HR In Profit Vs Nonprofit Organizations: 5 Key Differences | #hrmanagement #hrexecutive

Human resources are essential in any organization, whether profit or nonprofit. People are a vital element regardless of organization type. 

But whereas profit organizations need people to make their money, nonprofit organizations (NPOs) need people to further their cause. So what are the differences between the human resources in these two types of organizations? 

Keep reading to discover the 5 key differences in profit vs nonprofit organizations approaches to human resources.

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Protecting Interests

In many ways, being a human resources officer is like being a social worker. They both work to protect the rights and interests of people. 

But the way that human resources teams in profit and non-profit organizations apply their skills differs.

• In a profit company, they are tasked with recruiting staff and also keeping employees happy and productive. Ensuring better wages, fair treatment, and increased productivity also ensures higher company profitability.
• In a nonprofit organization, this is second in importance to looking after social interests. While staff (both paid and volunteer) must be taken care of so that they are happy to continue, this must always be weighed against the greater good of the nonprofit’s main mission.

Human resources are required to walk the fine line between the work satisfaction of employees and profitability. But when dealing with NPOs, they do so between worker’s happiness and social justice. And the cause will always take precedence over the individual.

Desired Outcome

The mission of a profit company is to make a profit. The mission of a nonprofit organization is to make a difference. And this glaring difference in the desired outcome carries over to the human resources department. 

• HR teams in money-oriented corporations need to manage staff that makes money for the company. That is their role in the organization. Any employee recognition or appreciation strategies they put in place are tools to create, maintain and grow profits.
• Nonprofit organizations need funds to continue their work, but they are not interested in profits. Their HR teams are tasked with creating, maintaining, and growing a platform with which to effect social change. And they do so by appealing to their workers’ sense of justice.

While nonprofit organizations also need to make money, it is merely a tool for the promotion of their cause. Their values are thus more community oriented than a profit organization.

Making An Impact

Profit companies look at the long-term growth potential of their organization. Nonprofit organizations look at the current impact their organization has, as well as long-term social implications. And HR staff have to adjust their strategies, accordingly.

• Virtually every profit company, whether a small business or a large corporation, is always focused on financial impact. 

This includes expansion to other areas, instituting new branches, and providing bigger and better products or services.

• Nonprofit organizations, on the other hand, have two distinct goals – one short-term and one long-term. 

In the short term, they look at the current impact their organization has, including fundraising efforts for immediate social work causes. The longer it takes to reach a fundraising goal for a community project – the less successful they deem themselves to be.

However, when it comes to their goal of social reforms, they assess how their future plans for social work will impact the community in the long term. 

That may indicate that a non-profit organization is a more pressured environment, and in truth, it is. But it also means that nonprofit organizations’ staff, and the HR team managing them, are more highly motivated to succeed.

Opportunities For Growth

Although both profit vs nonprofit organizations can have interns or temporary staff, the likelihood of them becoming permanent role players in the organization differs drastically.

• Many companies take on interns or temporary staff, and after a trial basis, may appoint them as permanent staff. The promise of career opportunities is a key factor in the human resources strategy of a profit organization. They look for staff who could be a long-term asset for the company’s profit margins.
• However, nonprofit organizations’ HR teams are looking for volunteers, interns, or even permanent staff who best meet the needs of their cause. And as each fundraising or awareness campaign starts and ends,  people will come and go. The staff has to be suited to the current campaign. 

That being said, a nonprofit does allow for the personal growth of the individual. A sense of pride in a well-executed fundraising campaign or awareness drive is the ultimate reward. Because purpose is the ultimate competitive advantage, and profit companies are starting to realize this too.

Recruiting 

Human resources teams at both profit vs nonprofit organizations have to recruit the right people for the job at hand. They can use incentives such as competitive salaries, the potential for advancement, and other benefits at a profit company. But this does not usually apply in nonprofit organizations.

• When recruiting staff at a regular company, the HR staff looks for top talent that will take the company further. They offer attractive remuneration packages and other benefits they may desire. The aim is to promote employee well-being to make them want to stay with the company long-term.

• In an NPO, human resources are looking for people who meet the needs of the campaign they are currently involved in. The turnover of ‘staff’ is higher, as they rely on volunteers or interns who leave after completing a campaign, only to be replaced by volunteers for the next fundraising or awareness drive.

Staff is important to a profit organization for as long as they remain productive in the grand scheme of making a profit. Knowing how many jobseekers are actively looking for work, human resources know they can find people to fit the bill. It’s harder to find people prepared to work for little or no financial reward. 

Conclusion

Human resources will always play a role in any organization. However, the approach of a profit vs nonprofit organizations HR team has clear differences. 

In a regular business, they find it easier to find people, but the pressure is on them to make money for the company. The converse is true of NPOs’ human resources teams. The financial pressure is not quite as high, but finding people to work for little to no money is far more challenging.