Creating a culture of philanthropy isn’t for wimps or hot air balloons; it’s hard work and it requires authenticity. Part of the reason it’s so difficult is that it requires leaders to change their mindset or at best, evolve it. Let’s face it, if leadership was already “there” in terms of mindset the culture would be right there with them. Leadership has to want to change and then lead the process to do so.
In my last few blog posts I’ve talked about the role of organizational core values in creating a culture of philanthropy – or LVBs (living, breathing values) as Wendy Maynard from Kinesis calls them (as opposed to the useless, lifeless, generic lists of core values too many companies pay lip service to). Reason being, to create a culture that’s different from the one you have now – even if it’s only more evolved – requires LVBs that support that culture.
Last week I wrote about the importance of having a mindset where not only clients of your mission, but clients that invest in your organization come first. That seems obvious, right? If you don’t make donor relationships an organizational priority then you’re not going to have a culture of philanthropy. But now I’m going to say that wasn’t a completely accurate statement. To be truly successful at both achieving your mission and creating a culture of philanthropy, employees need to come first.
I understand that this is a tough challenge for many organizations. Although 90% of corporate executives say that employees are the most important variable in their company’s success, a Towers Perrin survey reported that in practice they rank people-related issues far below other business priorities. Executives agreed improving employee performance would improve business results; 73% even said their most important investment was people. However, people-related issues, such as training and compensation, consistently ranked at the bottom of the list.
According to Steven Nardizzi, executive director of Jacksonville, Fla.-based Wounded Warrior Project (ranked #3 overall in 2014 after 3 years in the #1 spot, which it still retains among large nonprofits), successful organizations boil down to focus on the culture and alignment with mission and attracting, retaining, and engaging and supporting incredible people.
The Value in This Approach
In nonprofit organizations, leadership (and thus the entire organization) too often have tunnel vision when it comes to their mission being most important and they are hamstrung by the overhead myth that can keep them overly focused on the expense of employees rather than their value. The motto at Wegman’s, a company that has been on Fortune’s 100 Best Companies to Work For list every year for 17 years (they are ranked #7 this year) is “Employees first, customers come second.”
Vineet Nayar, CEO of HCL Technologies and author of Employees First, Customers Second, asserts “By putting employees first you can actually deliver on your promise of customers first. If you do not put the employees first – if the business of management and managers is not to put employees first – there is no way you can get the customer first.” Nonprofit organizations by design are laser-focused on their mission, it requires a shift in perspective to understand why putting employees first will serve the mission better.
“A study of 50 companies over a one-year period showed that organizations with high employee engagement had a 19% increase in operating income and nearly 28% growth in EPS (earnings per share). Conversely, companies with low levels of engagement saw operating income drop more than 32% and EPS decline 11%. A similar study also found that organizations in the top quartile in engagement generated revenue growth 2.5 times higher than companies in the bottom quartile.” (Financial Executives International)
According to Lori Fouché, CEO of Fireman’s Fund, “Culture is the glue that holds an organization together. It helps guide all the decisions, how you behave and act. You can pick whatever strategy you want but how you go about doing it is the difference between, oftentimes, success and failure.”
Learning and Development
Employee motivation is a highly researched topic and in study after study, employees cite learning and development as one of their top three motivations for staying with an organization, so it only makes sense that companies with a strong corporate culture and values typically couple personal growth with putting employees first.
- At First Horizon National Corp., the parent company of First Tennessee Bank and FTN Financial their #1 core value is “Employees First. We hire, retain and develop the best people, ensuring that every employee has the opportunity to demonstrate high performance and succeed. We nurture our culture as our competitive advantage.”
- Home Depot, also on Fortune’s list, has “Taking Care of Our People” as a core value and elaborates “Our associates are key to our success. We strive to create an environment where all associates feel they are respected, their contributions are valued and they have equal access to growth and development opportunities.”
- The Barnes Foundation has as a core value having “A Learning Culture – We offer venues for information sharing, analysis, education, and training that foster professional and institutional growth.”
Again, because of the overhead myth, many nonprofits, especially small-to-medium sized nonprofit, struggle to offer competitive salaries. Good news! A 14-year ongoing engagement and retention survey found that just as within the for-profit sector, within the nonprofit sector, Career Growth/Learning & Development was the second most cited reason for staying with an organization, behind Exciting/Challenging/Meaningful Work. (With the latter being fulfilled, at least in part, by the nonprofit’s mission.)
Why? The ROI
In a previous blog post I wrote about many of the hidden costs associated with not training fundraising personnel because according to Underdeveloped: A National Study of Challenges Facing Nonprofit Fundraising, executive directors report that 26% of development directors overall – and 38% among the smallest nonprofits – have no experience or are novice at securing gifts. What I didn’t talk about is the preponderance of studies that support the fact that training enhances organization profits. (When it comes to fundraising, this seems like such an obvious correlation).
Research shows that companies that invest in employee training and professional development outperform the market by 45%. These same firms also enjoy significantly higher profit margins and higher income per employee. Blackbaud suggests that setting aside 2-4% of your revenue for professional development each year “will show employees that you’re committed to their continuous growth.”
Training also decreases turnover – a chronic problem for nonprofit director of development positions. (A recent survey found that half of development directors (50%) anticipated leaving their current jobs in two years or less.) Major gift fundraising is all about relationships. How solid can your relationships be if your director of development position is a revolving door and the position is left unfilled for months (and in smaller organizations sometimes years)? (This tool can help you calculate the cost of replacing an employee for your business, although it does not include the biggest expense – lost revenue in the case of a fundraising employee.)
Of course there are many other ways to put employees first and truly having a culture that does so means making it a living, breathing core value that permeates the organization and directs its decisions and actions on a day-in, day-out basis. For examples of some nonprofit organizations who are having success with this kind of mindset, look no further than NPT’s Best Nonprofits To Work For 2014 (a new list should be coming out this month).
Attracting and Hiring the Right People
Attracting and hiring the right people goes hand-in-hand with training and putting employees first. Companies with strong, positive corporate cultures attract better people. The other side of the coin is choosing the right people. Dave Ridley, CMO of Southwest Airlines says, “Good culture starts with how you hire. You can’t train for happy and nice – you have to hire for it. Hire for attitude, train for skill.”
Finding the right person for a role is a challenging, costly, and time-intensive process which is why it’s important to make the right decision the first time. Strong living, breathing core values help guide the selection process. Bruce Jones of Disney says, “The selection process must include deep cultural immersion. That means communicating to potential applicants what the organization values are…The only way your selection process can work is if it becomes so deeply immersed in culture that someone will self-select in or self-select out depending on whether or not the culture is the right fit for them.” This is true when a strong culture has been established. Prior to that, however, Daniel Neel, president of The Fundraising Resource Group agrees with the Southwest approach and recommends hiring for characteristics needed for the job. “Often, some of the best and most successful MGOs have no previous experience or proven track record of success in major gift fundraising. I can teach the skills but I can’t teach the intangibles needed,” says Neel.
The flip side of hiring the right person is being willing to let people go who are not in agreement with and invested in your culture. In a radical move today, Tony Hsieh, CEO and founder of Zappos has decided to dramatically change the company’s organizational and management structure – and has offered an “exit strategy [three months’ severance] to any workers who aren’t sold on the unconventional idea.” Hsieh is also famous for his policy of offering new hires $2,000 after their first three months on the job to weed out anyone having second thoughts. While Zappos is an extreme example, companies that are successful at establishing a positive corporate culture agree that everyone in the organization must accept their core values.
Putting employees first is a real challenge for many organizations, and perhaps especially so for nonprofits because of their mission focus. Nonprofit leaders often cite the inability to pay competitive salaries as a big challenge in attracting and retaining good people but if you understand what truly motivates employees, you begin to understand the many benefits and wisdom of putting employees first and why it is essential to the process of creating a culture of philanthropy.
Other posts you might like on related topics:
The True Cost of Fundraising Training
The Role of Core Values in Creating a Culture of Philanthropy
Core Values and Nonprofit Client Service
NPTs Best Nonprofits to Work For: It’s Not About the Money
Nonprofit Leaders: Are You Effectively Motivating Your Employees?
Does Your Nonprofit Organization “Get” Internal Marketing?
Written by Lee Neel, Vice President of The Fundraising Resource Group. The Fundraising Resource Group helps non-profit organizations across the United States with fundraising feasibility studies, capital campaigns, annual giving campaigns, major gift fundraising, nonprofit marketing, fundraising training, and other high-impact, high-return fundraising activities. For more about how we can help your non-profit achieve fundraising success, visit our website or call 888-522-1492.