Overview
Building a Strong Team for Your Nonprofit
New nonprofits often start with a working board comprised of dedicated volunteers. As the organization grows, roles must be clearly defined to ensure smooth operations. When the workload and funds increase, the board may decide to hire employees or contract workers. This transition necessitates careful consideration of legal and IRS tax requirements.
Contract Workers vs. Employees: A Crucial Distinction
Distinguishing between contract workers and employees is vital. IRS regulations have distinct requirements for each. A contract worker uses their equipment, pays their taxes, and doesn't receive company benefits. Clear guidelines, such as the completion of W9 and issuance of 1099 forms, are essential when engaging contract workers.
Section 3: Hiring and Managing Staff
The Executive Director: A Pivotal First Hire
The board's first hire is often an executive director, frequently the organization's founder. This role is multifaceted, involving program development, financial oversight, fundraising, and more. Support and guidance are crucial for this challenging position. As the organization grows, hiring part-time assistants and/or recruiting volunteers can be a cost-effective strategy. Regardless of whether the worker is a volunteer, contractor, or paid staff, effective leadership is essential. The second hire will impact the organization’s culture, reputation, and execution of the program. Clear delineation of their responsibilities and decision-making authority is needed.
Performance Reviews and Culture Setting
Conducting annual performance reviews is crucial to assess employee performance. Leaders must reward strong performance, provide training for improvement, reassign roles if necessary, and make tough decisions about employment. Leaders set the organizational culture and must encourage idea sharing, creativity, and maintain staff well-being.
Ensuring Legal Compliance and Worker Safety
Leaders need to be aware of legal requirements such as OSHA regulations for worker safety. All policies, including sick leave, vacations, and benefits, should be clearly outlined in an employee handbook. Orientations covering handbook content are essential for all workers, paid or volunteer, to reduce liability and ensure everyone understands the organization's expectations.
Leader’s Wisdom
Building a Strong Team and Organizational Culture
1. Leadership Qualities:
- Passion and Perseverance: Starting a nonprofit requires passionate, hardworking leaders who are prepared for the challenges ahead.
- Intentional Culture: Cultivating a positive organizational culture requires intentionality in establishing values and corresponding behaviors.
2. Leadership Development:
- Continuous Improvement: Leaders should continually work on personal growth to better mentor their staff.
- Giving Back: Encourage experienced leaders to mentor younger, less-experienced counterparts.
- Weekly Reflection: Leaders should assess their weekly accomplishments to ensure they align with the organization's goals.
3. Employee Development:
- Fulfillment: Help employees develop their passion, purpose, and skills to achieve job fulfillment. Employees need to understand their role and how it fits into the larger mission work of the organization. They need to have the ability and desire to do the job well.
- Balanced Interaction: Allocate time for both group meetings and one-on-one sessions with employees.
- Modeling Good Practices: Lead by example in practicing prayer, quiet time, and maintaining a healthy work-life balance.
- Encourage Initiative: Allow employees to experiment with their ideas and learn from failures within reasonable boundaries.
- Business Coaching: Consider seeking guidance from a paid or unpaid business coach monthly.
4. Organizational Structure:
- Detailed Organizational Chart: Develop a comprehensive organizational chart that covers all roles, helping the Executive Director ensure all essential functions are covered.
- Infrastructure Setup: Before hiring employees, establish the necessary infrastructure for payroll and benefits.
- Payroll Software: Select and set up a payroll software system.
- Healthcare Planning: Determine healthcare options, work with brokers or state marketplaces, and define employee and organization contributions.
5. Human Resources and Hiring:
- Job Descriptions and Evaluation: Create job scorecards to clarify performance expectations for employees.
- Hiring Principles: Prioritize smart and coachable individuals over personal connections. The first person hired should be someone to lead the program not necessarily the Executive Director. The board may serve as the overseer.
- Trial Period: Begin with a 1-year contract to assess fit and performance.
6. Transition and Succession:
- Founder Transition: Consider transitioning from the founder to a new Executive Director as the organization matures.
- Cost of Wrong Hires: Hiring the wrong employee can be a costly mistake, so choose carefully.
- Financial Controls: Establish clear separation of duties and financial controls, especially related to bookkeeping and expense management.
7. Employee Handbook and Policies:
- Diversity and Inclusion: Document hiring policies related to diversity and inclusion.
- Faith and Lifestyle Policies: Implement faith statements and lifestyle policies and hire individuals who support these policies.
- Candidate Evaluation: Assess candidates based on qualifications, motivation, and capacity to perform the job, rather than personal preferences.
8. Leveraging Volunteers:
- Structured Volunteer Program: Start with volunteers, providing them with job descriptions, orientations, and regular reviews.
- Remote Work Policy: Create a policy on remote work, considering flexibility and effectiveness.
- Dealing with Toxicity: Address toxic or ineffective employees promptly to maintain a positive work environment.
9. Part-Time and Full-Time Employment Mix:
- Fractional Employees: Consider starting with fractional or part-time employees and growing them into full-time roles.
- Staff Mix: Evaluate the right mix of part-time, full-time, contractors, and volunteers for your organization's needs.
10. Accountability and Meeting Expectations:
- Meeting Expectations: Set clear expectations for staff to be punctual, prepared, and engaged in meetings.
- Hiring & Firing Employees: It is wise to hire slow and fire quickly. Coworkers know when an employee is not doing their job. It can lower productivity and morale for everyone. Employees most often leave because of their supervisor not because of the company. Know your employees and how to best communicate with them. Example: Some employees hate to receive an email from their supervisor after 5 PM because they feel they need to respond ASAP and they have transitioned to personal time.
11. Hiring Strategy:
- Robust Interview Process: Develop a comprehensive interview process to ensure the right hires. Find someone who has a passion for your work and the capacity to do the tasks physically, mentally, and emotionally. Consider emotional intelligence, which can have a significant impact on the team’s morale and job satisfaction.
- Diverse Team: Avoid hiring friends, family, or individuals similar to yourself; prioritize diverse skills and accountability.
- Focus on Staff: Recognize that your staff is crucial to the nonprofit's success; seek thought leaders passionate about your mission.
12. Founder's Role:
Selecting the Founder: Ensure that the founder is the right fit for the nonprofit's mission or consider supporting another leader who may be more experienced in the field.
Resources
Podcasts
- Plywood People (Atlanta) – Podcast by Jeff Shinebarger https://www.youtube.com/watch?v=5_bO1MJgbQU
Websites
- The Predictive Index is HR software that helps to hire the right talent, build leaders, and maintain a strong company culture. https://www.predictiveindex.com/
- Minnesota Council of Nonprofits has a human resources overview. https://www.minnesotanonprofits.org/resources-tools/principles-practices-for-nonprofit-excellence/human-resources
- IMF Serves provides ministerial credentials for your work. www.imfserves.org.
- The Nonprofit Association of Oregon has several articles including:
1. HR Legal & Compliance
2. Employee Compensation & Benefits
3. Employee Hiring
4. Employee Management
5. Volunteer Management
6. Independent Contractors
7. Demographic Data Collection
8. Health Benefits
9. Workplace Wellness & Remote Workers
10. Workplace Discrimination & Harassment
11. Data Privacy & Cybersecurity
https://nonprofitoregon.org/resource-library/ - The Amplify Mission Network in Minnesota has two primary programs designed to serve nonprofits that may be of interest to you if you live in the Minneapolis area. http://www.amplifymission.org/
- AMP Journey: Every year they accept applications from 10 ministries to embark on an AMP Journey, which is a nine-month deep dive to address a current pain point or challenge that keeps you up at night. Ministries receive a coaching team to take a 360-degree look at your organization and identify your greatest ministry challenge. The AMP Journey is completely free for nonprofit leaders. https://www.amplifymission.org/amp-journey/
- Learning Academy: Amplify runs three tracks each year to provide training, support, and learning to help nonprofit leaders better deliver on their missions. Find more details here: https://www.amplifymission.org/learning-academy/ - If you are an independent contractor, then you are self-employed. https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined. The earnings of a person who is working as an independent contractor are subject to self-employment tax. To find out what your tax obligations are, visit the Self-Employed Individuals Tax Center. https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center
Software
- There are many payroll software companies that simplify the payment of employees. They handle all tax deductions, auto deposits, tax filings, etc. Here are two recommendations.
- www.adp.com
- www.gusto.com - There are many payroll software companies that simplify the payment of employees. They handle all tax deductions, auto deposits, tax filings, etc. Here are two recommendations.
- Strength Finder https://www.gallup.com/cliftonstrengths/en/254033/strengthsfinder.aspx
- Predictive Indexes https://www.predictiveindex.com/software/hiring/
Books
- Emotional Intelligence: Why It Can Matter More Than IQ by Daniel Goleman
- The Advantage: Why Organizational Health Trumps Everything Else In Business by Patrick M. Lencioni
- Crucial Conversations: Tools for Talking When Stakes are High by Joseph Grenny, Kerry Patterson, Ron McMillan, Al Switzler & Emily Gregory
- How to Win Friends & Influence People by Dale Carnegie.
- Thanks for the Feedback: The Science and Art of Receiving Feedback Well by Douglas Stone & Sheila Heen
- Boundaries Updated and Expanded Edition: When to Say Yes, How to Say No To Take Control of Your Life by Henry Cloud & John Townsend
- The Power of Moments: Why Certain Experiences Have Extraordinary Impact by Chip Heath & Dan Heath
- Leaders Eat Last: Why Some Teams Pull Together and Others Don't by Simon Sinek
- Dare to Lead by Breen Brown
- Coachability by Kevin Wild
Subscriptions
- Society of Human Resource Management has a paid subscription. https://shrm.org/about-shrm/Pages/Membership.aspx
Software
- Consumer Search has customizable policy and procedure templates. https://www.consumersearch.com/technology/streamline-business-customizable-policies-procedures-templates?utm_content=params%3Aad%3DdirN%26qo%3DserpIndex%26o%3D740007%26ag%3Dfw38&ueid=6B3AE0B6-64FF-4694-9C84-6BC721D86F20
- Form Swift has an Employee Handbook template. https://formswift.com/sem/static-state/employee-handbook?utm_source=google&utm_medium=cpc&utm_campaign=148310538&utm_device=c&u_producttype=formswift&utm_term=policies%20and%20procedures&gclid=EAIaIQobChMIz_uu8baahAMVkDbUAR2glw_WEAAYBCAAEgKDR_D_BwE
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