Something Worth Reading: Those We Lead Tend to Live Up (or Down) to Our Expectations

MFL1Although Steve Browne’s recent blog post for TheHiringSite, How We See Others: The Role of the Talent Advisor, is directed at human resources professionals, I suggest that his provocative observations and recommendations have equal relevance for those of us in the advancement field who have responsibility for the success of fundraisers and other professionals.

Browne’s post is concise and simple, but its take-away is powerful: Stop focusing on why your employees and teams might be problematic and instead focus on their strengths and possibilities:

You need to understand the Pygmalion Effect*… [It] states that people will behave how you see them. If you think someone is a problem, they will be one. If you think they are talented, they will perform.

Perhaps Browne’s post resonates with me because during my career I have both delivered and received messages that conveyed low expectations or a lack of confidence. And I know from those personal experiences that when a supervisor encourages an individual, they frequently go on to overachieve; however, when an employee receives more criticism than praise or otherwise senses a lack of support from their supervisor, they will not be motivated to expend additional effort to excel–and indeed often respond in quite the opposite manner.

MFL2I suggest that all of us who supervise fundraisers and other advancement professionals follow Browne’s advice and start thinking of those we lead not as staff or FTEs but as “talent” with untapped potential; likewise, we should also begin to view ourselves not as managers but as “talent advisors”–coaches and mentors whose objective is to empower our own team members to grow, stretch and make the most of their abilities.

And if we do that, then perhaps–just as Professor Henry Higgins’ attitude changed toward Eliza Doolittle–we will soon “become accustomed to” the unique attributes and contributions of our own employees and thus find ourselves equally downcast about the possibility of losing these valuable partners.


 * For those unfamiliar with Pygmalion, it is the 1912 George Bernard Shaw play upon which My Fair Lady–both the 1956 Broadway play and 1964 movie (source of the scene with Rex Harrison and Audrey Hepburn posted above)–are based. Shaw, in turn, took his play’s name from a character in Greek mythology.

Maximizing the Return on Your Investment in Staff Development

Something Worth Reading: “Don’t Fear Fund Raising: Matching Donor Passion to Your Department’s Needs”

Fear 1Successful educational fundraisers know that faculty and academic leaders can be invaluable allies in building productive relationships with donors and securing funding for institutional priorities. Deans, department heads, professors and researchers possess a deep understanding of the programs they direct, as well as a credible and persuasive passion for those initiatives that few professional fundraisers can match.

Unfortunately these potential partners are often reluctant to engage in the cultivation and solicitation of prospective benefactors. Their hesitation can be rooted in a lack of understanding about how major gift fundraising is conducted, anxieties about asking for money, fear of rejection, or even concerns that a donor may attempt to exert control over their work. On the other hand, their perceived reluctance might also be a simple case of not being invited to participate.

In his recent Chronicle of Higher Education essay, “Don’t Fear Fund Raising: Matching Donor Passion to Your Department’s Needs,” Texas Tech professor and dean David D. Perlmutter does an excellent job of demystifying the fundraising process for his fellow academicians. Perlmutter’s piece provides insights into the process of setting fundraising priorities, clarifying and articulating those needs, and underscoring the uncomfortable notion that what most excites faculty members may not be what resonates with donors.

Perlmutter’s most important lesson, however, is, that effective educational fundraising is usually an iterative process and that our greatest successes often follow the rejection of an initial approach. Accordingly, faculty and administrators must be prepared to listen actively, “be willing to shift gears,” seek to “recast and redirect” their appeal, and “leave the door open” for future discussions, even when the first appeal proves unsuccessful.

So if you are a department chair, director of a center, or dean of a college, what should you do if you find that what the donor wants is not what you need? …. Be willing to shift gears. Don’t be hypnotized by your agenda. Keeping your priority list handy does not mean you should ignore out-of-the-box opportunities.

Dean Perlmutter’s terrific insights, however, are not enough to prepare academic leaders for fundraising success. Institutions committed to actively and effectively engaging faculty and academic leaders in the fundraising process must also be committed to providing education and training for these key allies.

In addition to demystifying the fundraising process, a training program for faculty, department heads and deans will also supply them with the perspectives, tools and techniques they need to hone and articulate their priorities and to successfully engage and build relationships with donors. After helping lead workshops this summer for academic leaders at several TalentED clients, I found it  both remarkable and satisfying to observe the resulting relief, excitement and resolve among our participants once they were been equipped with the tools for success.

So make the most of this readily accessible talent pool at your institution by ensuring your faculty and academic leaders receive the perspective, preparation, encouragement and support they need to maximize their chances for fundraising triumphs. Don’t leave it to chance.

The Manager Gap – Why Fundraising Managers Are Important and Five Factors of Ineffective Frontline Leadership

When you dive into the topic of talent management in fundraising and development one key topic arises again and again: the challenge and shortage of effective management, especially of frontline fundraisers. This is an issue that has rebounding implications, as ineffective (or nonexistent) management can cripple an entire program. Prioritizing management of fundraisers is thus important because:

  • Management and leadership drive fundraiser engagement and have a strong determining role in overall retention. Most surveyed frontline fundraisers who reported low satisfaction attributed it to leadership or management elements not compensation, cause, or geographic location.
  • Managing and building strategy for the frontline impacts performance dramatically,both in short and long term. Managers have the ability to not only inspire collaboration and strategic thinking, but they are the key players in meaningful goal setting and professional growth for the fundraising team, but factors largely influence fundraising performance.
  • Managers serve as a critical leadership linkage between institutional initiatives and human capital. Fundraisers focus on donors, rightfully so. Institutions focus on vision and programs. Those who manage fundraisers fill the gap between those two activities, building outcomes from institutional direction and providing focus in individual agendas.

Branson Quote

Managers in development are thus hugely important to building momentum, providing staffing stability, and driving performance. Why does fundraising management fall short so frequently then?

Any combination of the following five factors are typically at play when management of fundraisers is ineffective:

  • (1) Leadership buy into the misconception that, as seasoned professionals, fundraisers require minimal management. Yes, we’ve talked about how high performing fundraisers need to have independence, but the opposite of micro-management is not absence of leadership. Frontline fundraisers frequently report frustrations with their lack of access to and direction from their managers and team leaders. Moreover, donor relations and gift outcomes are optimize by multiple points of contact and clear strategy. Managers who are disengaged from their team negate that opportunity.
  • (2) There is a small talent pool of frontline fundraisers with meaningful management experience. Development and major gift officers are looking to be managed by “one of their own”, meaning that they trust and respond more readily to individuals who themselves have experience as a fundraiser. We’ve talked about the general shortage of frontline fundraising talent across the country, and the shortage is even more pronounced when searching for individuals who both know major gift relationship-building strategy and are comfortable building a budget and negotiating office politics. This leads us to…
  • (3) Fundraising shops are growing rapidly and promoting individuals without professional skill investment.  More and more unit-based and separate fundraising programs require larger teams. As these teams grow the most senior fundraiser is often promoted and management responsibilities are subsequently treated as a “add-on” to existing fundraising responsibilities without meaningful training. Of surveyed fundraisers with 10+ years of experience the most frequently requested training and professional development topic area was in leadership and managing a team. We have a full class of individuals with great fundraising skills and new management expectations, but little support in building their capacity to meet those new expectations.
  • (4) There are rising demands and responsibilities for existing leadership. Plainly, many managers and leaders in development don’t have the time (or don’t believe they have the time) to spend building and engaging their team members. There are too many fires to put out, too many volunteers to respond to, and too many items on the event calendar to plan for, not to mention that these leaders often have high-level portfolios of their own. Non-profit development leaders are often overworked and talent management falls to the bottom of the totem pole too frequently. This can often be a symptom of a larger problem, which is that…
  • (5) The development office and team members aren’t fully valued at an institution. Some organizations operate with the assumption that fundraising exists outside of institutional programming and general engagement. Fundraisers are expected to “do their thing” and bring in money, separate from institutional staff (whether they be program managers, faculty, physicians, or CEOs/Presidents). What this dynamic effectively communicates across an organization is that, not only is development somehow less related to the institutional mission and impact, but also that the happiness and engagement of those who do development work is a lower priority.

Five Types of Ethical Non-profit Incentive Pay Structures for Fundraisers

An excerpt from a lively LinkedIn discussion on incentive pay

An excerpt from a lively LinkedIn discussion on incentive pay

We’ve talked about what we do know about incentive pay in the non-profit fundraising sector. I knew this was a hot topic in our field (hence the desire to discuss). The response online (I regularly post this blog in a few linkedin groups), however, demonstrated just how passionate (and articulate) both sides of the argument are. Many of those who opposed incentive pay showed great concern for bonuses negatively influencing fundraiser motivations and behavior.  An ethical incentive pay structure would need to be aware of and account for that concern.

We have seen non-profits who have successfully used incentive pay as a component of their talent management strategy. In general these organizations have structured bonuses in one or a combination of the following five scenarios:

Development Office-wide Bonuses (1)

Most non-profits try to increase overall giving each year, with many boards setting macro goals that are quite ambitious. In the for-profit world this model is often referred to as “profit-sharing”, where the entire team gets an even (or clearly striated) cut of profit over goal each year. In non-profits this type of bonus is uniform across the full development staff (for example: a $2,000, award which is either paid to all eligible participants or to none). The decision as to whether to pay the bonus at the end of the year is based upon predetermined office-wide criteria and goals. In many cases of this model staff participate in the selection of the relevant goals – one of which is always the comprehensive dollar target for the year. The bonus is paid at the end of the year to all staff without regard to individual performance. Either the entire staff receives the bonus or none receive it.

Individual Bonuses based on metrics and goals (2)

Since so many development shops already devote a lot of time towards fundraising metrics  and goal-setting it follows that those who pay individuals bonuses can use those same metrics to determine incentive pay. In this scenario the most common set-up looks at performance versus original goals in 4-5 categories (major gifts secured, proposals presented solicitations, visits, team work, etc). This system is formula-based, with those fundraisers who reach 100% of or exceed all goals to receive the maximum bonus (most frequently 4-5% of base income) and those who fall below goal receiving a calculated, lower payout.  In some cases manager input and qualitative goals do apply here, but they become very difficult and controversial to measure related to actual income.

Team-based incentive payouts (3)

Many institutions, especially those decentralized amongst units and programs, prefer to structure incentive pay around overall team performance in meeting goals, securing income, and building constituent relationships. In about half of these cases incentive pay is determined  by the unit or program’s leadership, while the remainder still have central control over incentive pay. Bonuses are also often divided in these cases into two categories of staff: fundraisers and support staff.

Superstar individual financial recognition (4)

This model is almost entirely used in conjunction with the other incentive pay systems described above.  Usually modeled extensively towards top talent retention and recruitment this type of bonus pay is used to reward those few individuals whose achievements far exceed those of their peers (reaching 110%+ in all goal categories for example). Qualification for this level of recognition is set and known to all staff members and typically less than 4 individuals at an institution qualify each year. The actual payout of the bonus can vary widely, but usually amounts to an additional 25-30% of the bonus level set up by the base incentive pay system.

Hybrid Incentives with Multi-level Goals (5)

This is perhaps one of the most interesting types of programs one can find in incentive pay.  In order to encourage more teamwork and organizational cohesion while stimulating individual performance several institutions set up a set amount for bonuses that is tiered and divided by several categories of performance. An example of how this would look would be:

  • First, if the development officer fails to meet  its goal all bonuses across the board would be decreased by one third.
  • Second, if the team failed to meet its goal, bonuses for all members of the team would be reduced by one third.
  • Third, if the individual failed to meet personal goals, there would be no bonus for that individual.

 

 

You’ll notice that none of these scenarios tie bonuses directly to a percentage of gift income, much less individual gifts. In many cases any income or pay is coupled with “softer” incentives such as flex-time, vacation, etc.  AFP’s argument against such practices remains widely accepted by the non-profit community, even those who implement incentive pay.

What We Know About Incentive Pay for Fundraisers

The next few weeks I will be posting several discussions that focus on the topic of incentive pay for fundraisers.  This is a hot topic in development right now. For some managers financial incentive pay is a possible avenue to inspire and reward performance and gift income. For others the idea clashes strongly with the idea of non-profit and charity missions and cultures. Opinions aside, here are a few things we do know about incentive pay*:

piggy bank

Incentive pay has been around the non-profit sector for a while.

In the early 1990’s the rise of incentive pay was also a hot topic, with up to 25% of surveyed non-profits reporting some level of performance-base bonuses for managers and leaders. That’s at least 20 years of debate, reform, and revisions of incentive pay programs for fundraisers. While bonuses have been used in the for-profit sector for  much, much longer, it is important to remember that this is not a new topic and that it is also likely that incentive pay will be around for a long time in the future.

Incentive pay is more common in large fundraising shops.

Large shops have more developed metrics and management structures. It follows then that there is a wider variety of management strategies for these staffs. Most models of incentive pay can be found in development shops with ten or more frontline fundraisers. This often stems from a desire to even out performance, which, as we’ve mentioned, can be greatly unbalanced even when accounting for portfolio capacity.

For large institutions the likelihood of incentive pay increases when there is a separate entity or foundation leading development.

Many healthcare centers and universities hire fundraisers under the broader institutional umbrellas of human resources. In such cases there are more restrictions on compensation and position structuring. It is more common, therefore, to find incentive pay when development is “owned” by or falls under the supervision of a separate foundation or other managing entity, which can offer more flexibility in compensation packages and management.

Many incentive pay plans are based on group goals.

Based on the results of benchmarking studies anywhere from 60-75% of institutions who offer bonus compensation based on performance structure those payouts around group or team goals. In many cases a fundraiser might also qualify for additional pay based on his individual performance, but that can only be reached one the team goal and threshold has been met. Group goals also tend to bring in and attract junior level talent and be more inclusive of non-frontline fundraising staff.

Tying incentive pay directly to gift income is uncommon.

The AFP Code of Ethics explicitly condemns this behavior as it promotes self-interested behavior by employees and is widely frowned upon by donors.  Incentive pay is not used as a sales commission in any common model for a few reasons. The first is the same objection raised by the AFP about the ethical implications of personally being able to profit from a gift. The second lies is the sheer logistics, team work behind, and complexity of most very large gifts, any one of which which could dramatically swing incentive compensation that would be based on income alone.

Most bonus plans offer 10% of salary or less in incentives.

By their nature non-profits are extremely budget conscious.  Since most non-profits have ruled out the structure of a “commission-like” incentive pay development shops must budget each year for bonuses without knowing overall income. As a result even those organizations that have embraced and institutionalized incentive pay do not structure it to outweigh or even significantly compete with base salary,

The direct effect of incentive pay on long-term performance and retention is still widely unknown.

Those who support incentive pay use largely anecdotal evidence as to its benefits and impact on development shop performance and staff retention. There have been very few large scale, longitudinal studies that concretely point to incentive pay having a consistent positive effect. This doesn’t mean that incentive pay doesn’t have this effect, just that the exact impact is unknown or, more likely, is inconsistent due to the wide variance and circumstances across non-profit organizations.

When one looks at the discussions on the positive impact of work culture, vacation pay, and hour flexibility on employee satisfaction and performance, it is possible to dismiss incentive pay as unnecessary in the non-profit field. However, based on what we do know, this is not a topic that will disappear anytime soon.

Financial bonus structures for non-profit employees is a controversial topic, and we will weigh the detriments and benefits in a later discussion as well as feature a “Point/Counterpoint” debate on the topic between two guests this month. In the meantime feel free to contribute your thoughts on the topic in the comments below.

 

 

 

* based on benchmarking studies, field research, and personal interviews with leaders in development.

What is the real cost of an hour of Development Officer time?

In this post we introduced the idea of how expensive it is for the development shop when fundraiser time is diverted from front line activities. We’ll spend some time today breaking out the potential costs of development officer time spent both with prospects and in the office.

Understanding the real cost of fundraiser time is important for two primary reasons:

  1.  To understand that, when fundraisers visit with a prospect 9, 10, or 20 times the cost of securing that gift goes up significantly with each visit.
  2. To realize that, while it is easy to expect DOs to step up in short staffed offices, diverting a fundraiser’s attention from his portfolio can be enormously expensive in opportunity cost.

cost DOs

Next week I will post an infographic breaking out two scenarios further to show how dramatically the structure, goals, and support staff can effect the real cost of fundraiser time. Keep your eyes peeled.