to have different steps. These include assessing their knowledge/skill in the domain, ability/aptitude to work in the proposed team/unit, as also, the fit in the organisation in terms of mutual expectations. The recruitment process may assess each employee on two dimensions – competence or expertise and social commitment. Ideally, each person should have higher levels of both, even though the combination may vary. But the presence of one with the near absence of the other can be a problem.
Tweaking performance assessment to the needs of NPOs
We have discussed the difficulties in assessing the performance of employees in an NPO due to the intangibility of certain social outcomes and the difficulty in assessing each person’s contribution to these outcomes. Each organisation may have its own innovative strategies to address this.
Large NPOs (like philanthropic foundations) can give reasonable salaries, the risks associated with (or sacrifices to be made in) taking up a job with them may not be very high compared to, say, a typical, small NGO in India. Such foundations (PFs) recruit employees on a long-term contract and provide social security benefits and other assistance comparable to any formal sector organisation in the country. This can also encourage those competent people with a pro-social orientation, who are concerned about uncertainty in NGOs, to join PFs.
An organisation may analyse the cases of those who are not performing well and take corrective steps like restructuring roles as poor performance can be because a person is not a good fit for the role they are assigned to. In which case, restructuring a non-performer’s role and giving them time to meet the job requirements would be effective.
The assessment of performance could be based on activities that may lead to outcomes (not on the basis of outcomes). The indicator of performance could be based on a plan which is agreed upon by the employee (and here the targets are not imposed on him/her). This assessment may not be seen as a sort of binary evaluation or used to retrench all employees whose performance is not good. There are corporate organisations which may retrench the bottom ten percent of all employees based on such a performance assessment. Such a punitive measure may not work in NPOs. There may be a need to retain a person in the organisation as long as that person can demonstrate the potential for improvement. There can also be specific plans to build the capacity and knowledge base of such employees. There have to be forums where employees can express their views. There must be spaces for relatively open and clear communication between employees and leadership. Managerial decisions must be taken with an appropriate level of information, sensitivity and by thinking about the welfare of employees. There should be adequate avenues for grievance redress for employees at all levels.
Non-profit executives have to face up to the reality that they may not be able to accommodate certain competent people who may not fit in the organisation. Such employees may be asked to leave if all other strategies to accommodate them fail. Otherwise, it may have a negative impact on the capacity to function of other people including the leaders.’ Organisations which are sensitive to (or aware of) this issue may have to take action against those `competent’ people who are not liked by others. Or the organisation may have to take a number of unpleasant decisions in this regard. There could be a situation where such `competent’ people may leave the organisation. Despite the loss of their expertise and knowledge, the organisation may be compelled to accept such exits in considering its overall health.
An NPO may require not only a clearly stated social purpose but also periodic organisational attempts to see whether it is indeed contributing to such purpose (von Eckardstein and Brandl, 2004). There is also a need to adhere to and communicate, the integrity in decision-making processes. There can be ethical but polite ways of dealing with the outside world.
Limited career progression would also mean a certain separation between monetary compensation and hierarchy. In that case, the NPO could be closer to a knowledge enterprise, such as a university. Academics in a university are valued for their domain expertise and experience in research, teaching, and other academic activities, and not much for the administrative or supervisory role that they perform. All forms of exercise of power should be somewhat muted in an NPO. This may be necessary in order to sustain the intrinsic motivation of people.
AUTHOR
V Santhakumar, Professor, Azim Premji University
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