Right People, Not Right Product Make A Great Company

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So as something of a follow up to my post earlier this week asking if foundation boards embrace non-profit values, I wanted to point to an article about what private enterprises can learn from non-profits.

The five points the article emphasizes are connecting with the community, understanding what motivates your employees, creating long term value, valuing people over the program or product and improvising.

Many of these points are representative of what the arts can bring to private businesses. While I don’t think the arts are exemplary in the diversity of employees and audiences it serves, improving that situation is a major topic of conversation and can help lead others to the questions they should be asking about themselves.

Likewise, while it may seem that non-profits don’t have a sterling record in respect to overworking employees, they do understand what motivates people to dedicate themselves to a cause in return for little material reward.

Lately one subject that seems to come up frequently is the idea that private companies have an unhealthy focus on short term gains at the expense of creating long term value. Many companies are starting to see that focusing on corporate social responsibility (CSR) is crucial for doing business.

It almost seems that if the non-profit sector can come up with an effective program to engender even a partial shift toward a longer view, a great service will be rendered.

The one point I especially liked in the article was that great people have more value to a company than great products and services. I think it can be easy to forget that when you are being evaluated based on the numbers you achieve (which is especially the case for non-profits’ administrative cost ratios)

4. The right people (not the right product or program) make for a great organization (Chris Pullenayagem, Director, Christian Reformed Church)

Many private (for profit) organizations rely on products or processes or programs to be successful in their business. For those that do, this seems to be an inverted way of pursuing excellence. People bring vision, passion and creativity to their work as evidenced in non-profit organizations. If the right people are hired, every organization will move towards excellence in achieving its vision and what it was mandated to do. Any organization can show results, but only this type of organization will thrive with excellence.

Manholes As Destination Tourism (Seriously)

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In answer to the perennial question about how the arts can show their value to the community, I came across an answer/inspiration in the form of the Flickr group, Japanese Manhole Covers. There are nearly 3000 pictures of some amazingly artistic manhole covers.

With NYC looking to ban big sugary drinks and Disney announcing that they will restrict junk food ads, it occurs to me that a constructive approach to fighting obesity would be to commission these artists to make manhole covers.

People would get out and start walking around in an attempt to see them all. Heck, people may even include a manhole tour as part of their tourism. I am sure someone will develop a social media app that maps out the locations and people would compete to check in at each of them on sites like Foursquare. (Actually, looks like there is an iphone app for Japan.) Just to keep things interesting, the public works department can switch them around every so often so that people would have to contribute to a remapping effort.

Check out the Japanese covers, some of them are pretty amazing and show a lot of investment and pride in culture and community.

(Clicking on image will take you to the specific photographer’s page rather than the larger pool of manhole photos)

Osaka Castle Artwork on Manhole cover - Osaka, Japan
Osaka Castle Artwork on Manhole cover photo credit: Neerav Blatt

Stuff To Ponder: Do Foundation Boards Value Non-Profit Values?

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There was an article on the Center for Effective Philanthropy’s (CEP) website in April that I felt started to give me some insight into why it seems that foundations and non profits often aren’t in synch with each other’s needs.

CEP President Phil Buchanan writes about research he and research analyst An-Li Herring did on the backgrounds of the CEOs of the top 100 Foundations. I was actually surprised to find that 60 of 100 came from outside foundations. Of those that came from foundations, only 21 were promoted internally from the foundation ranks. Seven had come from another foundation, four of them were already CEOs of those foundations, three of those four had come from outside philanthropy.

That seems like an exceptionally small number of people with philanthropy experience leading foundations.

The profile of the 60 CEOs from outside foundations broke down like this:

Twenty-seven had experience in the nonprofit sector broadly defined:

Those who ran operating nonprofits (not including institutions of higher education) number 14.

Those whose experience was in higher education, typically as a college president or dean, number 13.

Seventeen came directly from a role in business.

The remaining 16 CEOs who came from outside the world of organized philanthropy had positions in government, law, or other domains.

Since boards and CEOs set the tone and operational philosophy of the foundation, this can have a lot of influence on the manner in which they interact with non profits and the criteria they set for funding. After reading the article, I started to wonder if foundations have contributed to the pressure for non-profits to run themselves more like a business. I have never argued that operational discipline isn’t important for non profits, but they are quite different from for-profit entities.

Some observations Buchanan makes:

Second, foundation boards don’t much value experience at other foundations. Again, perhaps a focus on leadership development within philanthropy will change that, but moving from being a Vice President at Foundation A to CEO of Foundation B happens only very rarely (at least at the largest 100).

Third, experience as a grantee, if you exclude colleges and universities (which I’d argue are a different animal) isn’t much valued by most foundation boards when they’re searching for a CEO. It’s striking that there are more foundation CEOs who came to the position from a job in the corporate world than a job running a nonprofit (again, excluding colleges and universities).
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All that said, I’d still argue that boards might want to prize operating nonprofit experience more highly than they apparently do. Leaders who have experienced the pressure to meet payroll with no endowment to fall back on, and have felt what it’s like to be on the other side of the table from foundations, bring something important. They come to the role with a hard-earned understanding of the challenges of doing the on-the-ground work foundations fund – and of what nonprofits really need from their funders.

After reading these findings, I wondered what it is exactly foundations value in CEOs if it isn’t experience, empathy and knowledge about the sector the foundation serves. Buchanan also makes an “if it ain’t broke” argument in support of foundation boards looking to promote internally rather than introducing a potentially disruptive element.

Having read the piece I am really curious to know if external hires are generally more effective than internal hires or not.

It would also be interesting to learn if non-profits would give the highest marks to their relationships with organizations lead by CEOs with a long career in philanthropy. Likewise, it would be interesting to know if foundations would give the highest marks/most support to non-profits whose practices/values are similar to those of the CEO’s past industry.

Info You Can Use: Let Me Take Vacation, Or You’re Gonna Pay!

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Hat tip to Non Profit Law blogger Emily Chan for providing a link to an article on a subject near and dear to my heart — vacation time.

There are some problems non-profits can run into regarding vacation and over time pay, but reading further is only necessary if people in your organization work a lot of overtime and don’t take all their vacation.

Hmm, nobody clicked away.

I wasn’t entirely joking when I said problems related to the accrual of vacation and over time were near and dear to my heart. Putting aside the number of vacation and comp time days I forfeited last year, I am regularly told about the guy who retired and wiped out most of the next season’s budget.

That is one of the hazards covered in the piece on Olive Grove Consulting’s blog. While most of the laws discussed are specific to California, there is a pretty good chance your state has similar labor laws.

For instance, in relation to accruing a lot of vacation time:

One law that often catches employers off guard is California’s requirement that employees be paid all vested vacation wages at the time of termination. As a result, an organization should ensure that it has sufficient reserves to pay out all accrued vacation. If an organization has a vacation policy that does not cap the amount of vacation an employee may accrue – and if employees do not regularly draw down their balances by taking vacation – then, the potential liability on the organization’s books can become significant.

California law prohibits employers from adopting “use-it-or-lose-it” vacation policies where vacation is forfeited if an employee does not take it. But, employers are permitted to place a reasonable cap on the amount of vacation that an employee may accrue. Thus, for example, if an organization allows employees to take 80 hours of vacation per year, the organization may cap the maximum vacation accrual amount at 140 hours. That way, even if some employees do not regularly take vacation, they will never accrue more than 140 hours, which will allow the organization to avoid having a significant amount of vacation liability on its books. To do this effectively, the organization must clearly articulate its vacation policy, including all applicable caps, in its handbook or in a stand-alone vacation policy.

Note: I edited answers for two question on this topic together. Also, my emphasis- Joe

The article also covers over time pay and discusses the California definition of employees who may be classified as exempt. This definition, which is very close to the federal definition, is based on spending more than 50% of your time performing certain types of duties or belonging to certain learned professions like lawyers, doctors, accountants (but not bookkeepers), clergy, registered nurses (but not LPNs).

Creative and artistic professions are considered exempt. The Olive Grove blog doesn’t expound, but the federal Fair Labor Standards Act says that:

Some employees may also perform “creative professional” job duties which are exempt. This classification applies to jobs such as actors, musicians, composers, writers, cartoonists, and some journalists. It is meant to cover employees in these kinds of jobs whose work requires invention, imagination, originality or talent; who contribute a unique interpretation or analysis.

So even if your imagination is working over time, you won’t get paid extra for it.

The Olive Grove blog also has some informative material about laws regarding comp time in lieu of pay, disciplining employees who do not record their over time and whether a non-profit can consider over time to be volunteer work.

Just in case you like the idea of voluntary over time but don’t read the article, let me just tell you–DON’T DO IT!

“However, the DOL (U.S. Dept of Labor) also takes the position that individuals may not “volunteer” to perform work for their employer that is the same as or similar to their normal work duties. Instead, this is compensable work time. The DOL is also likely to take this same position regarding time an employee spends performing dissimilar services, if those services occur at the employer’s request, under its direction or control, or during the employee’s normal working hours.”

Again, because the laws of your locality may vary from these, just take this information as a guide to the sort of questions you should be asking about labor laws in your state