HRM Strategies in Non Profits and How Similar and Different are They from Corporates

The Differences between HRM Strategies in Corporates and Non Profits

As the name implies, non profits are those entities that are engaged in social activities and which do not exist to make profits.

Instead, they are established and run with the purpose of serving society and zero sums accounting wherein the intake equals the cost and other expenses.

What this means is that the way in which Non Profits are run differ from the ways in which other businesses are run.

This has a bearing on the HRM or the Human Resource Management Strategies as well since the HR policies and strategies are aimed at capacity building, non bottom line oriented tilt and the like.

Whereas corporates encourage their employees to garner as much revenues as possible and cut down as many expenses as possible so that the profits are higher, in non profits, the accent is on nurturing people and reaching out to the vulnerable and underprivileged sections of society.

Of course, this does not mean that HRM in Non Profits is like a Utopian initiative where everyone moves around with stars in their eyes and halos over their heads without bothering about improving performance.

The Ways in Which HRM Is Similar in Corporates and Non Profits

Indeed, HRM in non profits, while not the same as in corporates, tends to have some similarities as far as performance monitoring, nurturing talent, adherence to organisational policies and the like are concerned.

Moreover, in many non profits, the pressure to find donors and funders in a never ending game of competition with other non profits means that there is immense pressure on the employees akin to that in the corporate world.

In addition, most non profits keep a tight leash on expenses lest they run out of money and hence, the administrative parts of HRM that are to do with Payroll and Expense Accounts resemble that of corporates.

Apart from this, HRM in non profits also stresses the importance of respecting racial and gender diversity and policy violations as far as discrimination and harassment such as the #MeToo type of allegations are taken seriously.

Indeed, most non profits are run like a Tight Ship leaving little scope for deviation from the norms that are usually the case in corporates.

On the other hand, there are significant differences as far as the aspects of fostering a work culture that is humane and fair and recruitment and talent building are concerned.

Some Insights into Why HRM in Corporates and Non Profits is Alike and Different

For instance, many non profits hire according to the principles of providing opportunity to the underprivileged and this means that a sort of Affirmative Action works in practice, and at the same time, capacity is also built by hiring experienced resources.

In short, non profits balance the needs of merit and social justice in their hiring strategies. Apart from this, non profits also hire from the communities that they serve since such resources are the best judges of what is good for the community.

This is a substantial difference from the corporates who hire talent for the money that they can make for them.

In addition, non profits do not operate in the same scale as that of corporates, though in recent years, there has been much debate over the Corporatization of Non Profits and how it is making them like the entities that they like to differentiate themselves from.

Indeed, as non profits evolve from being partners and helpers of donors and funders to a stage where they become stakeholders in the management of the activities in many areas related to society, it is inevitable that they would look more and more like corporates as the requirements are such.

The Corporatization of Non Profits and What It Means for Their Future

Talking about the corporatization of Non Profits, there are many INGOs (International Non Governmental Organizations) and NGOs that are run more or less like corporates.

Right from hiring and pay to how they engage with the other stakeholders, these entities often resemble the corporates in many ways.

This reflects in their HRM policies as well as well as in their HR strategies. While the merits and demerits of this trend are debatable, it is clear that given the scope and scale at which they are run and the amounts of monies that they receive, it is inevitable that they too have to adopt the ways and means in which corporates are run.

Moreover, with the governments worldwide clamping down on non profits that they deem are negative towards them, there would be more pressure on the former to be as thorough and as strict in their administrative aspects and be alert to possible violations that the governments can use against them.

This reflects in their HRM strategies as well and is also a catalyst for them to adopt Best Practices from corporates.

On the other hand, there are still substantial differences in the HRM strategies of non profits and corporates.

Corporates and Non Profits Exist for Different Reasons and This Must Continue

Last, work culture is something that is heavily influenced by the core reason for existence and this is the crux of the question as to the differences and similarities between corporates and non profits.

While the former are in it for the material aspects, the latter exist to actualise solutions to societal problems and hence, despite the similarities, there exist a Gulf of Difference between the HRM strategies of corporates and non profits.

To conclude, with the acceleration of market oriented policies worldwide, there would be a trend towards non profits being impacted as well which can lead to corporatization.

Authorship/Referencing - About the Author(s)

The article is Written and Reviewed by Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.