How to Build Nonprofit Talent Systems During Times of Rapid Growth

(Photo by iStock/Orbon Alija)

Over the last decade, many innovative organizations have changed their approach to human resources, moving away from treating employees like risks to be managed and toward viewing talent as an organization’s greatest asset. This shift comprises the heart of “people operations,” a way of thinking about talent that the tech industry has embraced in recent years. People operations puts talent at the center of business strategy and uses data-driven insights to invest in each stage of the employee lifecycle, including recruitment, retention, performance management, and alumni engagement.

In the nonprofit sector, wise investments in people operations can propel organizational success—especially during exponential growth. As the number of wealthy philanthropists has increased, so have forms of collaborative philanthropy and individual donors providing “airdrops” of unrestricted funding for promising programs. The scale of these funds often numbers in the tens or hundreds of millions. And while unrestricted financial support can increase the impact potential of small nonprofits, this fast path to growth presents major challenges to talent management.

IDinsight, a data-driven research and advisory organization that helps global development leaders improve their social impact, was founded 10 years ago and has quadrupled in size and revenue over the last five years. We—as well as clients and peers we advise—have faced myriad talent challenges during periods of rapid growth. These include maintaining hiring and performance standards as the number of open positions balloons, moving from informal to formal management structures, retaining tenured employees’ engagement and ownership over the organization, and evolving team composition to better represent the communities with whom we work.

Although most of our own expansion took place before we received significant unrestricted funding, our data-centric approach has guided our internal operations all along. Investing in “people systems” early on protected our team’s culture and caliber, as well as employee satisfaction, and we have continued to improve our talent systems since receiving a $12 million unrestricted grant last year.

Our experience shows that the right talent investments can conserve precious resources, protect organizational values, and maintain performance. They also lay the foundation for building representative teams and inclusive workplaces—an imperative for social sector organizations whose operating practices must evolve to better live up to their values, regardless of scale and budget. Investing in four talent systems—algorithmic hiring rubrics, rubric-driven performance management, pulse checks, and compensation and benefits reviews—can help nonprofits make more efficient, unbiased, data-driven, and high-quality talent decisions at scale.

1. Finding Diverse Talent Fast: Algorithmic Hiring Rubrics

I’ve talked to several leaders of fast-growing nonprofits who still use manual resume screening to process applicants. But having individual hiring managers read through resumes before voting “yes” or “no” on candidates introduces bias, as people tend to favor candidates who resemble them. It is also very time-consuming, and when you have dozens of open roles and thousands of candidates, spending many hours of human time on manual screening is just no longer realistic.

Early on at IDinsight, we invested in an applicant tracking system that processes thousands of applications using a weighted screening algorithm we created. This reduced screening time by tenfold. The system tracks the characteristics and competencies we value most in candidates, including important, historically underrepresented characteristics. A candidate’s in-depth understanding of certain local contexts or ability to speak minority languages, for example, can help us provide context-appropriate advisory services to clients in low- and middle-income countries. As part of our process, we set a cut-off point based on our capacity to interview. This ensures that only the top-ranked candidates in the areas we need to prioritize make it into the interview pool. Having data on candidate characteristics also allows us to study which variables may contribute to high employee performance and retention over time.

After screening, it’s important that hiring teams align on interview and exercise rubrics to reduce bias in the recruitment process. Pre-set interview rubrics allow teams to clarify the criteria for assessing candidates and define what types of interview responses will constitute a good score. For example, a full-score response to the question, “Why do you want to work at IDinsight?” would demonstrate nuanced knowledge of what IDinsight does, mention our values, and indicate commitment and passion for data-driven social impact work. Doing this work in advance helps mitigate the possibility that interviewers will give higher scores to candidates who “look the part” or who come from the same educational, professional, or cultural background as them.

In addition, using a mock work assignment allows candidates to “show” their skills, not just “tell.” As with interviews, assignments should have pre-defined scoring rubrics and should resemble on-the-job work as closely as possible.

Finally, hiring teams should provide candidates with an interview guide. This evens the playing field, as all candidates have the same information to prepare, regardless of background and resources. After all, the process is about finding the best worker—someone who can learn quickly with adequate preparation—not the person who is best at selling themselves on the fly.

2. Identifying Top Talent Amid Growth: Rubric-Driven Performance Management

The work and leadership opportunities of each team member grows with scale; nonprofits need to identify and elevate their best people and support them to excel. There’s no quicker way to drain the talent pool than to use an opaque performance management process that’s dependent on internal politics or luck of the draw.

When revamping a performance management system, nonprofit leaders must balance thoroughness and efficiency. The first consideration is format. While a 360 approach—where supervisors, direct reports, and peers submit thorough, scored performance feedback—is generally considered best-practice, it can be a heavy lift for a small organization. One modification we use at IDinsight is for team members to share scores and in-depth feedback only with the people they work with directly, while allowing other staff to provide shorter, written feedback. Another consideration is frequency—whether to do no reviews, annual or biannual reviews, or lighter-touch but more frequent reviews. After much experimentation, we now use an annual review system with an opt-in cycle midway through the year. The mid-year cycle is helpful to those who may need extra feedback to improve their work or who should be considered for a promotion.

Other tactical system-design decisions can increase the candor and objectivity of performance feedback. Rubrics that not only assign scores but also thoroughly describe each competency help ensure that organizations apply the same yardstick to all candidates. For example, IDinsight measures team members according to six categories—analytical ability, communications, client relations, project management, professional development, and values alignment—on a scale of 1 to 3, and offers descriptions of what each score means for each category. It’s also helpful to include reminders at the top of the feedback form to avoid intrinsic biases that commonly plague performance feedback. These include “recency bias,” where the reviewer bases evaluation on the most recent interactions instead of the entire review period, and the “halo effect,” where reviewers more easily recall positive performance characteristics of an individual who is already seen as high performing. The form may also include a special section for confidential comments that only the person preparing the final report sees. The preparer can also group comments into themes to retain some level of anonymity. These design choices can encourage candor and combat tricky power dynamics.

It is also important to set up a good process for determining promotions. In many organizations, supervisors have virtually unilateral power to decide who gets promoted. But individual managers see only a limited range of performance data from their small group of direct reports, and their opinions may also suffer from bias. Instead, approving promotions by a committee (which can include senior team leads, other performance review writers, supervisors, and human resources) can reduce bias, and ensure that organizations can compare performance data across the entire pool of people up for promotion.

3. Supporting Team Health, Well-Being, and Work-Life Balance: Pulse Checks

Increasing your team size without doing pulse checks on employee satisfaction is like navigating the open sea with no compass. Rapid growth means tracking whole teams of new people, and leaders often have very little insight into what is happening in each corner of the organization until a problem occurs (at which point it is too late).

With this in mind, IDinsight created a simple, five-question internal health check that gives each team member a chance to rate overall job satisfaction, professional growth, work-life balance, motivation, and inclusivity on a scale of one to five. We compile this data to determine the overall health of each team, and then work with team leaders to help course-correct groups that score on the lower end. Knowing which teams need special attention allows leaders to allocate their precious time and resources to timely interventions such as extra check-ins, additional headcount, budget re-allocations, or a change in staffing.

4. Staying Competitive: Compensation and Benefits Reviews

As nonprofits grow and become more complex, they often need to recruit team members in regions and industries where they haven’t previously competed for talent. Yet it’s difficult to get accurate data on peer organizations or market research to help understand the hiring context and what it takes to be competitive. Like compensation, benefit norms can vary widely across geographies; for example, African nonprofits usually cover dependent health insurance, but American nonprofits virtually never do. And without good benchmarking, nonprofits that receive a large gift risk creating compensation and benefit structures that are unsustainable over time.

The following three steps can help organizations create an inclusive, data-driven, and transparent compensation and benefits framework:

1. Define a compensation philosophy that aligns with your organizational values. For example, a peer NGO whose mission is to empower local communities implemented a progressive salary structure, compensating field staff at a higher level than peer benchmarks, but using lower target benchmarks for senior and headquarters staff. Another example is IDinsight’s commitment to equally compensating employees of different nationalities in the same role within the same geography—a surprisingly uncommon practice in the global development sector.
2. Invest in purchasing comprehensive data sources for salary and benefits benchmarking where possible, particularly those aligned with the local markets where you work. Birches Group reports are a useful resource for international markets. Within the United States, nonprofit 990s are useful but only cover the highest-paid staff. Glassdoor and Payscale also offer free pay-range and benefits data for many nonprofit roles.
3. Create a salary-setting tool that makes compensation decisions more algorithmic. Negotiation at the onset of employment frequently defines salaries but is a bias-prone process that disfavors women. Indeed, salary errors can easily occur in the flurry of growth and are painful to unwind. Organizations can mitigate these risks by mapping salary ranges to responsibility level, and then calculating individual salaries within those ranges according to a weighted tool that considers factors such as work experience, qualifications, diverse representation, and performance on interviews or in performance reviews.

Leaders might hesitate to build out the systems above for a few reasons. They may think these investments cost too much or take too long, or that the organization is already successful and shouldn’t bother. But it’s worth noting that IDinsight started building these systems with just a few people on our operations team—and long before we received larger amounts of unrestricted funding. We also found that these systems saved way more time and money than they cost. Failing to hire and retain the right talent, undoing costly errors in compensation or policies from a lack of systematization, reinventing the wheel, and screening thousands of applications manually—all of this takes many more hours to adjudicate than it takes to build solid, data-driven systems upfront. And while organizations may be getting along well enough before these investments, ad hoc approaches tend to break down as soon as growth begins. Finally, nonprofits put their reputations and future resources at risk if they fail to adequately invest in unbiased talent systems, track real progress on increasing historical underrepresentation, and build an inclusive workplace.

Data-driven people operations systems represent important investments for any nonprofit, and they’re even more essential during periods of high growth. They help remove biases, respond to team health issues, increase efficiency, motivate high performance, and improve diversity and inclusivity among teams. Growth remains a daunting prospect even for successful nonprofits; developing great talent systems can help leaders build amazing places to work, while achieving even greater social impact.

Read more stories by Rebecca Gong Sharp.