Top Five Moments When Human Capital Needs to Be a Top Priority for Nonprofit Executive Leaders
A nonprofit leader recently asked us, “I know that strengthening my organization’s human capital management will always help us to better implement our strategy and accomplish our mission, but are there particular moments that should make human capital rise to the very top of my priorities as an Executive Director?” Great question.
Here are our Top Five Moments when Executive Directors Most Need to Make Human Capital One of their Highest Priorities.
1. New, Ambitious Strategic Plans
Whether your organization is scaling, expanding geographically, creating new programs, addressing new client segments, or dramatically changing its culture, achieving ambitious strategic goals almost always requires similarly bold changes to a nonprofit’s talent and capacity. Nonprofits often realize that the leadership and organization will need to be quite different in three years to achieve their aggressive goals, but are not always clear how to build what they need.
A recent case study underwritten by the Annie E. Casey Foundation, A Smart Investment in Human Capital, provides rich insights into one nonprofit’s experience successfully navigating through these challenging waters. In 2012, the Corporation for Supportive Housing adopted a strategic plan that called for expanding its geographic footprint, and creating bold, new programmatic approaches. These changes led to dramatic organizational restructuring, and required new capabilities for its staff. As the CEO put it, “Adopting this new model of service delivery and programming was a huge leap forward for us in terms of achieving our mission, but it also revealed an opportunity gap in terms of our staffing structure and how we’d need to invest in our people to take advantage of this new opportunity.”
2. New Leadership
New leaders often bring new visions, which can lead to changes in goals, culture, and strategy. And new leaders can bring distinctly different strengths and weaknesses that require the rest of the organization to adapt. In either case, new leadership can require significant talent and culture changes. Smart new leaders take the opportunity to revise the organization’s investment in human capital management to benefit both employees and the communities served.
When a new CEO took over the reins at one well-established community foundation, he was eager to dramatically change the organization to make it more impact-oriented and more accountable for results. “We needed to create a new vision, redefine success and move away from our reactive and comfortable culture,” recalled the CEO. It was through a strategic planning process that the CEO began to see another major challenge – human capital: “It became clear that we needed to focus next on making sure we had the right people and the right skill levels.”
3. Quick Response to Changes in the Environment
In the face of recession, changing government regulation, or other environmental changes, organizations often need to quickly refocus their strategy. A good response to the external environment recognizes that new and different human capital capabilities are just as essential as strategy to achieving new organizational goals, and that smart human capital management investments usually result in decreased costs, increased revenues and greater impact.
A child services nonprofit AchieveMission has worked with receives most of its funding through competitive state contracts. When the state started consolidating its contracting, moving from several hundred smaller contracts to as few as a dozen large ones per year, our client needed to adapt quickly. The organization merged with several smaller organizations, and then moved to further bolster the human capital capabilities it would need in order to effectively integrate these merged organizations and compete effectively in a dramatically more demanding environment.
4. Dabbling Isn’t Producing Intended Impact
Many well-meaning nonprofit leaders introduce isolated HR tools and become frustrated when those tools don’t deliver the expected results. That’s because truly taking advantage of human capital requires embedding human capital management into an organization’s culture and integrating it across organizational practices. Human capital management is not solely the purview of any single leader or department, but rather, it is a core responsibility of every manager across the organization.
We worked with a youth development organization that had begun to “bite off pieces” of human capital work, but after some bad hires and staff turnover, realized that it needed to take a deeper approach to its human capital management. Now, the CEO says that integrated, holistic human capital management is “how we do business and we are getting better at it every day… Talent is everyone’s job.”
5. Major Struggles to Reach Goals
Many organizations experience symptoms related to neglected or poorly executed human capital strategies. In some cases, heroic efforts enable these organizations to achieve their strategic goals, but often with high stress and turnover. At other organizations, such challenges undermine the attainment of program, financial and growth objectives.
In comparing what it took to achieve goals before and after a major investment in human capital management, one CEO summed it up this way: “I come to work feeling lighter now. With people being more capable, and with a clearer understanding of what’s expected, there are fewer headaches and loose ends to deal with. I feel more focused, more productive and more strategic, and I think my entire team does as well.”
Do any of these scenarios sound familiar to you? If you know an organization that faced any of these scenarios, how did it respond? Feel free to share your thoughts with us - we'd love to hear them!