What Are Nonprofit CEOs Saying Now?

We returned from a trip to the U.K. on March 11 to find the country changed. Since then, we’ve been running small group gatherings for nonprofit CEOs via Zoom. They are sort of support groups, where leaders come together to get a sense of what other organizations are doing to manage during the COVID-19 economy.

In a recent session, we asked the question: “What is your decision-making concerning staff reductions? Furlough, layoff, fire, suspending new hires? Revenue staff versus mission delivery staff?”

Here’s what a few CEOs recently had to say.

From a $15 million(ish) nonprofit in the health space, with single corporation legal and operational structure:

When we did our recent restructure, my organization was operationally bankrupt, and the board who hired me had frozen access to the endowment. It was a do-or-die moment.

We identified people with the ability to think outside the box who were drivers and partnered them with steady work-a-bees who were trusted by the community and did not require a great deal of oversight. A good attitude and willingness to learn were the assets needed at a difficult time.

General project managers with the ability to collaborate and partner won out over narrow “mission” capabilities. We leveraged creative community members with the expertise to ensure the programs and the science were bulletproof, but focused on the people who could deliver when operating with thin margins.

The biggest mistake I made was keeping a few challenging employees who were “very important to the community,” but never believed in the new vision. They reinforced negativity, couldn’t adapt and only dug in, refusing to participate. 

In economic downtimes, you need creative survivors who can completely transform and reenvision your entire operation. 

Under $10 million health-oriented nonprofit, with single corporation legal and operational structure: 

I’m a believer in a Simon Sinek axiom — layoffs kill culture. (More on this approach here.)

We’ve run the numbers and stress-tested how long we can go with zero revenue coming in before we even begin to think about a staggered furlough program. That is 12 months from now, if needed.

We’re in growth mode considering that we’ll be better positioned to tackle the marketplace with an energized team, clear message and strong case for support when we turn the corner.

From an advocacy/policy nonprofit with strong reserves, with single corporation legal and operational structure: 

• We have very healthy reserves, and that is a major factor in our staffing decisions. We have told staff that:
• We are not laying off in the indefinite future — we need them more than ever to get through this.
• We suspended hiring for our one vacancy.
• We suspended cost of living raises. 
• Transparency is key. At an all-staff meeting, I said that layoffs are a textbook go-to, and they need to know that, but not here and not yet.  
• My personal opinion is that whatever you do (in reaction to the crisis) is shared equally. 

In the 2008/2009 financial crisis (at a different nonprofit), I did no salary increases for 1.5 years but no furloughs, either. But I did give staff Friday afternoons off for the full 15 months. That really helped them feel that they were still respected and that if I could not give them money for their time, I could at least give them the time back.  

Finally, I am on the board of another nonprofit that is cutting senior staff salaries by 5% with no reduction in hours.  

From a $50 million health-oriented nonprofit, with single corporation legal and operational structure:

We have run scenarios with as much as a 50% reduction in revenue. In that worst-case scenario, we can get through the year with our staff in place and still fund research. I learned from past reduction in forces is to identify exactly who we really needed to run the organization efficiently and effectively with the right reporting structure and updated roles and responsibilities to support our future organization.

In making staffing decisions, these are the questions I’ve been asking myself: 

• What roles are critical, and why?
• Are you taking the long view or short view?
• Where do you want the organization to be in three to five years?
• Do you have the right people in the right roles to accomplish your goals?
• Are there any other expenses to consider cutting or changing a business practice to be more efficient?

Lessons Learned

There’s one thing these folks have in common: As the economic meltdown drags on month after month, the CEOs in our group are all thinking about not just how to weather the storm, but how to reconstruct their organizations to emerge better than they were before.

In general, they see the first quarter of 2021 being the time when their reactions may change dramatically. We’ve watched different organizations respond to the changed landscape in one of two ways: frozen in fear and waiting (hoping) for a return to normalcy or embracing the changed environment and planning for it.

The “frozen in fear” group is making decisions that presume these are somewhat short-term conditions. That means they are sustaining two different workflows – the old one (waiting to put it to work again) and the new one. This is hard on employees for two reasons. First, it’s twice the work. Second, it does not release them to truly embrace the new realities. There is always that thought in the back of their minds, “I’m doing this right now for nothing.”

The group that’s embracing that the present is the future is making decisions in a very different way. They are scrapping the old workflow and the resources, energy, and belief systems attached to it. They believe and are living this old axiom: “The best way to predict the future is to create it.”