For the last ten years, I have been actively involved in local community non-profit organizations (NPOs). At first I gave of my time by offering computer training through an organization in my neighborhood. Gradually, I increased my level of involvement in the organization eventually I became become responsible for an activity of the NPO, the Quebec computer history museum. The activity was a success thanks to my involvement and that of a small group of volunteers I recruited. Indeed, I dedicated on average twenty (20) hours a week volunteering to make this activity work. We even created a permanent employee position.
During the five years that followed the start of the activity, we were invited to participate in regional events, contributed to a major exhibition in Quebec City and were repeatedly mentioned in the local and national media. Financially, it was also a success. We managed to generate revenue and obtain grants that have far exceeded our operating costs. We even created paid jobs. But it did not always go smoothly. After financial issues, always a critical issue in a NPO, it is the management of human resources that was a source of disturbance. There was a gap between my strategic vision for the activity, shared by the volunteers involved with me in the business, and the strategic vision of the managers of the NPO. Obviously, for the managers of the organization, the event was one element of an overall strategy to contribute to the sustainability of the organization as a whole. But for us, the volunteers, this was a first step. We expected that the activity would eventually grow and move to our own premises, like a child who eventually left home, once an adult. This shift in vision was frequently felt in the organization and led to numerous conflicts on the use of staff and volunteers from the museum to assist in other duties in the NPO.
Firstly, there was strong disagreement about the nature of my employment relationship with the organization. As a volunteer, I felt free to choose the time, the means and the tools that I needed to use it as part of my volunteer work, much like a consultant. I saw myself as a partner. But eventually I realized that the organisation considers its volunteers as employees. Maybe even as discounts employees. This was demotivating for me. The reality should be, in my opinion, that a volunteer is a partner that shares the vision of the organization, at least some important aspect of it, and who is willing to give of his time to the organization and contribute to effectively achieving its mission.
Then there were conflicts over the management of the employee of the activity, the museum guide. This lead to recurring conflicts with the Director General (GM) of the NPO. Ultimately, in 2015, the participants in the activity decided together it was time to make it independent, no longer able to work within the constraints of the initial organization and especially with its leadership. This was achieved by the incorporation of a non-profit organization, configured as a social enterprise. This experience taught me that money and human resources management (HRM) are the two main issues of a social enterprise. It is this second aspect that I wish to explore in this essay.
Why is this important?
In this time of economic volatility and global uncertainty, the different vision of the economy that NPOs in general and the social enterprises in particular offer, proposes potential solutions that will help to maximize the chances that man can survive in its ecosystem. A system based only on economic growth, population growth and increased life expectancy, can’t be sustainable in the long term given the limitations of our planet, a closed ecosystem. Specifically, we have only one planet to exploit. Ultimately, we will inevitably be exhausting scarce resources necessary for the survival of the human species. We can extend this by innovation, be it economic, social or technological and by other means. Putting forward a new model of entrepreneurship, not-for-profit and socially-oriented, can contribute.
As explained Campbell (2011), human resources (HR) are essential to NPOs. Financial capital is obviously necessary, but it is individuals that allow NPOs to accomplish their mission. For many organizations, human capital is the most important asset. However, the aging of the population observed in Quebec has the double effect of increasing the demand for volunteers in organizations and reducing the number of individuals who volunteer. NPOs must also take into account, as mentioned by Thibault, Fortier and Albertus (2007), that there is in Quebec a cleavage in individual and community values between the generation of the Quiet Revolution and the youth of today. Today, 15 to 24 year old residents are more likely to get involved as volunteers for anti-globalization or environmental causes that interest them, at the expense of NPOs that have a more local scope.
Moreover, as Comeau-Vallée(2009) mentions, many authors suggest the need for better awareness and understanding of the problem of human resource management (HRM) in this sector. In addition to enriching our knowledge on a different vision of the economy, studying HRM study in the social economy and NPOs sectors can help improve our knowledge of general management.
Objective of this essay
Produced as part of a graduate course at Paris-Dauphines University, this essay aims to explore an HR issue, contribute a personal reflection and propose solutions. This was the request of the professor. In following the required criterion, this work includes a description of the context and situation and recommendations.
This essay is based on my personal experience, scientific literature and published resources of organizations who are involved in the management of social enterprises. Without presenting the results of an empirical study on the subject, this study also seeks to contribute to develop guidelines that will enlighten the reader on best practices that can be used in an industry that is becoming increasingly important in Quebec and elsewhere in the world.
The social enterprise
The social enterprise is first and foremost a business. A corporation with the goal of being profitable, which is to say to generate revenues that exceed its expenditure efficiently and effectively. As a commercial enterprise, a social enterprise produces goods and various services. However, there are four important distinctions:
- It responds to social needs;
- It is a collective property;
- paid staff and volunteers work side by side;
- It’s managed differently from a commercial enterprise.
The main feature of the social enterprise is its social dimension. It puts as the highest priority in its corporate mission the will to enhance the social and uses predominantly an entrepreneurial approach as a means to fulfill this mission. It is basically a NPO that operated a lot like a for-profit business. As explained by the Quebec government’s action plan 2015-2020 on social economy, income-generating commercial activities are not an end in itself but a lever that these social enterprises use to achieve their social mission. More clearly, its commercial activities are a source of funding, or even the main source of income, used for the realization of social and community activities. As commercial enterprises, social economy enterprises produces tangible economic benefits. For example, they aspire to economic viability, pay sales taxes and payroll taxes and produce financial statements and corporate tax returns. The social enterprise pays a salary to its employees, but there is no redistribution of the profits in the form of dividends or bonuses to officers or shareholders. The surplus funds are reinvested in the business or given to the community in various forms, for example, donations can be made to local community organizations to help them with their mission. In case of cessation of activities, all assets and residual funds are devoted to a local organization with a similar mission. The social enterprise operates an economic activity while actively working to fulfill the human and social aspirations of its stakeholders. It frequently operates in business areas neglected or abandoned by businesses or by the state. Moreover, as the reported by Gagnon (2011), it often presents itself as a sustainable and environmentally responsible company with strong ethical values.
A second distinction of social enterprises is that they are necessarily a collective property, created by citizen-lead initiatives, mobilized by a shared vision. Unlike a commercial company that is owned by its shareholders, the social enterprise has members. The members have an ownership link thru a membership or social shares similar to that of the shareholders, but always with one vote per member, regardless of the level of their involvement in the organisation. Although the economic viability of the social enterprise may be due in part to financial support from the state, its management mechanisms and decisional controls do not depend on governmental agencies or the state. All the authors reviewed suggest that social enterprises generate greater support and commitment from the communities in its development projects, contributing to their success and sustainability.
A third aspect that distinguishes the social enterprise is that in addition to managers and employees, as in a conventional business, the activities of a social enterprise require the voluntary contribution of local citizens, as volunteers, and the involvement of local communities as a whole. Volunteering complement the work of employees and swell the ranks of the organization’s working force. It should be noted that volunteers often perform work alongside employees, as if they were regular employees of the company, but unpaid. We will return later to this later in a discussion on the issue of HRM in these organizations.
Finally, Quebec social economy enterprises are administered differently from commercial enterprises on the basis of principles of governance that could be called social governance. Their bylaws, internal policies and processes necessarily provide for democratic governance by its members on the principles of participation, support and individual and collective responsibility. Decision-making power is decentralized and participatory. Decision-making processes are based on stakeholder consensus. In an efficient social economy organization, effective leaders are skilled strategists, able to promote and embody a highly social vision, promote ethical and environmentally responsible values, while at the same time mobilizing stakeholders towards achieving its business objectives. The leader is the keystone of the delicate balance between social and profit.
Social economy in Quebec
Gendron and Saunders (2004) mention that the social economy sector has long occupied an important place in the economy of the province of Quebec (Canada). Quebec (2015) lists 3700 NPOs with business activities in Quebec in 2015. One of the oldest, the Caisse populaire Desjardins, has over 100 years of existence. According to the Chantier de l’économie sociale, there are nearly 6,300 social enterprises generating in excess of 4$Billion of economic activity. In Canada as a whole, social economy enterprises contribute about 4% to the GDP and generate about 120 000 jobs.
In Quebec, social economy enterprises take different legal forms depending on their mission: a cooperative under the jurisdiction of the Cooperatives Act, a mutual which falls under the Insurance Act or a non-profit organization (NPO) incorporated under Part III of the companies Act of Quebec. However, it is worth noting that not all NPOs, mutual and cooperatives are social enterprises. These must have commercial activities and a social mission to be considered as such. In this essay, we focus on the social economy enterprises that are created as NPOs, incorporated under Part III of the Companies Act of Quebec.
Human resources in social economy enterprises
We mentioned the importance of human resources (HR), which are often the most important asset of the organizations. They play a key role in the implementation of the strategy in an NPO. The study by Akingbola (2006) suggests that recruitment, compensation and labor relations in NPOs are often not aligned with their strategy. This contributes, according to the author, to explain some of the problems faced by these organizations. These issues are central to the issues discussed in this essay. As we mentioned earlier, in Quebec, the aging of the population has the dual effect of reducing the pool of volunteers while increasing the demand for volunteers putting a strain on the organizations.
One aspect that distinguishes the social enterprise is its complex human resources structure. There are directors on the Board of Directors (BOD), a General Manager (GM), managers and staff, as in commercial enterprises. But also, in the social enterprise, we need to add volunteers, members and the local community, who work alongside the staff. Salaried employees and volunteers are working in the execution of activities that contribute to the achievement of the mission and the realisation of the strategies. As stipulated Lavoie et al. (2011), when it comes to community organizations, NPOs and social enterprises, HRM includes dealing with staff, volunteers and members. Charpentier and Trépanier (2006) note that human resources of social economy enterprises are also distinguished from those of commercial enterprises with a higher level of education and a predominantly female composition.
Akingbola (2006) reminds us that HRM is of utmost importance in NPOs for three main reasons:
- First, the nature of services provided make it nearly impossible to replace human capital with an investment in physical capital and technology;
- Second, salaried employees are attracted to the organization and motivated in a large part by intrinsic factors such as their belief in the mission of the organization, an opportunity for them to put into action their individual values and the ability to participate in decision making, not by the compensation packages;
- Third, the need to provide professional services and transparency requirements put staff at the center of the strategic landscape.
So what we retain is that unlike a commercial undertaking, in which planning and policy decisions are devolved to the directors on the Board and the absolute top of the managerial pyramid, in a social enterprise, staff, volunteers and members, all expect to actively contribute strategically and not just operationally. Hence the need to implement a more consensual and participatory management style, because without it, they will offer their services elsewhere, which will cause a deterioration in the quality of the offering and eventually lead to the failure of the organization. Based on my experience in the field as a volunteer, I would add that this is a major source of conflict. GMs and long-time staff in an organization don’t appreciate having volunteers and members involved in a strategic role. For them, it is often perceived as interference. In any case, it was such for me. NPOs need to understand that if they recruit individuals with significant work experience and education, ask them to be actively involved, it is inevitable that they will expect to do more than just execute orders. In addition, Board members are often co-opted by the GM and a few key members, which provides strategic positioning issues that will impact on human resources. In a social enterprise, using the argument of management rights to justify decisions should never be considered legitimate.
Volunteers are people who choose to donate their time and skills to an organization, knowing they will not be paid for services rendered. They provide the bodies of a workforce that complements the work of its paid staff to enable them to accomplish their mission. According to Campbell (2011), this type of relationship is not subject to the rules, customary obligations and duties that govern traditional employer-employee relationships, such as loyalty, confidentiality or non-competition. Best practices suggest that a volunteer contract should be used to specify the nature and conditions of work for each volunteer in an organization. Only such a binding agreement can define the nature of the relationship in order to protect all parties involved, including the volunteer, but also the members and beneficiaries of the organization’s services that will interact with the volunteers. These contracts should lay down rules on confidentiality and privacy. However, in many cases today, the contract is verbal and informal. It is a contract, but its verbal form makes it inherently subjective, subject to interpretation and difficult to enforce. The jurisprudence teaches us that this is an intuitu personae contract, specific to the individual, in which an error on the person or on his qualities, is an error on an essential and determining element of the contract, rendering it null and void. These elements should also be included in the agreement and a minimum validation and verification of the skills needed for the job should be done. The dividing line between an employee and a volunteer may also be blurred. For example, a person may be employed as part-time employee in an organization and also contribute as a volunteer outside regular work hours. Thus, the contract of employment of employees will have to provide that.
Castonguay & als. (2014), identifies three decisive stages of volunteering: recruitment (Stage 1), voluntary action (Stage 2) and the continued engagement in the organization (Stage 3). Sociodemographic characteristics greatly influence the voluntary commitment of individuals (age, ethnicity, gender, education and place of residence). These demographic characteristics are correlated with access to essential resources that enable volunteering. Then come the physical and cognitive abilities of the person, their availability, income, skills and abilities, social support, motivation, sense of freedom and well-being and access to a means of transport to get to the site of the volunteer action. Specifically, the decision of an individual actor to engage in a volunteer activity is influenced by the presence or absence of these factors in an individual situation and context. The factors can be enabling or constraining. Despite this, everyone is not entitled to work as a volunteer. As recalled by Campbell (2011), an appropriate screening process for employees and volunteers should be provided for in the recruitment policies at stage 1. Specifically, organizations that provide services to vulnerable populations (young, elderly or people with intellectual or physical disabilities) should carry out due diligence checks of criminal records before hiring an employee or taking on a volunteer.
Organizations that wish to attract individuals who want to volunteer distinguish them by their ability to promote volunteer involvement from seven dimensions:
- Offer to volunteers of work that matches their interests;
- Dissemination of information about the needs of the organization;
- Flexibility and adaptability of the organization;
- Encouraging the development of skills by the volunteer;
- The integration process within the organization;
- Recognition given to the volunteer’s contribution;
- An offer of compensation for the costs incurred, such as transport and meals
For me, the main element that influenced me to join an organization in my neighborhood, that is to say when the volunteer recruitment phase (Stage 1), was the opportunities it offered me the body to contribute the development of my skills (D4). At the time, I was back in school to complete a graduate degree, looking to make a career transition from IT consulting into the field of education at graduation. The organization gave me the opportunity to create and provide training in information technology and, eventually, teach other courses. I initially had no information on the needs of the organization (D2) since it does little advertising to make its needs known. It was by chance that I became aware of the organization, while I was taking the bus in front of the building and I asked an employee who was smoking on the sidewalk what kind of work was done inside the building which mentioned education center on its sing.
At the beginning of my volunteer work in the body (Stage 2), the integration process (D5) was limited to a quick site visit. We first briefly evaluated my interest to perform the task (D1) and my ability to contribute. I had to work with vulnerable populations, yet there was no criminal background check. Then, as the organization had a urgent need for an IT trainer and that managers were very busy, they showed me the room I was to use for training and I got to work. Thus, there was no formal process of integration in the organization (D5). I did not sign a volunteer agreement; I filled a nominative form and a commitment to respect the internal code of conduct, which I was given a copy of.
In the continued engagement stage (Stage 3) of my volunteering, there was little recognition given to my contribution (D6). Although the organization has an annual dinner for all volunteers, this is not a particularly inspiring event. In fact, it was only when I decided to leave the organization that it recognized my contribution by naming me « Volunteer of the Year, » which led me to remain two years more. Although there is an offer of reimbursement of expenses (D7), I have called for in cases where I have incurred higher than usual costs.
Are volunteers’ employees?
In Quebec, the legal definition of an employee is given by the Labour Standards Act (LSA). It uses the term « employee ». The LSA defines an employee as an individual who works for an employer and who is entitled to a salary, including contract worker. Thus, the volunteer is not an employee within the meaning of the LSA. Case law has identified several factors as indicators of the presence of an employee. The presence of a large number of these factors leads to the conclusion to employee status.
|Factors indicating the presence of an employee||Employee||Volunteer||My experience|
|Remuneration for labor||Yes||No||No|
|No risk of loss||Yes||Yes||Yes|
|No possibility to make profits||Yes||Yes||Yes|
|No possibility to compete||No||No||No|
|Lack of free choice of labor or execution means OR subordination of the worker as to the execution of his work||Yes||Yes||partial|
|Acceptance by the worker to be integrated into the company||Yes||Depending on role||No|
|Existence of a framework for mandatory attendance at a workplace, the imposition of rules of conduct and a work schedule||Yes||Yes||Yes|
|Lack of authority to hire or fire the staff||Yes||Depending on the role||No|
|Duty of the worker to provide a sustained yield to the satisfaction of another person||Yes||Yes||Yes|
|No possibility for the worker to be replaced by someone else for the performance of part of contract||Yes||Yes||Yes|
|How the hiring and firing are made||Yes||Yes||Yes|
|Duty to warn if case of absence||Yes||Yes||Yes|
|Obligation to report daily, weekly or monthly||Yes||Yes||Yes|
|Conduct adopted vis-à-vis employment insurance, pension board, health insurance plans and income tax law||Yes||Yes, depending on the NPO||None offered|
|Duty of loyalty and discretion of the worker regarding things they learn in the performance of his work||Yes||Yes in part, if contract||No|
|Labor compensation mode||Yes||No||No|
|Supplies, work tools and equipment are the property of the work provider||Yes||Yes||Partially, I provided many of my tools.|
|On error, fault or negligence, liability is attributed to the employer||Yes||Yes||Yes|
|The services are exclusive to the work provider||Yes||No||No|
|The services are rendered in the name of work provider||Yes||Yes||Mostly Yes|
|Customers pay services at work provider||Yes||Yes||Yes|
|Customer belongs to the work provider||Yes||Yes||Mostly Yes|
Table 1: Assessment of the indicators of the presence of an employee relationship for an employee, a volunteer in a social enterprise and in my experience in a particular NPO.
We take these factors in Table 1 and attempt an assessment of the difference between the employee (column 2) and volunteer in a social enterprise context (column 3) and my personal experience (column 4). Not being a lawyer, this evaluation is subjective and based on my understanding of applicable laws and regulations.
Based on my experience and observation of other volunteers I have been working with, there is a preponderance of factors which might suggest that a volunteer has many of the key attributes of an employee in his relationship with a social enterprise. The difference is only three or four factors. Obviously, a very significant difference is the presence of a salary. The interpretation guide of the Quebec Labour Standards Act (LSA) provides some clarification on volunteer work.
« Sometimes it is difficult to define the concept of volunteer work. As was mentioned when considering the definition of « employee » (art. 1, para. 10), the Labour Standards Act does not deny the existence of volunteering. (…)
Some criteria can be applied when one has to analyze a situation and determine whether a worker performs work voluntarily or if, instead, worked without being paid when it should be under the law.
1. Does the « employee » perform work ?
2. Is there a relationship of subordination between the employer and the « employee »? Must he comply with the requirements of the employer with respect to how to perform the work, the work schedule or his availability? Does the employer rely on the employee’s services?
The type of business may also be relevant. Thus, volunteer work should not exist in a profit-making enterprise. »
The interpretive guide also mentions the following:
- Legal labour standards are mandatory
- The minimum wage payable is the norm
- An employee must be paid the legal minimum wage for all hours worked in Québec
- It is prohibited to stipulate that an employee will not be paid for his work
Obviously, by definition a volunteer receives no salary, he cannot be an employee in the strict sense. However, other factors shown in Table 1 are present in most social enterprises. We would therefore suggest that there is the need to define a hybrid status for this situation. It’s not just employee vs volunteer, we need a third category. We will name this new category the volunteer-staffer or volunstaffer. This brings into question the social and legal protection of the volunteer as a volunstaffer, essential to the functioning of NPOs in general and the social economy enterprises in particular.
- What are their obligations, rights, social protection and recourse in case of conflict with the employer?
- Who supervises his or her work?
- What is his relationship with his superiors or employees, is the volunstaffer in a manager role?
These points require analysis by a specialist in labor law, which we are not. Given the lack of scientific literature on these issues, by necessity in this trial to better understand the problem, we offer our own analysis.
Guarda (2009) argues that a broader definition of work suggest that unpaid work, including volunteer work alongside paid work in salaried employee, is work which would normally deserve remuneration. The Quebec LSA would also support this in the case of an employee who can be asked to work for no pay. One could imagine that the new employee category we propose, the volunstaffer, could apply for cases in which volunteers have a high level of involvement in an NPO. This level of involvement could be measured in hours, say 20 hours a week or more on average, of by the highly strategic or managerial nature of the role played in the organisation. However, Guardes(2009) states that the law is not moving in that direction and seems to retain a more restrictive definition of work. The case law indicates that the engagement in voluntary activities constitutes a sui generis contract (unique, in a class by itself), implicitly or explicitly, with flexible properties, the only constraint being to avoid abuses by both parties to the contract. Case law states that the volunteer contract constitutes a provision of gratuitous services of an individual with special skills, which differs from the employment contract in that subordination is not always present or often diminished and for which there is no compensation. It is these distinctions that make the parties to such a contract not subject to the usual obligations of labor relations. In my personal situation, I observed that few organizations have formal contracts, that is to say written. In fact, it is rather with verbal contracts, informal agreements, subject to interpretation based on the perception of each party on their role. When all is harmonious, there are no problems, but this is not always harmonious. Which justifies, in my opinion, to consider the creation of a new volunstaffer category. This category would be useful to refer to non-salaried employees who have a greater involvement in social enterprise, beyond the mere volunteer. They could have rights and social protection that are comparable to those of a salaried employee enshrined in a new labor law adopted by Parliament. In a place like Québec, one could imagine that those rights could even include a right of association to create something like a union, which could negotiate a collective agreement-like work contract. Obviously, volunstaffer will not receive a salary but they would receive medical expense and revenue-loss insurance coverage in case of accidents related to their work, and travel expenses or meals that could be negotiated collectively. A volunstaffer law could frame conflict management processes within organizations, even allowing for grievance resolution and arbitration processes.
In Quebec, in the social economy enterprises ecosystem, there is increasingly a professionalization of volunstaffer. They are often recruited for their competence and experience. They have less and less liberty to choose when and how to contribute. Social enterprise rely on the presence of volunstaffer to offer products and services to its customers, to its members or to the community. The community counts on them and on the social economy enterprises to deliver basic services, sometimes to compensate for the withdrawal of the state in key areas such as health and education. However, the lack of legislation creates a gray zone of lawlessness which create risks for the volunstaffer. This gray zone can offer benefits to the worker but necessarily implies consequences and difficulties in practice. The situation may also have significant strategic impacts on the social enterprise. Guardes (2009) identifies the following consequences:
- social consequences, due to the lack of recognition of the contribution of volunteering to society;
- legal consequences caused by the lack of regulation and unclear status of workers, inadequate risk management and insufficient health and social protection.
Even without a formal contractual agreement, a volunteer has the moral obligation to provide quality work for the tasks he agreed to do. However, it is desirable to define the expectations, duties and obligations of the parties in a written contract. This document will be used to define the duties and later evaluate the work. In its absence everything will remain unclear. Similarly, only a contract will enable all to understand the nature of the reporting relationship of the volunstaffer with managers, co-workers, volunteer and subordinates.
In Quebec, a volunteer can benefit from partial protection afforded by the government’s industrial accidents and occupational diseases insurance if the organization in which he performs his volunteer work completes the paperwork and pays a premium, which is not always the case. Personally, I have never received such protection. If I had been involved in an accident in the performance of my volunteer work, I would have had to sue the agency to be compensated for any losses. This is a long and expensive process in any jurisdiction. There is no other social protection. It would be useful to frame the role of volunteers to protect and protect organizations, their employees and for managers. This could also be addressed in a legislative framework.
The role of senior management and managers
In a social enterprise, salaried employees, volunteers and members expect to actively contribute both strategically and operationally. Thus, the GM and all managers must adopt a participative management style, to mobilize all of the staff, volunstaffer, members and the community. Mobilized stakeholders contribute to the emergence of a working environment conducive to good business. This impacts how to manage human resources.
In a social enterprise, managers must perform many of the same HRM tasks as those of business, that is to say:
- Implementing HR practices;
- Articulating HR practices related to programs;
- Creating a climate conducive to the emergence of positive behavior;
- Ensuring the alignment of individual goals, teams goals and organizational priorities.
What differs from a for-profit business is the way to get there. During my years of volunteering in a local organization, I often found my relationship with GM and managers to be difficult. If it wasn’t for my strong desire to pursue a particular activity, I would never have stayed so long. Over a period of five years, I nearly quit on many occasions. Each time they pleaded with me to stay. Ultimately, it is the organization that put an end to the relationship, saying that I had contributed to a climate of segregation in the projects I was involved in. All the problems in the relationship may not be the fault of GM, there are certainly elements due to my personality, but the absence of a formal work agreement helped maintain a certain degree of chaos. More than just in my personal situation, I observed many HR problems between volunteers and staff and between volunteers and managers of the organization. What I observed leads me to believe that the lack HRM skills of the GM and his inability to control middle management are the main cause of dysfunctions in this area. In a social enterprise, the role of senior management and HRM managers is critical because of the strategic weight of human resources. We have already mentioned that they are often the most important asset of NPOs. But in a social enterprise NPO, it is impossible to achieve the financial goals and realize the mission of the organization without the active presence and cooperation of all. Inefficient and maladapted HRM practices in NPOs and social economy enterprises puts them on a fast-tract to ruin. With some luck it may be a slow death, allowing time for the Board to correct the situation, if it identifies the symptoms and if is not under the spell of the GM and key managers.
Board of directors
The Board of Directors, or just Board, is the representative of all members of the organization. It is the guardian of the mission and ultimate responsible for the strategic direction of the organization on behalf of all members of the organization. Board members are elected at an Annual General Meeting (AGM) according to election rules established in the constitution of the organization. Board members have many duties and obligations, including a responsibility to act diligently, to avoid conflicts of interests, and to act in the interests of the organization in order to promote long-term sustainability. According to Campbell (2011), Board’s responsibilities regarding HRM fall into three elements.
- It is the employer’s general manager. Thus, it is responsible for all aspects of this employee relationship to the organization (selection, recruitment, support, performance management, succession planning and replacement).
- It is responsible for setting the remuneration of the GM and the general compensation philosophy of the organization.
- It develops and ensures oversight of HR policies and practices, including those related to volunteers.
In fact, the GM, who is on site every day, has a great influence on Board decisions in HRM. It is the GM who is the main source of information for Board members. It is he who prepares the agenda of Boards meetings and submits documents that need to be discussed and approved. This is beneficial when everything is going well and that policies and effective internal controls are in place and implemented.
For matters of HRM, the Board may choose to create special committee on human resources and HR policy and practices monitoring committee. In this case, the Board always remains fully responsible. GMs work with these committees and it rely on it for assistance when needed. As Campbell (2011) reminds us, no matter how HRM issues are addressed, they shall be clearly stated in the terms of reference and mandate of the Board’s HRM committee. I think it is certainly necessary to form such a committee. In a social enterprise, to ensure business continuity, this committee will help smoothen the working relationships and personal relationships between managers, staff and volunteers. The committee should create HRM policies and revise them as needed, annually or when significant organizational changes occur. A training plan for new hires and volunteers will be necessary to ensure that all are in line with these policies.
The Board also has the responsibility to act on matters of psychological harassment and ethics. In Quebec, as defined in the Labour Standards Act, this includes sexual harassment at work and harassment based on race, color, sex, pregnancy, sexual orientation, civil status, age except as provided by law, religion, political convictions, language, ethnic or national origin, social condition, a handicap or the use of a means to palliate a handicap. According to Campbell (2011), the use of a code of ethics may be helpful in shaping the culture and HRM practices of the organization. While the initial responsibility for developing a code of ethics is with the GM, the Board is responsible for reviewing and approving this code. It is also responsible for monitoring its implementation.
Codes of ethics are important vehicles to:
- articulate the values of the organization;
- help new employees become familiar with the standards of the organization;
- attract and retain employees and high caliber volunteers;
- establish the limits of acceptable behavior;
- inform other parties of the agency’s expectations regarding acceptable behavior;
- reduce the risk and cost of fraud, conflicts of interest and other ethical breaches;
- provide guidelines for sanctions for those who deviate from it.
When effective, the code of ethics can enhance the organization’s reputation and promote its growth. It also strengthens the organization’s culture of integrity by emphasizing the responsibility of each individual to apply its principles. The code of ethics should not only apply to staff, it should apply to all volunteers, managers, members and all those in a relationship with the organization. Board members must comply with the code of ethics and must ensure that their own actions and those of GM are compliant.
In this essay, I wanted to explore the issue of HRM in social enterprises NPOs. My experience in the field, presented in part in this essay suggests that HR is a strategic component of this type of organization. Of course, HRM is essential in any organization. But there are aspects of a social enterprise that make HRM particularly acute. First, they cannot be substituted by other means, such as technology or investment. Second, the mobility of volunteers, who can leave if they are not mobilized by the mission, brings operational difficulties. Finally, the demographic curve creates the dual challenge of increasing demand and decreasing volunteers. It becomes important for these organizations to make an effort to create favorable working conditions that foster mobilization within the ranks of their staff and volunteers.
Similarly, our experience has highlighted significant gaps in HR practices and HR competencies of managers, GMs and Boards. Based on the literature and my personal experience I have identified some recommendations for social enterprises:
- Create a Board subcommittee responsible for human resources management;
- Create a HRM policy oversight committee;
- Create a specific HRM committee for volunteers;
- Appoint a manager of volunteer HR;
- Establish a code of ethics;
- Establish a volunteer recruitment program;
- Write an individual contract for each volunteer (you can have a boiler plate form to simplify this);
- Establish a formal volunteer integration process for new volunteers;
- Create a volunteer recognition program.
The implementation of these recommendations by the social enterprises is not a guarantee of success, but can help to create a favorable climate to improve their HRM practices and promote success.
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