What Businesses Can Learn from Nonprofits
I have been blessed over the past several years to have had the opportunity to work as a volunteer and director with two nonprofit societies. I have watched them evolve from a group of individuals with an idea to well-functioning, mature, and highly successful organizations. And I am continuously amazed by how much passion, energy, and creativity that the volunteers and core team members bring to the table. Interestingly, the level of enthusiasm and engagement I see in these organizations often surpasses what I see in most for-profit companies. This is remarkable when you consider that these people are not being paid or compensated in any way; they are donating their time and energy!
What if we, as business leaders, could create an environment in our companies that generated the same levels of passion, commitment, and engagement with our employees? In this article I want to explore some of the dynamics I see in these nonprofits and propose which elements can be applied in business. Furthermore, I would suggest that some leading for-profit firms are already adopting the behaviors described below, and these behaviors are creating a competitive advantage for them.
Clarity of Purpose
Nonprofits and charities know exactly why they exist. These organizations are typically founded on some core purpose or cause – to house the homeless, to support education in the third world, to encourage and support entrepreneurship, etc. This clarity of purpose is a major factor in attracting people who want to contribute, whether with their time, energy, and ideas (volunteers); their money (donors); or in other ways. And those organizations that draw the greatest contributions are those that are most clear and forthcoming about their core purpose in all public facing communications.
In business there seems to be more confusion. I think this stems from the fact that many people assume businesses all have the same purpose – to make money for owners and shareholders. This is a very utilitarian definition of purpose, and many thought leaders, such as Simon Sinek (author of Start with Why), argue that making money is a result or a byproduct, not a core purpose. Leading companies exist for a bigger and more compelling “why,” and they ensure that the world sees and understands that core purpose.
Question for your business: Does your company have a clear purpose for its existence beyond just making money? Is that purpose obvious to employees, customers, and the public at large?
In the nonprofit world, I find that communication is more open, honest, and robust. This likely stems from the fact that the people involved are not employees and, therefore, there are no “career limiting” conversations or taboo subjects. No one feels at risk of losing a job or looking bad in front of colleagues.
The very best companies in the world create and reinforce an environment where robust communication, even healthy conflict, is not only welcome but encouraged. Ground rules are established so that people can speak openly; they know that there are no “bad” comments, except for the things that don’t get said. It is only through having open conversations about difficult topics that we are able to address the root causes of issues and unlock the potential of real creativity and innovation.
This type of environment doesn’t just happen; it requires deliberate attention and modeling by leaders. Leaders need to encourage and reinforce “straight talk” without negative repercussions.
Question for your business: Does your firm foster an environment of healthy, robust communication? Is there “straight talk” at every level?
Goal and Performance Visibility
If you arrive late for a sporting event, what is the first thing you look at when you arrive at the stadium, field, or rink? Most people immediately look at the scoreboard, absorb that information, and only then do they focus on the action.
The same applies in organizations. People want to know the score; they want to know how the organization as a whole, and in parts, is performing. And there is no point in keeping score unless we have defined the scorecard. That is where goals come in. Goals are definitions of specific, measurable outcomes to be achieved within a certain timeframe.
I have seen this done very well in the nonprofits I work with, and I believe it is tied directly to the fact that their core purpose is clear. If it is clear why the organization exists, then it is much easier to set clear goals in context. Examples could be number of dollars raised or contributed, the number of people housed, the number of kids saved, etc.
There are a variety of methods for tracking performance. I am very supportive of online dashboarding tools that provide the dynamic, real-time status of goals and that color-code performance as green, yellow, or red. Everyone in the organization, no matter their background, can understand the score.
Question for your business: Does your company track and share the score? Are the key numbers and performance-to-goals visible to the team?
Recognition and Collective Learning
Both of the nonprofits I work with run significant events during the year, and activity levels rise significantly just prior to and during those events. Although processes and roles are well defined, there is always some amount of scrambling and unforeseen challenges that crop up and need to be addressed. Thanks to the good intentions of the team and their clarity of purpose and goals, these are generally overcome without too much stress on the system.
And shortly after these periods of increased activity, two important things occur: The first is a formal recognition of the team members and volunteers for their contributions. This is tied directly to the goals set for the event or campaign, and because performance is visible, as noted above, recognition of success is quite easy. This recognition can take a variety of forms, but publicly and formally taking the time to say “thank you” is often the best approach.
The second important thing that occurs is the capture of lessons learned. This is given appropriate time and a level of formality to ensure that good information is gleaned from all contributors, and the rules of healthy communication noted above are in play, so that team members can share all their perspectives, both good and bad.
Question for your business: Does your firm take the time to both recognize contributions and formally capture key lessons?
The disciplines listed above are not rocket science, but sometimes we, as business leaders, lose sight of the power of a highly engaged team. Studies show that highly engaged employees result in better performance, both financially and otherwise.
No organization is perfect, and certainly there are many opportunities for improvement in the nonprofit sector. However, on the dimensions listed above – clarity of purpose, healthy communication, goal and performance visibility, recognition and collective learning – many nonprofit organizations demonstrate best-practice behaviors. Can your for-profit firm say the same?
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