· 3 min read · Features

What can the commercial sector learn from not-for-profits?

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Broadway Homelessness and Support HR director Helen Giles on what commercial businesses can learn from not-for-profit organisations.

I was recently invited to speak to a group of senior managers undertaking a strategic leadership programme at the excellent Roffey Park Institute. All the managers work for one of the big insurance companies, and I was really impressed with their open-mindedness to learning not only from companies in other industries such as retail, but also from the experience of engaging leadership I was able to share from my charity.

This is somewhat unusual as often it is assumed that all the learning potential goes one way. One often hears the boards of not-for-profit organisations saying: “We must recruit some talent from the commercial sector for exec and non-exec roles” because they rightly think that this brings in another dimension of expertise to help them survive and thrive.

But there is often a sense of disinterest and disbelief at the suggestion that an ex-charity director might actually make an excellent appointment to a business and that sending managers to visit a high-performing, not-for-profit might prove to be an enlightening professional development activity.

Charities as businesses

I believe a lot of this stems from a misunderstanding of what the 21st century charity really is. I have heard many a person from a commercial background express surprise that people who work for charities actually get paid, perhaps because of the term “voluntary sector”.

In reality, most charities of any size are very complex social businesses, fighting in a tough competitive world for contracts and funding to be able to pursue their mission and provide high quality services to their beneficiaries. In that sense, there is much similarity with commercial companies needing to stay ahead in terms of products, quality of customer experience, marketing and cost management.

Charities are generally very receptive to advice and experience from people who do all this stuff for a living in commercial markets, as it gives them a valuable new dimension to inform what they do.

The ‘business of people’

But what is it that the best-run charities are really good at that can provide an enlightening new dimension from which the private sector can learn? Well, because they are first and foremost in the business of people, many charity leaders are extremely advanced in having embedded the kind of practices that tend to drive employee engagement: meaningful consultation and involvement mechanisms, co-operative teamwork, good management of work-life balance, and creating working environments that are at once challenging and supportive.

At their best, many have also established excellent performance management processes, and the ability to create genuine learning organisations with good career development opportunities without needing to throw money at these issues. They tend to be able to cultivate a close match between espoused values and the behaviour of senior managers, and demonstrate they appreciate and value their staff without the need for elaborate pay schemes.

In surveys, the voluntary sector tends to achieve higher levels of engagement than other sectors, and this is not just because people are inspired by working for a cause. In fact, I believe there is a great deal to be learned by commercial enterprises from the way they accomplish this, particularly when times are tight.

At a talk I once did for a group of business leaders, a director of an engineering firm said that his company had featured in the Sunday Times Top Employers listing before the recession when they had been able to offer very competitive salaries, excellent working environment and resources and big bonuses. He wondered how they would be able to maintain the same levels of engagement when all this was gone, given that none of their managers really “got” people.

Indeed, he added that many were just expected to get on with what they liked doing without having to make themselves too visible or spend time having one-to-ones with their staff. I didn’t have the heart to tell him that in that case they were probably stuffed.

Go forth and learn

This is not to say that there are not many companies who have got all this right, or to say there aren’t plenty of charities that are not very well led and managed. But even in the days before the Sunday Times 100 Best Companies separated out not-for-profits from commercial companies, housing associations in particular have always been extremely well represented in the listings.

Not-for-profits also tend to be pretty generous about opening up their doors and sharing their insights and practices. The incredible degree of networking and collaboration between senior HR people in the social housing sector is one of the many reasons I stay within it.

I would advise any commercial company that is thinking in terms of striving for transformational as opposed to transactional engagement – in the terminology of David McLeod and Nita Clarke’s latest study – you could do far worse than approaching one or two organisations in the Sunday Times top Not-for-Profits listing to open their doors to you. This will remove any temptation to set engagement as an objective for your internal communications department and think ‘job done’.

Helen Giles is HR director of Broadway Homelessness and Support and managing director of Broadway’s Real People, a social enterprise HR consultancy. She is an HR magazine blogger. Follow her on Twitter: @HelenMJGiles