Chief Learning Officer - October 2007 - (Page 67)

human capital By several measures, growth in the nonprofit sector is outpacing growth in the rest of the economy. The U.S. gross domestic product increased by less than 37 percent from 1994 to 2004 (after inflation) when the three major financial measures of nonprofits (revenues, expenses and assets) increased by about 56 percent, according to the Nonprofit Almanac 2007. This increased demand for services has not been matched with a commensurate investment in the talent required to support such growth. Instead, nonprofits have put their limited resources toward the capital required to fulfill their missions. Such an underinvestment in learning and development has further complicated some of the people-related challenges nonprofits face in terms of staffing, leadership and succession planning, particularly with the impending talent shortage the baby boomers’ mass retirement is supposed to cause. nization’s purpose is to build shareholder value and a nonprofit’s objective is to promote a cause or assist the needy, the key principles required to successfully run both types of organizations are more alike than they are different. Both types of organizations should operate within their means and keep a keen eye on their finances to ensure their survival and long-term fiscal health. Additionally, they should use their resources (money, people and technology) to either maximize their profits or the delivery of much-needed care or services. These similarities imply that nonprofits and for-profits can learn a lot from each other — nonprofits could increase efficiency and improve services if they focused more on businesslike operations and financial performance measures, and for-profits could decrease turnover and increase customer satisfaction if they focus more on increasing employee engagement. When it comes to development, though, nonprofits should take their cues from their for-profit counterparts: • Blurred lines between for-profits and nonprofits call for more extensive training. Many of the old distinctions of what made nonprofits special have diminished, as competition has increased among organizations for grant money and donor contributions, which has required nonprofits to act more like for-profits. Therefore, it has become increasingly important for nonprofits to formally educate their employees on business issues, accounting practices and ethics to remain compliant with evolving legislation and tax codes. • Tight budgets require organizations to identify and prioritize their greatest development needs. Nonprofits should offer only the training that will provide the most bang for their buck, as identified through structured and targeted needs analysis. Often, managers are so emotionally invested in the organization that spending money on learning takes a back seat to funding various projects that directly support the cause. Nonprofits that invest wisely in their organizations through the strategic development and training of their employees find they are stronger and better equipped to carry out their missions. Although increased competition is requiring many nonprofits to think and act like for-profit organizations, there remains one characteristic that will always separate nonprofits: a passion for the cause. Despite the cynicism that often surfaces in government, business and the media, people still embrace a sense of idealism and want to make the world a better place. It’s this passion for making a difference that fuels results. Here are six ways talent development differs at nonprofits, along with recommendations for increasing the effectiveness of such efforts: Today’s Environment Requires Learning Between 2002 and 2004, the nonprofit (paid) workforce grew by 5.1 percent, compared with a 0.2 percent dip in the overall employment rate during the same time period, according to a 2006 study by the Johns Hopkins Center for Civil Society Studies. Such growth puts an even greater emphasis on learning and leadership development, and it creates a strong business case for making learning an integral part of an organization’s annual budget — a level of commitment most nonprofits are still struggling to achieve. And it shows. A recent study by Bridgespan on the leadership deficit in the U.S. nonprofit sector revealed nonprofits have to recruit external talent for leadership positions two-thirds of the time. The for-profit sector, by contrast, recruits from outside the company only one-third of the time. And once those leaders are onboard, it is estimated that up to 40 percent of new managers (in both nonprofits and for-profits) are replaced in the first 18 months of assuming their new roles because of leadership ineffectiveness. The financial impact of such attrition is even more startling. A recent talent retention survey revealed that it cost organizations between $5,000 and $20,000 to replace a single employee. In addition, indirect costs resulting from the impact of turnover were reported to exceed $10,000 per employee. These statistics illustrate the need for nonprofits to increase their leadership development capabilities and provide employees at all levels the learning they need to be successful in their jobs. Because change is just as prevalent in the nonprofit sector as it is in the business world, nonprofits need to provide training and education as a means of equipping workers with the tools required to adapt to changing skill requirements, organizational shifts and an increasingly complex environment. Similarities Unveil Learning Opportunities Many say nonprofit and for-profit organizations are fundamentally different and therefore require separate approaches to management and training. Although it is true that a for-profit orga- 67 October 2007 I www.clomedia.com I Chief Learning Officer http://www.clomedia.com

Table of Contents Feed for the Digital Edition of Chief Learning Officer - October 2007

Editor's Letter Table of Contents Letters to the Editor Taking the Lead Trends Best Practices Effectiveness Guest Editorial Elements of Social Media Arrive on the Learning Scene Trend Micro: Making Learning More Modular CLO Profile Learning’s Role in Talent Management INTTRA: Using Global Learning to Better Enable Talent Management Operationalizing Communities of Practice U.S. Army: Sharing Lessons from the Field Looking Back, Moving Forward Leveraging Business Data to Develop Strategic Learning Solutions Chrysler LLC: Metrics, Score Cards and Automobiles Advertisers' Index Editorial Resources Connecting the Dots: Recognizing Talent Development Differences at Nonprofits Nonprofits in Health Care: Learning at ENH Case Study Business Intelligence Case Study In Conclusion

Chief Learning Officer - October 2007

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