Over the next few weeks, I’m going to talk a little bit about what performance management might look like in different industries – and the unique challenges you may face building a PM program that functions well in them. Remember, a great PM solution will be tailored to your organization’s specific needs, so it pays to be aware of the nuances of your terrain.
Let’s start with an area close to my heart – and one often very challenged by traditional performance management programs. Nonprofit organizations struggle when trying to apply for-profit performance models to their own, very different, organizations. Let’s take a look at why those cookie-cutter performance programs so often miss the mark with this sector.
Defining performance. First, it’s hard to define organizational performance in the traditional sense in the nonprofit sector. For-profit organizations can use a clear bottom line as both their reason for existence and their performance measurement, but nonprofit organizations are often built around varied and complex missions. This makes it difficult to pick out an obvious measurement of success. Since mission achievement is not typically tied directly to the organization’s ability to generate income, natural performance measures simply do not exist.
Cultural resistance. Although nonprofit organizations are increasingly embracing traditional business practices, many others still resist these changes on a cultural level. And there’s nothing that is more “corporate” than a traditional performance management program. Interesting research from the University of Georgia notes that “there is a high degree of idealism within the nonprofit sector and reluctance among nonprofit employees to acknowledge that they are involved in competitive, market-based activities, and, for ideological reasons, they are reluctant to use market analysis.i”
In fact, the idealism prevalent in nonprofits can be a huge strength or a significant weakness, depending on how well it’s captured and leveraged.
Having worked with a lot of nonprofit organizations, I’ve often experienced these struggles first-hand. But here’s the thing: the focus on measurement is less critical if we can unite those groups of passionate people to work collaboratively toward a compelling and shared goal. In fact, the idealism prevalent in nonprofits can be a huge strength (or a significant weakness, depending on how well it’s captured and leveraged). The strength of the idealism is realized when your performance design effectively taps into each individual’s connection to the mission. But that idealism can become debilitating if you introduce performance approaches that are perceived as being a distraction from productive work or contrary to the mission.
With these ideas in mind, here are a few tips for designing performance solutions for the nonprofit environment:
- Keep it simple: research has shown that particularly for non-profits, the success of a system is directly proportional to its simplicity.
- Heavily emphasize the role of the mission in your solution design.
- Clearly define strategies or actions that will help your team bridge the gap between the lofty mission and your near-term goals and needs.
- When looking for metrics, consider impact, the level of activity, and outcomes related to your program mission and purpose.
- Be creative with reward strategies. Understand what motivates the people in your organization. Reward with experiences that are connected to your mission. (Tip: it’s unlikely that pay is their top driver).
- Don’t try to force models that are contrary to the culture or mission.
In my next post, I’ll talk about the challenges of organizations that are spread out across our connected globe. Until then,
These are concepts from my book, How Performance Management is Killing Performance – and What To Do About It. Check out the book (you can order it from Barnes and Noble or Amazon) for the “full meal deal” – MTC
P.S. Don’t miss a post – sign up here for my email list to keep up to date on PM Reboot ideas.
P.P.S. Please help spread the PM Reboot revolution by sharing this post with your networks!
i Lindenberg, Marc, “Are we at the cutting edge or the blunt edge? Improving NGO organizational performance with private and public sector management frameworks,” Nonprofit Management & Leadership, Volume 11 Issue 3, 2001, 247-270. Page 255.