Performance Management in Nonprofits: A Guide to Best Practices

The following list highlights 5 best practices for performance management within nonprofit organizations. This list discusses nonprofits in general terms, but it is important to note that not all nonprofit businesses are structured the same way. These best practices are intended to leave room for nuance.

1. Lead With the Mission

While the mission should be the heart behind every organization, this is even more true for nonprofits as their recipient communities rely on them to fulfill their purpose. To engage employees and retain talent, the overarching mission must be at the forefront of all internal initiatives and decisions. 

When it comes to performance management practices, it is crucial to keep the mission in mind while setting goals for the company, departments, and individuals. Each person’s contribution should ultimately have an impact on the mission, and this should also be reflected in performance objectives. While goals may be broad and long-term, objectives are specific and measurable actions that work towards achieving the larger goal. Even if the objectives are designed to be relevant to multiple team members or departments, they should always be aligned with the mission.

2. Measure Workplace Behaviors and Performance Equally

Many nonprofit teams find themselves struggling to report to stakeholders the specific outcomes and impact they achieved over a set timeframe. Staff effectiveness tends to be measured by outcomes such as dollar amounts, volunteer numbers, internal costs, etc. while often neglecting to measure behaviors displayed within the team. Articulating impressive numbers is what brings in more fundraising dollars, so the sole focus often turns to employee performance efforts.

Including workplace behaviors in performance evaluations is crucial for nurturing and developing talent within nonprofit organizations. By giving equal weight to carefully crafted core values and performance objectives, employees are encouraged to embody the company’s mission and values. This comprehensive assessment not only provides a clearer picture of employee efforts but also minimizes subconscious bias by relying on concrete evidence of meeting or exceeding expectations. 

The bullets below detail practical ways to measure workplace behaviors:

• Include workplace behaviors in the performance review– Ensure that managers are evaluating employees’ performance and their commitment to the core values. For example, WorkDove’s Performance-Values Matrix in the Performance Review app measures performance and workplace behaviors/core values equally but separately. Employees receive two separate scores which are then plotted on a matrix. 

• Include workplace behaviors in the recognition program- To enhance peer recognition, base the recognition program on core values so employees have a standard by which to give and receive praise. For example, Employee A recognizes Employee B for exemplifying the core value of Grit by voluntarily working longer hours to guarantee that the fundraising event had more potential donors present than expected. This practice ensures that recognition is rooted in tangible observations and further perpetuates positive behaviors.

3. Prioritize Employee Engagement

Leaner teams tend to experience higher rates of burnout. Nonprofit employees especially are at risk of expending a lot of emotional equity due to the often vulnerable and high-needs nature of the groups they serve. Investing in and frequently gauging their engagement and satisfaction will help to alleviate high turnover. 

This list contains tangible action steps to invest in employee engagement:

• Implement one-on-one check-ins- Facilitating regular one-on-one meetings gives employees a dedicated space to share their needs and challenges, and allows managers to provide necessary coaching, thereby maintaining alignment. WorkDove’s performance check-ins give managers insight into goal progression and allow them to track employee sentiment trends over time. 
• Embrace employee recognition- As mentioned above, recognition is a key aspect to engaging employees through praise and appreciation. 
• Administer surveys- An employee engagement survey is a great tool for checking employees’ pulse on what should change or remain the same within the organization. However, it is important to distribute surveys wisely so employees do not become overwhelmed by constant questionnaires and view them as cumbersome. 
• Create individual development plans- Committing to continuous career development will help employees grow and reach personal goals. It also shows them that their talents are needed and valued in the long term. While there may be fewer opportunities for promotion within nonprofit organizations, individual development plans can show team members a pathway toward greater responsibility and autonomy.
• Schedule team development sessions- In many ways, a greater level of dedication is required of nonprofit employees and teams. It is important to show teams that the work they do truly leaves an impact and that their team unity is of critical importance. Be sure to schedule time a few times each year to foster even greater morale through team development sessions.

4. Embrace Continuous Performance Management

“When leaders provide consistent coaching, engagement goes up,” said Tina Twyman, SHRM-SCP, a senior consultant for NonprofitHR. Continuous feedback has long been proven as a better approach to performance management than solely relying on an annual performance review. When the annual or bi-annual appraisal is the only formal performance conversation that occurs all year, the reviews are longer, more arduous, and less effective in producing change. Nonprofit organizations do not have the time or bandwidth for this approach. 

Continuous performance management is a structure where performance conversations occur more frequently but in shorter spurts. A few examples of continuous feedback practices are listed below:

• Frequently scheduled check-ins– As mentioned previously, check-ins are brief, informative meetings between the manager and employee that occur at least once each month to discuss goals, employee sentiment, and performance.
• Goal updates– Often included in the one-on-one check-in, conversations about goal progression occur on a frequent basis to ensure efforts are on the right track and coaching is provided when necessary. This is in opposition to determining if goals were or were not completed only at performance review time. 
• 360-degree feedback– Implementing 360-degree feedback provides another layer of peer, upward, and external feedback that gives employees and managers additional insight into how employees and their performance are being perceived. 

Keep in mind that continuous performance management is not necessarily meant to replace the annual performance review. Instead, continuous feedback practices further educate and inform the evaluation process so the appraisal is a documented summary of performance discussions that have been occurring all year.

5. Use Software That Meets Nonprofit Needs

Manual, outdated performance management practices are cumbersome and inefficient. All businesses have specific needs when it comes to performance management software but nonprofits in particular hold a unique set of requirements. The bullets below indicate a few things to look for when selecting a preferred vendor:

• Cost-friendly– It’s no secret that nonprofit organizations have tight budgets. Partnering with performance management software requires the most bang for the buck. The WorkDove platform offers easier-to-use, more comprehensive functionality than performance management modules included within HRIS, and WorkDove’s cost is significantly lower than most comprehensive performance management softwares.
• Data and reporting accessibility– Sharing pertinent data points with stakeholders and the community at large is a top priority for nonprofit businesses. These data points can be gathered when goals and performance objectives are tracked appropriately in one single source of truth. An excellent software will allow users to easily filter and pull reports that share the right information. 
• Efficient and user-friendly- Nonprofit team members are constantly moving, so there is a thin margin of time to document performance management updates. The vendor of choice must be simple and easy to use so employees can effectively document what is necessary and have a delightful user experience while doing so. Moving from paper, cumbersome systems to a system like WorkDove typically reduces time spent on performance management by 30-40%, and thus, drives a significant ROI.