HR Problems Archives - TurnAround Social Sector Coaching

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Battling with the Board? Frustrated by Fund Raising? Join me for a Zoom Executive Director Cocktail Hour at 5pm Eastern on Thursday, December 20. Bring your own wine and hors d’oeuvres.  I’m your host. Ronald Dale Tompkins. As with all good cocktail hours, I’ll have questions such as who is the most interesting person you met this month? Who is your most successful client this year? And what do you need to solve before you enjoy your holiday feast?  Register at the link below and see you soon!

You are invited to a Zoom meeting.
When: Dec 19, 2019 05:00 PM Eastern Time. Click HERE to Register in advance for this meeting:
After registering, you will receive a confirmation email containing information about joining the meeting.

No gossip column on 990s can omit the juicy topic of what we’re all getting paid.

The 990 tracks highest paid compensation in two places – Part VII, Line 1d on the main form and also Schedule J (There are 16 additional schedules that can accompany the main form and sometimes this is where the bodies are buried.)

There are two ways to examine the data.1045_4931523

  1. What did the highest paid staff member receive?
  2. What percentage of the total compensation expense (Part I, Line 15) are the Highest Compensated Employees taking?

 

 

Let’s start with the highest compensated in $ even though the percentage of total compensation by percentage may not be unusual.

  1. Leadership of universities/medical facilities and private schools for the wealthy are routinely given higher salary in lieu of stock options. The theory is high leadership skill is required but leaders could also make more in the for-profit corporations with stock options as incentives. The eye popping salaries are a replacement for the stock and other incentives to be made at Apple, GE, and IBM.
  2. Higher pay can be concealed by Part VII Section A Column F – Other related organizations. While I have an upcoming look at nonprofit captive corporations, some midmarket nonprofits with financial sophistication use this column to add an extra $50,000 to the executive compensation. Wish I worked there 🙂
  3. Guidestar publishes an annual compensation report. For example, the CEO in Sacramento for a nonprofit should make approximately $54,000 if the total revenue is less than $500,000; $112,000 if the total revenue is less than $1 million. $130,000 if the total revenue is less than $5 million, and $175,000 at greater than $5 million revenue. These numbers strike many Boards as generous, but Guidestar is watching all of these clever add ons and reporting them. Why should you settle for less than fair? (Guidestar, 2017:208)

Let’s continue with the underpaid!

  1. Leadership compensation by percentage of total compensation is how much the Board thinks that the leadership is worth. An agency of $6+ million should expect that leadership compensation will absorb 3-5% of total compensation.
  2. Since ill-equipped leadership will never get the nonprofit to $6 million in revenue, small organizations may experience 6-12% of total compensation for leadership costs. Boards have to pay in advance of the larger size that good leadership can provide. It’s necessary pain of investment!
  3. If you are in a $500,000 revenue organization, be careful not to overvalue the ED job. Let’s use the Sacramento example and your compensation should be $54,000. Because the company is small, your job may also include clerical for 25% of the time and program meetings for 25%. Those two compensations for full-time work are $30,000 and $40,000.

So your total compensation would be

  • 50% ED – $27,000 (54,000*.5)
  • 25% Clerical – $7,500 (30,000*.25)
  • 25% Program – $10,000 (40,000*.25)
  • TOTAL $42,500
  1. I’ve also seen another nonprofit with $18 million in revenue and 1% in Highest Compensated Staff. While I applaud the benefits that staff receive in pension and health, it appears that they are risking a loss of leadership when managers go to a convention and chat about salaries. (People gossip at conventions! ). Poor Board leadership.

 

Let’s finally think about the overpaid

  1. I’m looking at a $7 million revenue organization with compensation requiring about 16% of the total compensation budget. That is leadership that has the board in their pocket!
  2. I’m also looking at a medical nonprofit that has been in the news for fraud charges. There is $2.5 million in compensation from related organizations – for 2 people.

 

Conclusion

Board of Directors should structure compensation to be generous to leadership and expect high results in return. Small agencies must suffer with tight budgets until total revenue approaches $6+ million. Boards should work with Executive Directors/CEO so that most of their time is spent in leadership. Mixing job descriptions will never produce great results in lives of clients. At the same time, there are ceilings to compensation for highest paid employees. With the 990, we can see where an agency is on the continuum.

The CEO/ED job is challenging. A business coach can help and contact me if you need support to go through this process.

Did you work harder after you hired more people? The reason to hire more staff is because there is too much work. How can more people create more work instead of less work?

Companies go through ‘valleys of death.’ This is commonly described as any nonprofit between $1-6 million in revenue. This is the growth period where the need for more office support (administrative, legal, hr, accounting, etc) is high but the cash is really not there to pay everyone.1118_4740631

Valleys of Death – Employees

Another Valley of Death happens when the staff team grows and changes.

1-10 Employees

Companies usually start with the vision of one person. How many times have you seen a great visionary start a small homeless program? The new company is built around the passion and skill of the founder. Of course, the owner cannot prepare food, clean and recruit clients so helper people are hired, 2 social workers, a kitchen assistant, and a custodian. This model climbs to 10 employees. The new staff are owner-helpers. They don’t have much authority. The director/owner sets the rules for the shelter, orders the supplies and keeps the books. The helpers clean and help. It is critical that the director/owner trusts the helpers.

10-25 Employees

Over 10 staff and more is needed than loyalty to the director/owner. Good food and safe housing created a flood of applicants for the housing program. The director/owner helpers are replaced by staff who have the ability to make good decisions when the director/owner is not there.

26-100 Employees

The staff team over 25 people is the highest level of director/owner failure. It is possible for the owner to work too hard in the 10-20 staff member range and not hire capable people to exercise independent judgment. If the director/owner continues to add 30 helpers without independent good judgment

  1. The director/owner will collapse from overwork OR
  2. The agency will lose newer staff and cycle between shrinkage and growth with 25 staff

The director/owner must prepare for a constant change in role during growth. There is a steady shift from

  • Leader doing all of the work with help
  • Skillful staff taking over marketing, accounting, client engagement
  • Leader becoming a visionary and values thought leader with managers
  • Leader setting 3 year highly achievable goals with management team

There is a saying that at 10 staff the owner needs to hire someone identical to herself. At 100 staff, she needs to hire someone much different from her style to fill in missing skills.

Any problems?

  1. The director feels too badly to transition staff who helped to start the company but don’t have a place on a larger team. One for-profit owner had two CEOs who could not grow as the company expanded to 5 sites around the world. He simply added them to his research staff at their same rate of pay – until he was no longer breaking even.
  2. A nonprofit director lost many younger staff when three ‘original’ staff were mean and dismissive and no longer playing valuable roles. She couldn’t face the stress of honesty and transition.
  3. A director liked to hire managers who were not threatening. They had less ability than the director. The agency could never break growth barriers because the team lacked skills and experience to take it to the next level.

There are personnel companies who can be hired to review job descriptions and actually transition unproductive managers when the owner/director or board does not feel capable of the task.

Conclusion

Leading a growing company is a difficult and constantly changing job. Your role requirements will not stay the same for 12 months.  While sufficient cash is a challenge, the balance of effective people on the team at different stages is critical. The CEO job is challenging. A business coach can help and contact me if your team needs support to go through this process.

This weekly club meeting talks about stress that CEOs and Executive Directors feel when employees don’t do the right things at the right times and life gets difficult.  Perfectly happy Directors and Presidents are not eligible for membership. This week, I’m thinking about why employees get the job description and don’t understand the job.

955_5660976Job Description
In a former job, I was also half of the HR department. I wrote job descriptions for every job. Since the job involved children, I carefully added that you have to be able to get down on the floor with kids and lift 70 pounds. The description is great – but has so many details in it that’s its impossible to know what the actual job is. While it’s critical to be able to carry a child in a fire, the day to day work for the appraisal is quite different.  In 10 years, staff had to pick up a 70-pound child one time! How do you protect yourself without hopelessly confusing your new employee?

What is the job description? The job description outlines the legal limits of your authority. If you are the first grade teacher, you cannot pay bills. It’s not in the job description. You don’t have the authority. The job description describes the limits of the job but employees want to know what is the core of the job?

Job Scorecard
There are several systems online to identify simply what the job is about. The job scorecard is what the job is really about. It’s simple enough for employees to understand. It protects them because you write down how you measure success. Many employees try to be successful if they know what you want.

Some employees won’t give their best until they understand what you want. I like a 10 point job scorecard that has 4 sections. I can tell the staff very simply what the job is about and they are not surprised later in feedback and appraisals.

Example: Accountant

  1. Knowledge, Skills, Abilities – 3 measures. For example, an accountant might have
    1. Knowledge – BA Accounting and 40 hours of additional training per year
    2. Skills – 3 years experience in inventory allocations (Knowledge plus practice)
    3. Abilities – interprets our corporate financials to board (baked in knowledge)
  2. Values – 3 measures of values (values have to already be established)
    1. Value is mission-driven staff – measure is staying late to meet the reporting deadline
    2. Value is delighted customers – measure is returning calls and emails in one day
    3. Value is flawless execution – measure is 0 corrections required in the audit.
  3. Visible Results – 2 measures for an Accountant
    1. Reports to the managers by 5th of the month
    2. Public audit without qualification
  4. Key Responsibilities –
    1. 18-month rolling cost budget
    2. Inventory entries with sales, costs of goods sold, raw materials, finished goods, and work in progress.

Isn’t that simple?

Keep the job descriptions because they keep jobs from changing without good reasons. They protect both manager and employee in moments of tension.

Use the job scorecard to do appraisals and help the employee understand how they add value to the company. Your employees will not understand you until they know what you want. Job scorecards help!

The CEO job is challenging. A business coach can help and contact me if your team needs support to go through this process.

 

 

This weekly club meeting talks about stress that CEOs and Executive Directors feel when2_2501249 employees don’t do the right things at the right times and life gets difficult.  Perfectly happy Directors and Presidents are not eligible for membership. This week, I want to deal with the stress of the 18-36 month window.

ReHire
When you first take the CEO job, you have to rehire all of the people who report directly to you. Perhaps you assumed that they are good sheep and will simply change to a new head sheep?

Not so.

Someone who now reports to you isn’t confident and you make them nervous. Someone else wanted the job that you have. Someone else has been cutting corners (with time and attendance, expense account, etc) with the last boss and wonders how to test your tolerance. And so on. You thought it was a greener pasture, but all greener pastures have manure!

Meet with each direct report and help them show their best side to you. Recognize their talents, skills, values and passion. Meet together as a team and give staff an idea of your most important values. My own personal values include:

  • I don’t hire assistants. I hire people smarter than I am who own their part of the company – In your area, take responsibility and authority and bring me solutions as well as problems.
  • Be a continuous learner. I expect to offer more skills to my job one year from now. I expect you to offer more one year from now. I read one book a week. What is your goal?
  • I pay 75 percentile for your position. I think that great managers need to be compensated so they don’t worry about job and home. I pay for professional development. I offer flex time and remote work where possible. I respect your valuable contribution to this company.
  • I only want people in this company that you would enthusiastically rehire. Does anyone need more attention on your team? Does anyone need to transition? Those will be my questions.

Result
The result of the rehiring – people feel respect for who they are and what they have accomplished and they have a clear idea on how to work with you. In most cases, this is a great start.

Review
Research shows that effective CEOs will need a 50% change in leadership team in the 18-36 month range. The management mix requires a team that can be effective under your leadership. In some cases, the reporting managers also see this and create their own retirements and resignations. This is not a sign of poor leadership as long as the revolving door stops within 24 months. It’s what is needed to take the organization to the next level.

The review period is where you set up a job scorecard for each position with the help of the leadership team. The process is necessary but it will point out some managers who are not in the right seat or not a match for the next phase of the company.

Repair
The discernment process is a time where you meet with some direct report about needed changes that may bring about transition. It’s also a time to see if you have followed the Rehire and Review process.

Failure to rehire can cause leadership challenges in the first 12 months.

Failure to retire people that you do not enthusiastically want will cause problems in year 2. According to the Rockefeller Habits Question 1, you need a leadership team that understands each other’s differences, priorities, and styles and a team that is able to engage in constructive debate. And you need team members who function flawlessly so that you are leading instead of repairing problems. Here are 3 Repair Steps.

  1. It is never too late to say to a direct report ‘I apologize for the awkward start to our relationship and I’d like to hear more about your talents and interests as we continue to create the team.’ No one is perfect and you are opening the rehiring question and giving them respect and a chance to join your team.
  2. It is never too late to state your values and apologize if anyone is surprised.
  3. It is never too late to start a repair or termination that you delayed out of fear or misplaced sympathy. I hate to fire people – until they start making me do or fix their work, or until they start to create trouble on the team.

CEOs can let problems slide, but my Personnel Consultant always said, you can’t cure cancer with aspirin.

  • They’ve worked here for 15 years.
    • I respect that but the company is growing and changing and needs staff who empower that change. Can they change? I’ll help.
  • They probably can’t get a parallel job with their training.
    • That is a choice that they made when they decided not to keep learning. It’s tragic, but respect their choice.
  • They have a lot of friends on the staff team.
    • Very likely, but employees protect their own job first. There may be muttering but none of us are as popular at work as we hoped 😊

The CEO job is challenging. A business coach can help and contact me if you need support to go through this process. But with or without support, most Executive Directors inherit leadership teams with issues. The issues can be managed – and the Board was wise enough to hire you to do it.

Rehire, Review, Repair.

 

If you want One Minute TurnArounds by email, please sign up!

GDPR – Your email is collected by an automated system so that the One Minute Manager posts can be sent. You will be invited twice a year to a two hour Scaling Up workshop for CEOs and EDs. Annually, you will be offered an Ebook and asked whether the resources of TurnAround Business Coaching are helpful.

A maximum of 10 companies per year develop a relationship for Business Coaching to turn around their company or scale up past a growth barrier.

Since most nonprofit leaders haven’t seen a four hour workweek since Kindergarten — it’s a tempting fad right now.  Tim Ferris promises it in a book that has topped all charts on Amazon. Could it work for us? Imagine ……..704_3484856

  • Food provider? – Drop ship to client house and save onsite labor!
  • Counseling? – Make an app that clients can use themselves with a 5 minute phone consultation at the end.
  • Education? – On demand videos and educational games online!

 

Sorry —- Getting your NonProfit turned around requires passion and labor. If it were easy, you wouldn’t need us!

Does it ever get easier? Definitely, yes. I say that from experience.

  • After you fill your company with people that you would enthusiastically rehire, you will have more skills available from people who work together. Magical!
  • After you have clarity and discipline in your strategy, your leadership team energy will waste less energy on projects that are not that critical. Magical!!
  • After you have created a coaching system with staff that reduces errors and eradicates your time to repair problems, you double your leadership time. Magical!!!
  • After the nonprofit starts to turn around in the 2nd quarter, your cash improves and you sleep at night. Magical!!!!

I’m not sure about the 4 hour workweek. Frankly, I’d be bored. But I can promise you a normal workweek with time for fun and family – and the chance to do good too!

If you want One Minute TurnArounds by email, please sign up!

GDPR – Your email is collected by an automated system so that the One Minute Manager posts can be sent. You will be invited twice a year to a two hour Scaling Up workshop for CEOs and EDs. Annually, you will be offered an Ebook and asked whether the resources of TurnAround Business Coaching are helpful.

A maximum of 10 companies per year develop a relationship for Business Coaching to turn around their company or scale up past a growth barrier.

PS. This link is a critique of the 4 Hour workweek.

The 4 Hour Workweek Mindset

I’ve had experience with three effective volunteer organizations – the United Methodist Women, the typical traditional Black Church, and an Indo-Chinese Caucus. Of course, you may know many others.775_6051438

If you want to grow and scale your mission – do you have a chance of success with volunteers?

A lot of us are very familiar with difficult volunteers on committees, co op boards, community boards, and church trustees. Finding volunteer structures which work well is like the bitcoin investments. They look reasonable but most people are finding bitcoin mine (fields)!

What lessons can we see from non-profits that use effective volunteer teams?

  1. They believe in the mission. Women were excluded from mission activity in the Methodist Church so they made their own organization. Literally, thousands of small committees sprang up to meet, hold fundraisers, and spread the vision. After the organization became wildly successful, the men suggested merging the two organizations 😊
  2. They are accountable. I remember three all-stars
    • A woman who started a food bank, expanded to a network and got government funding
    • A woman who was in charge of sound, lighting and media weekly for 5 years and always professional and on time
    • A woman who played as a volunteer in a band and was practiced and professional

Sadly, I did not take their good examples to spread a culture of accountability in the organizations. It is socially awkward and sometimes splits small organizations when families are involved and one member is called to accountability. One family with 5 children wanted a church to provide a part time job to the oldest undisciplined boy. He was called to task after wrecking a riding mower but the family still left the church.

3. They have the skills and interest in the job that they accepted. There was a screening process that ignored politics and chose people who could actually do the job. I remember a chair of a Boys and Girls Club who was enthusiastic about generosity and also raised funds. Contrast that with people who get on the Finance and Stewardship committee because they are nosy

4. They are recognized. The traditional Black church has been very effective with titles and recognition to sincerely thank people who accept the volunteer responsibility.

5. They have a sense of community. The Indo-Chinese caucus had meetings until 2 in the morning and endless other meetings to drive action that affected American Indo-Chinese communities and homelands. No one looked at the clock because there was such power in solidarity.

Most of the websites that I check tell you about effective practice for volunteers. Since you’re reading this, your problem is taking an ineffective structure for volunteers and changing it!

When you start the process, you are going to get pushback from stakeholders who like things the way that they are:

  • Volunteers who took a job for status and self-esteem
  • Volunteers who feel that they have earned an important job because of loyalty
  • Family members who believe the reports of someone who got caught
  • Volunteers who see the money in an organization and look for ways to enrich themselves
  • Pressure groups who see the volunteer as their voice, regardless of other issues
  • Volunteers who are champions of stability in a time of change so they really want to be volunteers at large instead of accountable for a specific task that they have been assigned
  • Volunteers who see this assignment as good for their resume so they are short term and don’t want interference

Getting past these barriers to effective volunteering is a lonely and soul-searing task at times. And volunteering is declining in the USA (Murphy, 2015). So we are getting the volunteer dregs plus the smaller number of qualified people.

I honestly can’t think of a solution that does not involve coaching. The coach offers the leadership team support and clarifies the plan to be effective and successful through volunteer support.

Maybe you’re tempted to give up after this report? Never!  Volunteer effort still remains a powerful resource to scale your nonprofit work! Like everything else, you can’t do something meaningful that doesn’t involve emotions.

The golden nugget – accept some uncomfortable emotions and get a coach to guide the process of the leadership group. Success and a culture of accountability  is the result!

 

If you want One Minute TurnArounds by email, please sign up!

GDPR – Your email is collected by an automated system so that the One Minute Manager posts can be sent. You will be invited twice a year to a two hour Scaling Up workshop for CEOs and EDs. Annually, you will be offered an Ebook and asked whether the resources of TurnAround Business Coaching are helpful.

A maximum of 10 companies per year develop a relationship for Business Coaching to turn around their company or scale up past a growth barrier.

 

Notes

Murphy, N. (2015). 3 Disturbing Facts About Volunteering in AmericaThe Cheat Sheet. Retrieved 11 March 2018, from https://www.cheatsheet.com/business/why-a-drop-in-volunteering-is-bad-for-everyone.html/?a=viewall

youre-fired.jpg?fit=600%2C424&ssl=1

I had a job search in 1988 and finally got an interview for an executive position. I would be 2nd in command to a leader who planned a five year window for retirement. I was flown to Washington and then Philadelphia for interviews. The interviewers stressed that I would have considerable power. What’s not to like about power?

The interviewers admitted that there was one challenge – their current president was scared of one person who reported to him. The staff member was abrasive, had no support of other staff, and criticized his supervisor and peers without hesitation. They were reluctant to say what they wanted, but an unwritten part of the job description was to handle Jorge.

I understood that new direction was needed. I hated to take a new job and fire a well known staff so I suggested in the 2nd interview that they fire the offender and I could come in with a clean mandate to make things better. They were doubtful because ‘Jorge even knows how to deal with the boiler when it breaks.’ They agreed to think about it. I was sure that I had the job. I started looking for housing.

On my birthday, April 20, I got the call I had been waiting for! …… But the call was to tell me that they had chosen another candidate for the job. There is a copper taste in my mouth even as I write this today.

After much reflection, I realized — The real job that I was offered was to fire Jorge (handle him Ron) and I turned it down!

It doesn’t matter how many strategic plans you write. You will fail if you have staff who can’t work the plan or who want the plan to fail.

This is why I focus on 4 questions for success in business:

  1. Do you have a strategic plan that also changes what you do tomorrow?
  2. Do you know how much money you need and how to spend wisely?
  3. Can you keep staff from stealing money after $1 million revenue?
  4. Will you and your staff have the talent and passion to do what you plan to do?

Sometimes, staff changes are slow because of civil service, unions, elections – things outside the manager’s control. The mayor employs many critics that he cannot fire in the Police Department and other union and civil service protected positions.

For most of us, the big reason that we can’t change things is that we are scared of the people who work for us! “In 2009, U.S. companies spent $3.6 billion on “outplacement services” (figuring out whom to fire and how to do it)” (Rogers, Jenny. “Getting the Ax From George Clooney.” Slate Magazine (2010): n. pag. Web.)

Staff transitions are difficult. And it’s always tragic to create chaos with someone’s livelihood and career.

If you have staff that can’t or won’t work your plan, you need to analyze job descriptions, start regular appraisals, and stop being scared. Don’t let anger amplify difficulty. Discern if a problem staff has the respect of others. Don’t ask others to do it for you. And stop being scared!

If you want One Minute TurnArounds by email, please sign up!

GDPR – Your email is collected by an automated system so that the One Minute Manager posts can be sent. You will be invited twice a year to a two hour Scaling Up workshop for CEOs and EDs. Annually, you will be offered an Ebook and asked whether the resources of TurnAround Business Coaching are helpful.

A maximum of 10 companies per year develop a relationship for Business Coaching to turn around their company or scale up past a growth barrier.