A Practical Guide to Performance Management for Nonprofits

Updated:

November 28, 2022

Performance management for non-profits looks a little different. Employees live by certain values, work for the greater good, and aren’t measured on profits. HR departments at non-profits may struggle to run a traditional performance management system.

A Bridgespan Group survey showed that two-thirds of nonprofit organizations think performance assessment is a weakness. If you look at all companies— for-profit and non-profit —less than half say their performance management system needs work.

So, why do nonprofits struggle with performance management more than for-profit businesses?

Nonprofits have unique challenges. Many nonprofits have small HR departments. These small departments have little time to build a performance management process. Measuring employees’ performance can be difficult when profits aren’t the main goal.

Though performance management for nonprofits may be challenging, it isn’t impossible. All you have to do is apply an approach that works for you.

Below, you’ll find steps you can take to design a nonprofit performance evaluation for your team. You can also see real-life examples of how other nonprofits approach performance management. These examples can guide you when you’re designing your performance management system.

The right software makes it easy for small HR teams to run performance reviews.Learn More

3 Steps for Designing a Nonprofit Performance Management Process

An HR person at a non-profit can get into trouble if they think of the performance management process as a whole. It’s easy to feel overwhelmed. Breaking it down into individual steps will help you tackle the process more quickly. 

The three steps for designing a nonprofit performance management process include:

  • Align your goals with your mission
  • Use a continuous performance management process
  • Use software tools to streamline the process as much as possible

1. Align your goals with your mission

There’s no need to reevaluate your mission to create a nonprofit performance evaluation. Your performance review process should align with your mission.

First, dig deep into your company's core values. Then, determine where you want to be. Compare that to your current values and see if they support your vision. If the answer is yes, they can be used in your review process.

Here’s an example. Let’s say positivity is essential to your organization. You can measure employee performance by observing if they show:

  • An openness to identify solutions when presented with problems
  • The drive to find progress every day
  • An encouraging attitude towards colleagues who are facing obstacles

Just be careful not to go overboard! Focus on the least amount of values that enable you to achieve your vision. This will prevent your evaluation process from getting too clunky. You can use PerformYard to streamline the goal process, as seen below:

See goals alongside reviews with PerformYard software.Learn More

2. Use a continuous performance management process

Let’s say you’re trying to find the quickest version of a nonprofit organization's performance evaluation process. You like the idea of an annual review because it sounds like it would take less time than a continuous performance management process. The truth is, a process with frequent touch points throughout the year is easier—and less time-consuming. 

It’s what your employees probably want too. 80% of employees prefer immediate feedback rather than waiting for an annual performance review.

Continuous performance management means both employees and managers talk about performance frequently. Reviews can be scheduled weekly, monthly, or biannually. You can create a schedule of informal check-ins or conduct project-based reviews every time the team completes a project. Discussions may include goals, celebrating wins, and how to improve performance. 

This type of performance management for nonprofits doesn’t force you to tie annual reviews to everyone’s work anniversary. HR doesn’t have to set aside huge chunks of time when annual reviews come around. Instead, you work continuous feedback into your weekly schedule. Continuous feedback is a popular feature within the PerformYard performance management platform. Using it helps employees get the frequent feedback they want.

Build a culture of continuous feedback with PerformYard .Learn More

Still like the idea of an annual review? Having smaller reviews throughout the year gives you a pool of review data to pull from at the end of the year.

3. Use software tools to streamline the process as much as possible

The trick to making a continuous performance management process easier is using the right software.

A software program like PerformYard is specifically designed for performance management for nonprofits. It can track details and collate data in real time. It enables employees and managers to get a detailed picture of performance. Both parties can make tweaks along the way without having to wait months until the next annual review.

Learn why nonprofits like Habitat for Humanity use PerformYard.Learn More

Well-built programs are fully automated. That means HR people can minimize the amount of time they spend on the performance management process. Even the smallest HR departments can run a continuous performance review process with frequent checkpoints and continuous feedback. You say what you want to measure, how to measure it, and how often, and the program does the rest.

Examples of Non-Profits Excelling in Performance Management

Let’s see some real nonprofit organization performance evaluation systems in action. These examples show you a clear path forward with your performance management process.

Here are a few examples of nonprofits excelling at performance management:

  • How Habitat for Humanity built a culture of accountability
  • How NAMI created more qualitative discussions with employees
  • How the Colorado Health Foundation modernized performance reviews

How Habitat for Humanity built a culture of accountability

Habitat for Humanity started with an annual review, which is where many nonprofits start. Those reviews included a self-evaluation and a downward review.

As the organization grew, the average review totaled nine pages. These reviews had wildly different feedback from different managers. The reviews included files that would just sit in a drawer until the next annual review. It was time for a change.

Kathy is the Director of Human Resources at Habitat for Humanity Philadelphia. She was introduced to the idea of a standalone performance management platform. Shortly after, she slowly began the process of transitioning.

In the first year, they kept their standard review forms and focused on getting employees comfortable with PerformYard. In the second year, they added a mid-year review to keep everyone accountable for the process.

They also simplified their forms based on their organization's core values. In their fourth year, 360 reviews were introduced. They also expanded access to PerformYard to include part-time employees.

Read more about how Habitat for Humanity built a culture of accountability here.

How NAMI created more qualitative discussions with employees

James Cornett, the VP of Administration at the North American Meat Institute (NAMI) used to spend two months each year on annual reviews. It relied on spreadsheets and binders. These were filled with the information the CEO would use to make salary raises for staff.

It’s no surprise that James started looking for a new system to automate the process and save time.

Now, NAMI has a biannual review cycle in June and December that starts with a self-evaluation. The self-evaluation responses move to management, and eventually to the CEO. Everyone can share comments throughout the process. It is all tracked digitally through PerformYard. There is no need for extensive spreadsheets and note-keeping.

James and the team can make continuous improvements to the forms and the process based on employee feedback. The system is streamlined and focused on quality. That means HR has more time to integrate check-in conversations between review cycles.

Read more about how NAMI created more qualitative discussions with its employees here.

How the Colorado Health Foundation modernized performance reviews

The Colorado Health Foundation found the previous software they were using to be restrictive. There was too much structure associated with the goal-setting process. This resulted in the employees having to fill out long forms. The organization wanted the flexibility to develop new focus areas. They also wanted a review process that required employees to have meaningful conversations as part of their review.

It was time for a change, so they started by implementing monthly conversations to get the process worked out. 

Next, they implemented a new process of recording goals in freeform notes. It allows all departments to use a single process. That process can be tweaked to fit their needs, even if they are engaged in dramatically different types of work.

For example, the philanthropy department once chose to add a prompt for one of their quarterly conversations. Another department added structured goals to pair with the standard freeform goals.

In the second year of implementing the modern, the most important questions were consolidated. That meant conversations could take place quarterly instead.

Read more about how Colorado Health Foundation modernized its process here.

Find out what PerformYard can do for your organization.Learn More

What to do next.

Here are three ways you can continue your journey to a more modern and effective performance management strategy:

  1. See PerformYard In Action. Find time with one of our product experts to get a live look at what it's like to use modern performance management software. Every call starts with a 5 minute discussion of your approach and then immediately dives into a live product demonstration that's based on your organization's process. Or start by watching a 2-minute video overview.
  2. Learn more about modern performance management. Start with our Guide to Building a Modern Performance Management System, or visit our blog to see the latest ideas from our team.
  3. If you know other HR Pros who would appreciate this article, share it with them through email, LinkedIn or Twitter.