THE BLOG
01/22/2015 11:40 am ET Updated Mar 24, 2015

Can Nonprofit Organizations Compete in the War for Talent?

As the leader of a nonprofit organization that is experiencing rapid growth, I have strived to create a culture of accountability in order to improve our performance to achieve the organization's mission. It is an ongoing process that never ends. It all begins with the right leadership team and refusing to compromise or settle on selecting the very best people who demonstrate a passion for their work, especially in the nonprofit sector.

The nonprofit sector is up against numerous obstacles when it comes to identifying, hiring and retaining top-tier staff and leadership. According to a study by Nonprofit HR and the Improve Group, "2014 Nonprofit Employment Practices Survey," 46 percent of nonprofits surveyed increased staff in 2013, compared to 17 percent that decreased staff. These numbers are significant, as the nonprofit sector employs 10.7 million, the third largest industry in the U.S. (Nonprofit HR Survey). So what issues are nonprofit organizations facing and how can they address them?

Some hiring struggles are unique to the nonprofit sector and some are universal. In order to begin to address these obstacles it is important to identify them in a clear way. The Nonprofit Employment Practices Survey states that the nonprofit sector reports their three biggest staffing challenges are: 1) Hiring qualified staff with limited budget constraints, 2) Finding qualified staff, and 3) Finding time to recruit and interview (Nonprofit HR Survey).

Finding top talent isn't easy and nonprofits certainly don't have resources or dollars on their side when trying to bring in the best and brightest. The Nonprofit HR survey reports that only 15 percent of nonprofit organizations included in the study reported having formal annual recruitment budgets (Nonprofit HR Survey). Because resources are scarce, nonprofits often settle for scraping by rather than investing in hiring leadership to think strategically about moving the organization forward. Investment in talent for a nonprofit can feel like a huge gamble as you are relying on that person's success. In my organization Common Threads, success is defined as more children cooking and more dollars raised to support our programs. If a staff member is unable to reach their defined benchmarks with a commitment to best practices it is certainly not in our best interest to keep the person on, as difficult a decision that may be. In the nonprofit arena, shifts of organizational resources from programs and direct service to organizational capacity is often considered an indulgence, taking away limited funds and direct support from those the organization serves.

Nonprofits also experience considerably high turnover. While they are increasing staff, about 20 percent of all hiring is a result of filling slots vacated by turnover -- clearly one of the greatest human resources challenge facing nonprofits ("Smart Hiring"). Because we cannot necessarily pay top dollar for talent, many of our young, green staff has moved on to other organizations that could pay them more and offer reduced workloads.

With a laser focus on finding passionate, smart, driven, roll-up your sleeves kind of leaders, I began tapping my network for hiring advice. My network led me to what was the most important meeting I've had on this subject to date. My friend Mindy Mackenzie listened to my challenge at length and gave me advice that rocked my world and I believe, will change the trajectory of our organization. Mindy, a former C-Suite executive with three major corporations, spends most of her days consulting and working with senior leaders from Fortune 500 Companies. Nevertheless, her advice and counsel to me was just as relevant for my small and growing non-profit.

Mindy explained that I could hire a recruiter but that given my budget; I could try to recruit and hire myself using a wonderful process which is outlined in a book by Geoff Smart and Randy Street, titled WHO: A Method for Hiring.

I had already come to the conclusion that I needed to be more intentional about the process and as soon as I read the book, I adopted the method for our organization and knew we would never go about hiring employees in the same way. Interviewing is an art form and our entire team needed to master this competency in order to hire top talent.

To ease the transition and make sure we were on track, I brought in Mindy to lead an all-staff training to help my team implement the method.

Since Mindy had more than 20 years of experience driving change through organizational and leadership effectiveness at companies like Walmart Stores, Campbell Soup Company and liquor giant Beam, Inc., she was the perfect person to help transform our approach. She is also authoring a series of leadership books designed to help professionals and organizations drive growth through their people. Needless to say, she knows a thing or two about hiring and keeping "A players." The lesson learned here is that you cannot leave training like this to the "gifted amateur." Investing in the right partners up front will pay back 10 fold in the long run.

Taking the first step and adopting a new and different approach is the hardest part. So much of it used to feel like guesswork, but it should not be that way. We started with some basic questions...How do you find folks that have the guts to push the vision and to measure frequency? How do you find people that naturally strive for greatness? How do you find people that are willing to fail and to say, "Hey Linda, I made a mistake. This is what I learned and this is what we should do about it."

Mindy gets these questions a lot and she focuses her message on effective "truth-telling" in the workplace. Her colleagues lovingly refer to her as the "Velvet Hammer," along with boasting about surviving her "meat grinder" interviews as a significant professional accomplishment! In fact, she actually had a candidate pass out after an interview! (The candidate had a pre-existing medical condition -- but still!!) I asked her some questions to find out a little bit more about how she makes this method work for her; as well as what she has learned through her experiences.

Does it take a skilled recruiter to find top talent?

I believe the best recruiters are the hiring managers - because they have the greatest need to get that hire right. And yes -- it does take skill. No one could argue that a manager needs to know how to read and manage a P&L in order to run their business effectively however, the ability to interview and select the right talent for the right roles is an equally important skill that is often overlooked.

What is the WHO methodology and why does it work?

What I love about the methodology shared in Geoff Smart and Randy Street's book is that the hiring solution they provide is simple, practical and effective. It's research-based and, after using it for years myself, I can guarantee the process works. However, the adoption of the WHO takes time. There is a direct correlation between people who complain about their lack of time and about the performance of the staff that they hired. These are the same people that complain about the hiring process, claiming that it is too hard or time-intensive. Smart leaders and managers connect the dots between putting more time in upfront and recruiting and hiring staff that they can count on.

Can non-profits really find "A players" when they don't always have resources to bring home the sell?

Of course! Hiring people isn't about having the most perks or largest paychecks to offer. "A Players" are only "A Players" if they are an ideal match for the role they are considering. The ideal match is someone who not only has the skills and competencies needed for that particular role but also shares the same values as the hiring company. That means that both the candidate's talents AND motivations must align with the company's. This is GREAT news for non-profits.

What can nonprofits use instead of $ to sell the job?

Every human being has a core need to be seen and heard. People desire to work in a job where they can contribute their talents with a group of people they respect and have fun with; while working on things that make a difference. And oh-by-the-way - get paid for it. Did you notice how pay is the last thing I mentioned and not the first? Study after study has been conducted by research organizations around the world (think Gallup, Harvard Business Review, Kenexa, Corporate Leadership Council, Development Dimensions, Inc., Aon Hewitt, etc.) about employee engagement. And the findings are consistent. Fair pay and benefits are a hygiene issue -- meaning they are important only to the extent that they are perceived as fair -- but they do not drive engagement. And engagement is simply defined as why people join an organization and why they stay. A company better have way more than money to offer as a way to attract and keep great talent.

What is the investment in adoption of the Who and it's ROI?

The largest investment is time. Like anything that is important to learn, you have to invest some upfront time to learn a new skill. And selecting and hiring "A players" are skills. But once you know how to do it and are willing to take the time to do it right, the ROI is priceless. The cost to individuals and organizations for mis-hiring and then dealing with the aftermath is also immense. According to Smart and Street's research, the average hiring mistake costs 15X an employee's base salary in hard costs and productivity loss. And hiring mistakes are made a lot! Many experts, including legendary Peter Drucker, estimate that managers get it right only half the time! Learning to hire the right people for the right roles is a business practice that is imperative for every leader, no matter the industry.

How do you define an "A player?"

Think of hiring as casting. If you think about it in this way you shift your mindset from finding a great person to finding the best "rock star" for the role you are trying to fill. How many times have you read a fantastic book and then gone to see the movie only to be super disappointed because the casting was wrong, so the movie didn't live up to its potential? Just because an actor is phenomenally talented doesn't mean they are perfect for every role.

The same is true in hiring. An "A player" is only that if they are an ideal fit with the majority of the elements of the role on offer, have a demonstrated track record of doing the work the role requires, share the values of the company and team they are joining and actually wants to do the work. That's when the magic happens!

What's the trick to retaining "A players?"

Everyone is unique. You must get to know your people -- understand what they value -- and then make sure you deliver on it. It sounds simple, but I am constantly astounded by how many assumptions managers will make about what they believe their employees want. Just as we tend to give gifts to others that we like to receive, leaders tend to dole out reward and recognition in forms that they like to be given.

A simple trick is to sit down with each of your direct reports 1:1 and simply ask them to tell you about the most meaningful recognition they have ever received and why. Listen to how the recognition was given (on stage in public, note in private, cash bonus, weekend getaway trip for them and their spouse, and extra week of vacation, etc.). Then verify what you heard. Make sure to be clear to them that you are trying to understand what motivates them so that you can tailor your recognition over time in ways that mean the most. Take notes. Then do it. It's a game changer!

One employee I worked with had not been asked what mattered to him or what motivated him, in all of his 33 years in the workforce! Just being asked the question was a huge motivator for him. Take the time to ask.

How do companies get to that benchmark of having 90 percent "A players?"

One job at a time. In my experience it is very important to prioritize the roles in your company that deliver the most value. All jobs are important but some are mission-critical. Identifying which jobs those are and then prioritizing (mandating!) that all those roles are populated with "A Players" is job #1.

The WHO methodology also recommends using scorecards and I have found that this is a valuable tool when hiring and retaining "A players." A scorecard includes all of the outcomes and competencies that are associated with a specific role; and each role should have a scorecard. It will ensure that the candidate and/or employee is a match for the position and a match with the company culture. Scorecards can also be utilized for performance reviews.

Building a staff of 90 percent "A players" is not for the weak or weary. It is hard work and sometimes requires taking difficult or uncomfortable measures. A good manager will be clear about what success in a role looks like and will remove obstacles to help an employee be as successful as possible. However, if someone is simply not a good fit in a role, the best thing to do for them and for yourself is to let them go so that you can find the right person and so that they can find a role where they can be successful. Honesty is key. Each person that I have released from his or her role, with the exception of two, has thanked me. I genuinely care about them and maintain contact. You have to be honest with people.

Top 5 worst voo doo interview questions?

The WHO methodology refers to these questions that do not serve the purpose of hiring top talent. This list could be endless. We've all encountered bad questions as an interviewee (manhole cover, anyone?) and possibly even as an interviewer. Instead of giving you a Top 5, I will share some general bad habits. Managers seem to have their pet questions. So-called "voo doo" questions are all bad. Asking trick questions or hypothetical questions is a ridiculous waste of time. Allowing candidates to speak in generalities as opposed to providing specific evidence is also not useful. Getting swept up by someone's charm and discounting someone because they are less glib is also a typical trap. But my #1 interviewing pet peeve is managers who over talk in the interview versus asking smart, job-related questions and listening. Over-talking is an epidemic in management ranks and a sure-fire way to almost guarantee mis-hiring.

Mindy's Top Meat-grinder Techniques

The most important technique that I apply to interviewing is being thorough. That can be painful for some. I take the interviewing and selection process very seriously and genuinely want people to be as happy and fulfilled as they can be. Being in the right role is a major component of that personal and professional fulfillment. I am confident that interviews are well worth the time to do right, and I generally conduct interviews that last anywhere from 90 minutes to 3 hours (go read "Who" for why this is the case!). I do prepare candidates up front that I will be maximizing our time together and because of that, might interrupt if they start to share non-relevant information or if I have enough of what I need.

I do not allow candidates to speak in generalities and will challenge them to dig deeper if they come across as disingenuous and are unwilling to share failures or lessons learned. This is especially critical when interviewing executives for C-suite positions. The process should be extremely insightful and can demonstrate a lot about a potential hire. One recent interview I was conducting involved a top executive, who was reluctant to share much information, being unable to identify a time when his or her mind was changed. That doesn't show much potential for learning, growing, or taking a broader point of view.

According to Mackenzie, "While folks will say I may be the toughest interview they have ever experienced (I admit, this is a common theme!), they will also say they felt it was the most robust and exhaustive process where they really got to share deep content and context and were convinced they were a good fit for the company if they went on to be offered and accept the job."

My organization has found success with this method. The first step was ensuring that the entire staff got on board. It was admittedly met with resistance. We had to rethink and redefine the process of hiring for a significant number of openings. People that had pending offers had to be re-interviewed. It was a lot of work and time, and my staff was frustrated with the length of the practice, adding to their already busy to-do lists. The WHO Method is a practice, similar to Ashtanga Yoga, the sequence doesn't change, but the more you do it, the deeper you can go into the questions to get the juice.

For us, it had become glaringly clear that we needed to invest deeply into human resources and our hiring process or our outcomes would suffer. Delivery was playing a huge role in the results of our program outcomes and that could be traced directly to personnel. So, I didn't care that our staff moaned and groaned about their lack of time to advertise a position, collect resumes, screen, interview, second interview, make a decision and an offer, and get an acceptance in that short a time. I wanted to ensure we had the best and brightest and were making an effort to work towards a team of rock stars. We needed to make a change at the root so our fast-growing organization could thrive.

This method is like truth serum, exposing a candidate's strengths and weaknesses through the extensive interview process. It was surprising at times, people we thought were star candidates did not necessarily rise to the top during the structured process while others that we had dismissed as average candidates surprised us. Many people expressed a clear vision of what they wanted from their career and interestingly enough many folks we thought were "A Players" were unable to articulate what they wanted from their career and how they could add value to our organization and mission.

This method will deliver. If you commit to the process and see it through, you will be amazed at what can happen. The process will assist you in building a staff that you can "go to war with." Isn't that what every leader wants? To have a team that you can be proud of, a team that will push the vision forward without compromising ethics, a team that will proactively find ways to measure success.

Mindy Mackenzie is the founder of the leadership and strategy consulting firm, MM Enterprises, Inc. Mackenzie advises CEOs, works with their executive teams and consults with Fortune 500 firms and their executives along with not-for-profit organizations looking to improve their business performance through prioritizing and resourcing against its top growth imperatives. She can be reached at mindy@mindymackenzie.com.

A study by Nonprofit HR and the Improve Group, "2014 Nonprofit Employment Practices Survey," http://www.nonprofithr.com/wp-content/uploads/2014/03/2014NEP_SurveyReport-FINAL.pdf

Smart, Geoff and Randy Street. Who: A Method for Hiring. New York: Ballantine Books, 2008. Print.

http://www.lasallenonprofitcenter.org/smart-hiring/