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SHRM Foundation Research
 

   8/19/2014
 

High Performance Work Systems in Nonprofit Organizations: Surfacing Better Practices to Improve Nonprofit HRM Capacity

Funded: August 2012     Completed: August 2014

Sally Coleman Selden, Ph.D., Lynchburg College
Jessica E. Sowa, Ph.D., University of Colorado Denver

Executive Summary
The nonprofit sector is becoming increasingly important to the economy of the United States.  More than two million nonprofit organizations operate in the United States, contribute more than 800 billion dollars to the economy, and support a workforce of more than 60 million people. Because of the continued growth of the nonprofit sector, quality management in these organizations is essential for them to fulfill their missions. Of special importance is recruiting the right people with a commitment to an organization’s mission, the right competencies to deliver services and the ability to contribute to the overall growth and development of the organization.  Unfortunately, some nonprofits do not adopt professional Human Resource Management (HRM) policies and practices that enhance their human capital. Often this failure is due to outside pressures from funders and other stakeholders causing the organizations to justify their budgets and under-invest in their formal management practices.  For these reasons, the nonprofit sector is unique and in need of sector-specific HRM practices.
Because the management of human resources in the nonprofit sector remains an under-examined topic, this study by Sally Coleman Selden and Jessica E. Sowa is an important addition to the overall knowledge base of Human Resource Management.  The authors of the study focus on the implementation of high performance work systems (HPWS) in nonprofit organizations and demonstrate how HPWS can be applied to HRM in the nonprofit sector to increase the performance of these organizations.

Utilizing the major components of HPWS (staffing, compensation and recognition, training and development, performance appraisal, information sharing, and employee input and participation), the first stage of the study surveyed executive directors of human service nonprofits in eight states.  The second stage identified 16 high performing nonprofits from the original group surveyed and site visits were conducted at these 16 organizations.  The final stage involved surveying employees and volunteers from the high performing nonprofits.

KEY FINDINGS

1. The theory of HPWS applies in the nonprofit sector; that is, performance in nonprofits is higher when organizations have adopted High Performance Work Systems. 

2. HPWS practices are important predictors of employee satisfaction.

3. Management of nonprofits makes a difference in how the components of HPWS are operationalized and how they influence employee satisfaction.

IMPLICATIONS FOR PRACTICE

• Information Sharing. Nonprofit organizations should think carefully about how information is shared and how employees and volunteers are involved in the operations of the organizations.  Nonprofit executive directors should examine the transparency of their organizations, asking questions on how information is regularly shared, and what constitutes the formal and informal channels for information sharing.  Nonprofit executive directors should examine their overall philosophy toward employee and volunteer input and increase legitimate opportunities for input.

• Staffing.  Designing onboarding, training, and first-year employee and volunteer support programs that clearly communicate the mission of the nonprofit, the role of the employee or volunteer, and reinforce the connection to the mission over time could influence the performance of the nonprofit, help retain employees and volunteers, and improve their satisfaction with their roles. 

• Compensation Systems.  Compensation systems should be carefully studied in nonprofits and aligned with the market, as feasible; multiple other ways to reward employees should be harnessed to show them their importance and keep them invested in the nonprofit.

• Overall Management.  Management expertise and trust between management and volunteers has a significant impact on the satisfaction of employees and volunteers.

Study Methods
The study involved both a qualitative and quantitative design to examine the impact of HPWS on HRM capacity in nonprofit organizations.

The first stage involved a survey of executive directors of human service nonprofit organizations in eight states across the United States between May and July 2012. Survey response rate of 39.5 percent yielded 344 respondents.

In the second stage, 16 high performing organizations were chosen based on the authors’ index of performance, which was based upon previous research studies and the authors’ own exploratory field research conducted in 2010. Interviews were conducted with the director of the nonprofit, the 
staff member  with HR responsibility, and the volunteer coordinator, exploring the performance of the organization, how the organization approaches the different HPWS, how leadership functions and what defines the organizational culture.

The third stage of the research involved surveying the employees and volunteers of the 16 organizations. Finally, the study analyzed the quantitative data using descriptive statistics, t-tests, and multiple regression models.

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