Dudo von Eckardstein and Julia Brandl

Human Resource Management in Nonprofit

Organizations
1. Theoretical Foundations and Related Research
Human resource management (HRM) as a discipline within economic
research has developed over the past 30 to 50 years with the focus being
primarily on business enterprises. In the meantime, many enterprises,
especially larger ones, have become highly professional in doing HRM.
Following this trend, the role that HRM plays within scientific research has
also increased. This development was mainly driven by two forces. First, the
expenditures for personnel especially in nonproductive industries often
consume more than half of the revenue or total costs. Second, personnel has
an enormous influence on organizational performance. In a situation of
intense competition, it is therefore important for companies to concentrate on
HRM in order to improve their own performance and to reduce their costs.
As far as nonprofit organizations (NPOs) and public sector organizations
are concerned, forces of competition, limited access to resources and need for
performance improvement have, although with some delay, become highly
relevant (Horack/Heimerl, 2002: 180f.; Zimmer/Priller/Hallmann, 2003:
40f.). In general, responsible managers in NPOs realized much later the need
for implementing professional HRM, even though NPOs have relatively
higher expenditures for personnel than their forprofit counterparts due to their
service orientation. In the meantime, the pressure for rationalization has also
grown in many NPOs. As a result, personnel is increasingly regarded as a
valuable resource, and HRM, in turn, has become a critical instrument for
organizational success. As a further consequence, institutionalized HRM, i.e.,
the HR function per se, is becoming more professional in NPOs.
Following these developments, academic research interest increasingly
focuses on examining HRM (or the effort to implement HRM) in NPOs at
different levels. At the conceptual level it is asked if and how HRM, which
was originally conceptualized for business enterprises, can be transferred to
NPOs. The transferability of management instruments to the specific case of
NPOs is discussed widely for almost every management function. Conclusions at this point differ and depend on the specific functions under
examination. For accounting systems, for example, a transfer seems to be

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possible without fundamental changes. Other functions such as financing, on

the other hand, require more in-depth analysis. For the field of financing,
existing instruments must be expanded in order to account for specific aspects
of NPOs such as fundraising. For the HR function, additional questions arise
as well. Mayerhofer (2003), for example, discusses whether volunteers, who
are an important if not a constitutive element of NPOs, should be regarded as
personnel at all. A positive answer to this question would be a precondition
for the application of HRM instruments. Other authors wonder whether the
unique character of NPOs (especially their non-economic values, which also
affect the treatment of personnel) can be retained when HRM instruments
inspired by forprofit companies management strategies are applied (see
also Krnes 2001 with respect to the Protestant Church). There is fear that as
a result of increasing commercialization, NPOs might lose their specific
character, such as the trust that they enjoy (especially in the area of social
services) and their ability to recruit and keep volunteers (Simsa, 2002: 138f.)

Purpose of This Chapter

In general, the central task of human resource management is to secure
quantitatively the availability of human resources and to ensure quality levels
of the work carried out by employees (in proportion to cost). If HRM is
neglected, the efficiency of the organization could be endangered. More than
any other type of organization, NPOs depend on their employees
performance so that they can fulfill quality expectations. They also need to
ensure that labor costs are at an acceptable level. Therefore, excellent employee performance is the most basic condition for the survival of any organization (Capelli/Crocker-Hefter, 1996). Increasing competition for employees
as well as for funds will force NPOs to rethink their current HRM activities in
order to become more cost-sensitive, efficient, and effective.1 It is therefore
worth asking whether and how the principles of human resource management
can be transferred to NPOs in the same way they were developed for profitoriented organizations over the past 20 years.
The purpose of this chapter is to outline the ways HRM can stabilize and
increase the efficiency of NPOs. To do so, special attention must be paid to
the specific characteristics of NPOs. As the technical term human resource
management already indicates, the management perspective will be the focus.
The management perspective implies that the viewpoint of the top
management of the NPOs will be adopted (e.g., the one of a secretary general,
managing director, or executive committee). It only seems sensible to adopt
1

The extent to which these challenges affect NPOs and the necessity to become more
professional in terms of HRM varies between NPOs. As this article aims at giving a general
overview, we will focus on aspects which are relevant for different types of NPO.

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this perspective for the case of relatively large NPOs. If NPOs are relatively
small (especially when they are still in their formation process), there does not
seem to be much room for strategic personnel management. This is mainly
due to the special ad hoc character of management decisions in smaller
organizations.

2.

Special Conditions for HRM in NPOs

NPOs can be described by a number of characteristics that allow them to be

distinguished from profit-oriented enterprises and public sector organizations.
These aspects must be taken into account whenever HRM tools are designed
or converted to fit the NPO case. In recent years HRM in NPOs also has
become a matter of particular interest to many researchers. Research in this
area is primarily concerned with the effects that specific characteristics of
NPOs (which will be examined below) have on the development and
implementation of HRM concepts.

Mission Instead of Profit as an Institutional Goal

A particular characteristic of NPOs is their pursuit of a mission, in the
fields of, for example, culture, sports, politics or social service. In contrast to
profit-oriented enterprises, the highest goal of the nonprofit organization is
the fulfillment of this mission, not the maximization of profit. Thus, within
the organization, attention is focused on the realization of non-economic
values. These values must be expressed in strategic plans. They also need to
be transferred into the daily application of HRM in order to secure, both
internally and externally, the success of the NPO. The Protestant Church is a
good example at this point (Krnes, 2001). This idea completely rules out a
predominantly instrumental use of employees. Instead, within NPOs the
individual as such can claim benefits or satisfaction from the realization of the
organizational mission.

Structure of Employees in NPOs

Many NPOs differ from profit-oriented enterprises and public sector
organizations due to the particular composition of their labor force. A main
characteristic of profit-oriented enterprises and public sector organizations is
that employees almost exclusively work for remuneration (i.e., in order to
earn a living). For many NPOs it is common that volunteers are active in
addition to paid employees (who themselves often receive a much smaller

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remuneration than the prevailing market rate). Due to their status, volunteers
do not receive any remuneration at all (Badelt, 1985; Wehling, 1993). In most
social service NPOs, community service workers must be added as a third
group of employees. These community service workers are often required by
law to work in NPOs. As a result of this complex situation, HRM must adjust
itself to the respective combination of paid workers, volunteers and those
carrying out community service. It is a strategic HRM decision to choose an
appropriate combination of these groups (in terms of size).

Motivation Structure of NPOs Employees

Following what has been said previously regarding the importance of
voluntary employment in NPOs, it can be concluded that NPO management
needs to implement motivational tools that substantially differ from the ones
typically employed in profit-oriented enterprises. This has consequences for
HRM practices, too. First of all, voluntary activity means that an activity is
done for its own sake (honors sake). The aim of such an activity is to reach
a goal or to create an externality that derives from the NPOs mission. The
motivation of employees in NPOs is predominately intrinsic. The usual
function of management as motivators or stimulators of performance is
therefore unnecessary because the employees are already highly motivated.
On the one hand, this results in less pressure for managers, especially if
one assumes that many employees in the forprofit sector do not feel at all
motivated by their tasks, but only by the payment they receive. On the other
hand, the possibility is not given in NPOs to stimulate a desired behavior
through money and other incentives. Volunteers themselves determine
whether, how, with what intensity, and how long they want to be active in
their organization. Therefore, if looked at under the aspect of influence
possibilities, this situation creates at the same time both problems and
opportunities. Current empirical research about the commitment motives of
volunteers offers a more differentiated picture of the motivation. It can be
concluded from recent findings in the literature that apart from the activity
itself, employees are motivated by their desire for a meaningful use of spare
time, social networking, their desire to gain valuable experiences, and the
wish to extend their own range of knowledge through learning (see, e.g.,
Gensicke, 2000: 78).
Summing up, special requirements for HRM in NPOs result from the
parallel existence of mostly income-related motivational structures (for paid
employees) and non-income-related motivational structures (for volunteers
and possibly for community service workers).

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Specific Restrictions on the Use of Volunteers

Voluntary activity is subject to certain restrictions that have special relevance
for the HRM of NPOs. Taking on volunteers implicitly presumes that the
person hired has a reliable income that covers living expenses. Volunteers
therefore have to receive other income from third parties (such as full-time
employment income, pensions, or support from employed husband, wife or
parents). Only in some cases are volunteers wealthy enough to cover their
living expenses completely. Furthermore, voluntary service commitments in
combination with other duties can lead to a degree of involvement that is
com-parable to full-time employment. As a consequence, volunteers usually
only work a limited amount of time per week or month for the NPO due to
other pressing activities.

Limited Availability of Performance Benchmarks and Cost Standards

NPOs often develop in areas where there are no market rules to regulate
economic activity. Clients of the services often have no clear expectations
about the quality, quantity, and cost of the services they receive. If NPO
managers cannot refer to market standards as reference cases, they will find it
difficult to value their employees achievements. Under these circumstances,
the NPO itself needs to define service standards, e.g., on the basis of direct
agreements between the provider and the recipient of the goods and services.
The lack of reference cases often also applies to personnel expenditure.
A significant number of NPOs either have no or only low personnel costs
because their employees do not receive any remuneration for their activities.
In other NPOs, personnel costs can be quite high. In this case, costs crucially
depend on the proportion of volunteers and paid employees. In a third case,
personnel costs exist and can be compared to other firms. In this case,
however, personnel costs have no effect on the organizations performance
because they are directly refunded by other organizations, e.g., by the
community or the state.

3. Instruments of HRM
Choosing the Appropriate Mix of Employees Within an NPO
A large number of NPOs can be characterized by a mix of different types of
employees, such as full-time and part-time employees, unpaid volunteers,

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fully remunerated employees and, in certain cases, even community service

workers. This being the case, management has to choose the right mix of
employees (in terms of the composition of all workforce categories). Choices
need to be made regarding the proportions or the representation of certain
groups of employees in relation to the overall structure of employees depending on the kind of activities that are to be carried out (Wehling, 1993).
Thus far, no general rules regarding the optimal mix or composition of
employees in an organization have emerged. The following recommendations
offer practical guidelines. In general, as in any organization, key criteria for
employees are their availability, their qualifications and the overall cost level.
Availability refers to the recruitment possibilities on the external job
market. The availability of the various types of employees will affect the
mix. For example, the potential for part-time employees, volunteers and
community service workers on the external job market is limited, especially
since NPOs compete for these groups of employees among themselves. The
criterion of availability also covers the fact that part-time employees and
especially volunteers tend to quit their engagement for the NPO after a
relatively short employment time.
Volunteers and community workers in particular are not always in
possession of the required qualifications for the field in which they are
working. Therefore, specific training is necessary at the beginning of the
employment period. If no such training is carried out, the NPO risks lowquality performance. If neither qualified adequately nor trained appropriately,
these groups of employees are often assigned simple tasks. Over a longer
period of time, it might lead to a decrease of their intrinsic motivation.
The aspect of cost economies relates to labor costs. In relation to unpaid
volunteers or community workers, labor cost levels in NPOs can be quite high
for those parts of the workforce that are fully compensated. The use of
volunteers can lead to cost advantages, which in turn is an argument in favor
of employing relatively large numbers of volunteers (in terms of their
proportion to total workforce, cf. Gaskin, 1996; von Eckardstein/
Mayerhofer/Raberger, 2001). As the proportion of volunteers increases, paid
employees often tend to worry about their job security. In order to avoid
competition among different groups of employees, management might adopt
dysfunctional personnel strategies for volunteers. Another cost factor can be
derived from personnel structure: Training volunteers and community workers means relatively high worktime-specific costs of qualification because of
the generally short payback periods for these education investments. This
makes education investments for full-time employees more economical.
Finally, coordination and interface problems contribute to the limited use
of volunteer staff. On the other hand the volunteer staffing policy must be
seen from the perspective of creating potential opportunities for highly
motivated part-time employees in the future. Coordination problems and other

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difficulties thus should be seen related to this potential.

Structuring can be done also giving consideration to other criteria, e.g.,
by aiming at a mixed age structure in order to avoid obsolescence with its
unfavorable consequences or by aiming at an appropriate gender structure
within the different fields of work.

Recruitment
Recruiting serves to create the personnel structure or to maintain it. Basically
the importance of diligent recruitment rises with the length of employment,
requirements for qualification and motivation as well as the wage demands.
Staff selection procedures are based on the existence of applicants.
Therefore recruiting actually starts with external communication to increase
the number of potential applicants. It is advisable to broaden the applicant
pool by target group marketing over different communication channels
(advertisements, articles in newspapers, contacts made by existing employees).
The most common instrument for staff selection is the interview, which is
based on an analysis of the application documents or a personnel questionnaire. Interviews are an opportunity to become acquainted with the applicant
personally. On the other hand applicants need information as well, which
influences their decision-making, and wrong decisions can be reduced on
both sides. To reduce subjectivity, it is helpful to include a second interviewer
or to assign an additional interview. The interview can be also standardized
by asking every applicant the same questions in the same order so that one
can compare the response behavior.
Especially for the recruitment of management staff the so-called
assessment center is recommended. Information about the applicants is obtained by observing how candidates behave under simulated work conditions.
For this purpose applicants have to accomplish different tasks (e.g.,
presentations, discussions), which reflect their future work situation.
Afterwards the observers compare their perceptions and decide which
candidate fulfilled the duties best. The use of assessment centers in selection
procedures is relatively time-consuming, but leads to a high-quality prognosis
for the future suitability of the proven applicant. They are used at present in
many large profit-oriented enterprises (see, e.g., Fisseni/Fennekels, 1995).
Sometimes organizations use knowledge, behavior and personality tests
for their candidate selection. Such tests can be useful in pre-selection if there
are large numbers of applicants. Since the connection between task fulfillment
in real work situations and test results is not discussed, the quality of their
prognoses remains still undefined.
By now, staff selection procedures for full-time paid employees in NPOs

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are a matter of course. For volunteers by contrast, the use of selection

procedures is less widely accepted. A frequently mentioned argument for this
fact refers to the donation aspect of voluntary work, which cannot be rejected
even if the volunteers are not always reliable or qualified. Some NPOs stress
that volunteers are not only employees but also members on which they are
dependent. A further argument reflects the low costs of unpaid employees.
From a HRM perspective it is to be said that volunteers contribute to the
quality of performance as much as other employees. Applying professional
selection procedures could therefore improve performance quality and lower
costs.

Organization of Work
The organization of work consists of two steps, both having strategic
importance: First, the tasks are specified for each employee, second, it must
be decided whether the employee accomplishes these tasks individually or
within a group structure.
Task definition is critical for job requirement levels, for demands (von
Eckardstein et al., 1995: 192), and for the attractiveness of the job activity. A
general rule is: The narrower the task is defined, the lower are the job
requirements for the activity and the smaller is the attractiveness of the work
for the identification possibilities, which are connected with the task, and also
regarding remuneration. On the other hand, the advantage of narrowly defined
tasks resides in the fact that they can be done by a relatively large number of
employees after only a short briefing.
The second organizational parameter is the decision between individual
or group work. Recent trends in the profit-oriented economy show that
numerous enterprises strongly promote group work as they increasingly
discover the advantages of group work concepts and seek to use them for
improved productivity.
The advantages can be explained best based on the model of the semiautonomous working group, which also represents the preferential model for
the introduction of group work. In semi-autonomous groups the members
decide about internal task distributions, sometimes also about output quantity,
about their schedule, about the replacement of temporarily absent members,
etc. The main advantages lie in the rapid, briefly closed self-management
without superiors, in quick replacement when group members leave, and in
the very effective social control of individual group members, which is
realized over task execution and problem-solving as well as learning together.
The mechanism of working groups is based on a less hierarchical organization, which makes it possible to use the advantages of self-organization in a
hierarchically structured organization without questioning hierarchy as a

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coordination principle itself. Such group work normally presupposes that

each member controls substantial elements of the entire task assigned to the
group. Besides semi-autonomous groups, there are several other concepts for
team work (e.g., quality circles, continuous improvement processes, project
groups), which are all based on comparable principles.
Most NPOs have implemented elements of group concepts. The question
is whether the success of this concept can be further increased by intensified
shaping and additional implementation of such groups (e.g., by intensified
group socialization). The advantages of group concepts in the forprofit sector
are so highly convincing that managers of NPOs cannot really even consider
the absence of group concepts.
Cooperation between full-time employees and volunteers is a special
topic of work organization (von Eckardstein/Mayerhofer/Raberger, 2001: 144
ff.). Conflicts arise mostly as a result of the fact that volunteers feel
insufficiently informed or gerrymandered by full-time employees, so they
reject responsibility for their own duties. To improve cooperation between
both, specific solutions for each organization are needed, which can also lead
to a group-specific task separation.

Leadership
Leadership covers personal communication between unit managers and the
persons employed within an organizational unit. The purpose of this
communication is to affect the employees behavior so as to achieve the
respective goals of the organization. Under this condition, leadership makes
sense only if goals were expressly formulated for the organization. Unit
managers have to break down the goals so that they are translated into clear
actions. Leadership is an indispensable function in every organization,
although there are substantial differences between organizations concerning
the intensity of this control instrument.
The practice and theory of leadership defines important leadership
instruments each supervisor should know: feedback, employee evaluation,
and performance discussions. Feedback is communication about the evaluation of behavior as soon as possible after an observation. This happens in
positive cases in the form of acknowledgement, in negative cases as criticism.
For practical purposes, numerous rules are helpful, how such feedback
discussions can be led as effectively as possible. Employee evaluation
represents a systematic procedure to collect comprehensive information about
the achievement and the behavior of the employee being evaluated (von
Eckardstein/Schnellinger, 1978: 302). This information should be made
accessible to the employee and be discussed in detail, typically in the context
of personnel development interviews. Performance discussions constitute the

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place to exchange assessments of past achievements and behavior and are

mostly conducted at least annually. Transparency in the process and an
orientation for future behavior are important for both participants.
In practice, leadership follows very different principles in which the
respective individuality of the involved persons as well as specific organizational aspects are reflected. Some organizations create leadership
guidelines, which include statements about the desired leadership behavior of
the superiors.
For NPOs the question of whether and how volunteers should be
integrated into leadership processes has not been convincingly answered so
far. Some organizations enter into agreements in which mutual expectations,
rights and obligations are outlined (Biedermann, 2000: 118). In hierarchically
oriented organizations such as fire brigades and rescue organizations, clear
instructions exist and have to be applied. In the context of regular interactions
(goal agreement, feedback, performance discussions), leadership has only
modest value.

HR Development
Qualification of employees refers to activities conducted by an organization
to improve the abilities of its employees to increase the quality and quantity
of output. Qualification can be called HR development if such activities
follow a longer development concept (Mayerhofer, 1999).
Important qualification components are professional education and
professional training. The goal of professional education is to enable particularly young graduates in the practice of a qualified vocational activity by
conducting an official training program that meets a set of national standards.
The aim of professional training is to enlarge and deepen vocational abilities
already acquired. In contrast to professional education, professional training
is not regulated. Its main purpose is to adapt the employees qualifications to
the qualification requirements that are necessary for the respective job or
tasks.
In the context of increasing professionalism in numerous NPOs, HR
development is very much appreciated. In considering the intensity and the
goals of qualification activities, it is essential to differentiate between a
minimum qualification for the execution of the tasks at hand and a more
general qualification. In the case of the first, the main advantage results from
cost economy; in the case of the second, a greater flexibility for new tasks is
acquired. Especially in situations that require high personal responsibility, a
broad qualification level is obligatory.
If volunteers and community service workers are active in an NPO in
addition to paid personnel, the strategic question arises whether the NPO

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should expand its qualification programs toward these two groups. Economic
facts argue rather against including unpaid employees because they generally
work a smaller number of hours in relation to the paid employees and - in the
case of community service workers - remain only a relatively short time in the
organization. In this case the worktime-specific expenditures for the
qualification noticeably exceed those of the paid employees.
However, if investment in the qualification of unpaid workers is
systematically less, a two-class system is generated because the unpaid
employees can be assigned generally only simpler work or auxiliary activities.
From this again, the organizations inclination might be to reduce voluntary
activities and to allow unpaid employees to remain a shorter time within the
organization. One should ask instead whether a qualification policy could
increase the attractiveness of unpaid activities to the volunteer labor
market. Thus, the integration of unpaid workers could be improved, their
proportion in the organization could be increased, and conflicts between paid
and unpaid workers over the often-proclaimed lack of acknowledgement of
the latter would be reduced.

Remuneration
Within the realm of paid work, remuneration is usually regarded as a main
incentive for performance. A salary is the price for which the employees give
their work to the organization. In this market-oriented view, the amount of
payment naturally has a substantial role, since it represents a cost factor for
the organization and is generally the most important source of income for the
persons employed. Numerous organizations use payment as a main instrument for performance management. In the context of NPOs, two questions in
particular are raised: How can the amount of remuneration be determined,
and should the remuneration system be used for the control of performance?
The question about the amount of remuneration must be treated
differently for the different segments of people employed in NPOs. For paid
employees, the NPO will try to pay a wage that corresponds to the usual
market conditions for the respective activity category in order to survive in
the competition for qualified workers. Otherwise organizational performance
could be jeopardized. However it is to be pointed out that many persons
employed in NPOs are satisfied with a smaller remuneration than they would
receive in a profit-oriented enterprise for a comparable activity, due to a
strong identification with the mission of the NPO (Badelt, 2002: 124).
Improved goal-orientation is the aim of performance-oriented remuneration systems. An additional payment is connected with the achievement
of special quantitative and/or qualitative performance goals. Pay-forperformance systems generally seem to be less common in NPOs than in

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profit-oriented enterprises. To motivate performance, their application should

be considered also for NPOs. In the context of mixed personnel structures,
however, caution is indicated since conflicts between value orientation and
income orientation are to be expected there. The remuneration of management presents a special problem: Should their compensation vary according
to their contribution to the organizations performance as is the case for highlevel personnel in forprofit enterprises (von Eckardstein, 2001)?
With paid employees, by definition the payment in cash is the main focus.
This does not generally apply for unpaid volunteers. For volunteers a nonmaterial return by representatives of the NPO in the form of
acknowledgement of their achievements holds more importance. Apart from
this, non-material privileges such as access to reasonable purchase possibilities, training and other qualification opportunities, etc. come into consideration for the acknowledgement of voluntary activity as well. Privileges for
volunteers - for instance within the social security system could also be
justified from the social context of voluntary work (e.g., Biedermann, 2000:
123 f.; Gensicke, 2000: 85).

4. HR Strategies
Concept of HR Strategy
The different instruments of HRM outlined above are interdependent and
cannot be seen without considering their context. Human resource managers
have to assume that employees are affected not so much by individual
instruments but rather by all instruments as a whole. Therefore a consistent
total concept in which the individual instruments can be arranged is needed.
These instruments represent an action program that the participants in HRM
pursue for a longer term. It is defined here as human resource strategy.
With the development of such a concept, a fit of instruments is to be
aimed at in the sense that individual instruments mutually strengthen each
others effect, or at least do not obstruct each other (horizontal fit). The
question of a vertical fit also arises: This includes the harmonizing of the
personnel strategy with relevant contextual conditions on the one hand and
the strategic goals of the NPO on the other hand. It is evident that a fit of
relevant contextual conditions and organizational goals with the personnel
strategy is more favorable for the performance of the NPO than an
independent personnel strategy. Nevertheless fits in the horizontal and
vertical dimensions cannot be monitored regularly (von Eckardstein, 2003:
392f.). Human resource strategies are not controlled by logic, by developing

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action programs on the basis of relevant contextual factors and organizational

goals, which must then just be converted by the responsible persons. They
rather reflect the subjective logic of the participants and the culture of an
organization (von Eckardstein/Mayerhofer, 2001: 227f.). Human resource
strategies depend on whether and how conditions are assessed and how they
are converted from organization goals into action programs (von
Eckardstein/Mayerhofer, 2001). Every human resource strategy is connected
with a basic idea, a philosophy, which the participants share and put into
action. Basic ideas or philosophies of the participants as well as the organizational culture do not change on short notice; they are longer-term stable
constructs. Their function in the context of HRM is to put the complexity of
HRM action and appropriate planning into a frame of reference and thereby
to make it describable. Thus the classification of individual instruments
within a general context is made easier. The responsible person has to ask
whether and to what extent these instruments are compatible with organizational goals, circumstantial factors, and the philosophy and organizational
culture (see Eckardstein/Simsa: Strategic management, in this book).

Designing HR Strategies
The following section outlines prescriptive and empirical aspects of HR
strategies in NPOs. The prescriptive perspective offers organizational
recommendations, while the empirical perspective focuses on the practical
shape of HR strategies in NPOs.
From a prescriptive viewpoint, numerous recommendations regarding
instruments and measures can be found in the literature, primarily with
reference to paid personnel in enterprises (see, e.g., Pfeffer, 1994; Berthel,
2000; Drumm, 2000; Oechsler, 1997; Klimecki/Gmuer, 2001). These
recommendations express the best practice of HRM without regard to
sector-specific conditions. Beyond that, more NPO-specific recommendations
exist in the literature about NPO management (e.g., Herman, 1994;
Naehrlich/Zimmer, 2000, therein esp. Biedermann; Pidgeon, 1998 with
reference to volunteers). These volumes recommend highly proven HR
strategies with a general validity. However, they lack any link with situational
conditions such as participants, pursued goals or types of NPOs. This is not to
diminish the value of these recommendations because they contain numerous
valuable suggestions. Nevertheless, they are often too general for direct
application and include too little information about how to set priorities under
specific conditions. In this context the findings of Simsa (2001) appear
remarkable. Simsa describes different influence strategies NPOs can exert on
other organizations based on two dimensions: divergence of logic and
interpretation tendencies and extent of coupling. The four HR strategies

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that result from the matrix of these two dimensions in the picture below can
be assigned to specific types of NPOs. Simsa differentiates between influence
strategies based on confron-tation, which apply to human rights
organizations, for example. To ensure acceptance by their surroundings and
to fulfill background activities, these organizations should offer internal
career brackets, also with a focus on older employees. Cooperative influence
strategies are typical for membership associations, which try to exert
influence through negotiations with other organizations. For them HRM must
concentrate on the selection of personnel and employee development to
strengthen the employees commitment to the organizations goals. Damage
limiting strategies are focused on the reduction of negative effects and are
very appropriate for aid organizations. HRM should concentrate on protecting
employees from burnout effects and loss of motivation through coaching and
team development. The dominance of service provision, which applies mainly
to NPOs in the cultural and social fields, requires high professionalism of the
NPO personnel because of the competitive environment. HRM can support
this, for example, by defining quality standards for employees. There are only
a few empirical studies about HR strategies pursued by NPOs. Empirical
research in HR strategies still is at the beginning in general, and this is true
particularly for NPOs. Ridder/Neumann (2001) find in an exploratory study
(hospitals and nursing facilities in Lower Saxony/Germany) that the vertical
fit between general management and institutional HRM is only weakly
evident, since responsible HR managers are rarely consulted for strategic
questions with impact on HRM. They concentrate on the operational activities
of HRM instead. For quantitative personnel planning as well as for qualitative
staffing, they follow instructions from external sponsors. Management by
objectives as a leadership tool is seldom found. A HR strategy taking
horizontal fit into account does not exist.
Another exploratory investigation based on twelve case studies of social
service NPOs in eastern Austria (von Eckardstein/Mayerhofer, 2001) with a
focus on volunteers found a different staffing pattern for voluntary
employees. They are assigned within the operational range as either

additional to paid employees in order to support the work of the

latter and/or
equivalent, i.e., with the same tasks as paid employees, or
exclusively for the execution of operational tasks, while paid
employees concentrate their activities on management tasks.

A second finding shows substantial differences for the development level of

HRM. On one hand, there are NPOs using only few HR instruments and
mostly not in a purposeful and systematic way (lacking in particular HR
development). On the other side of the spectrum, a highly developed HRM
can be observed, characterized by the use of comprehensive instruments that

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are coordinated among themselves (horizontal) as well as with the organizations goals (vertical). While the first case is found very often in smaller
NPOs, the latter mostly applies to large NPOs in the sector of social services.
A third set of findings refers to whether the NPO sees differences in
qualification and achievement among volunteers and how these differences
are handled. This perspective is important for the maintenance and
improvement of performance quality and highlights the question how NPOs
react to differences in their volunteers performance and qualification. From
the combination of two criteria (development level and handling differences),
a four-field matrix can be developed with four types of HR strategy (selective,
harmonizing, differentiating, leveling). The sample allows a first empirical
insight into HRM strategies in NPOs. Results show that on one hand NPOs
with a highly developed HRM emphasize performance and quality
orientation; on the other hand there are NPOs stressing the community of
volunteers and the acknowledgement of the donated work (harmonizing
human resource strategy). Both developments reflect specific philosophies
of participants and organizational culture. In terms of strategy development
these conceptual frameworks can be used as analytical tools for selfdescription of the actual HR strategy as well as for the definition of strategic
goals.

Human Resource Management Dependent on the Type of NPO?

The NPO sector as such is quite heterogeneous. NPOs can be classified according to a number of criteria (Badelt, 2002a: 70f.), for example, the purpose of the NPO (membership, service, advocacy, or support), its stage of development, its size, and its proximity to private sector companies, to public
sector organizations or to society as a whole (Zauner, 2002: 174). A classification of NPOs could be carried out also according to their geographic
affiliation (e.g., Eastern European countries, transition economies, Western
European countries, U.S.A.). Following this idea of heterogeneity among
NPOs, the question arises whether HRM should be differentiated, too,
according to the type of NPO. A second question is whether there is even
empirical evidence for potential differences in HR strategies.
As far as the main functions of personnel management are concerned
(such as the recruitment, management, and remuneration of employees), it is
suggested that from a purely prescriptive perspective, these functions are the
same for any kind of organization (i.e., regardless of its nonprofit or forprofit
nature). Mayrhofer/Scheuch explicitly point this out saying that management
functions need to be carried out regardless of the specific character of an
NPO (Mayrhofer/Scheuch, 2002: 100). Employees need to be recruited, managed, and remunerated independent of whether they work in a hospital or for

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Dudo von Eckardstein and Julia Brandl

a political party. Volunteers need to be recruited, too. By definition, however,

they do not receive any remuneration (in monetary terms). Following these
considerations, it is therefore not controversial to assume that NPOs carry out
their HRM functions (such as recruitment or management) with a varying intensity. Recruitment in NPOs might be a less complex task if there are volunteers that approach the NPO themselves with the intention to work for it (in
comparison to the case where the NPO needs to engage actively in costly recruitment activities). As far as the objectives pursued with these HR functions
are concerned, there are potential differences among NPOs, however. It is
suggested that NPOs should treat their employees in the same manner or with
the same set of values as they proclaim themselves. A religious order that is
itself obliged to dutifulness should therefore apply this itself as a key governance principle. v. Eckardstein/Ridder have formulated, with the necessary
precaution, a number of hypotheses regarding the relationship of NPO types
and the focus of their personnel strategies (v. Eckardstein/Ridder, 2003: 18f.).
Simsa, too, recommends differentiating personnel strategies in NPOs according to type of NPO (Simsa, 2001; cf. 6.4.2 Designing HR Strategies). From
an empirical viewpoint, there is no information as to whether personnel strategies in NPOs clearly depend on the type of NPO. It seems more to be the
case that there are significant differences between organizations of the same
type. These differences can most likely be explained by differences in orientations of human resource managers (e.g., their own opinions or priorities) or
other situational factors.

5. Conclusion
HRM has a substantial influence on the performance and the expenditures of
NPOs. There exists an extensive body of knowledge and recommendations,
which were originally developed for profit-oriented organizations and which
can be applied in different ways to NPOs as well. However, the special characteristics of these organizations must be considered. HRM practices vary
from NPO to NPO. Single observations and case studies show that several
NPOs already use instruments for recruiting and long-term planning or develop HR strategies. But there still is a need for increased professionalism. If
the application of professional HRM instruments remains behind expectations
and needs, the question of why arises. In this area there is a lack of knowledge
about practical problems NPOs face when they implement existing recommendations for HRM. Because intensive empirical research is missing, there
are substantial gaps in this field, which are difficult to fill because of the
heterogeneity of these organizations.

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Suggested Readings
Badelt, Ch. (ed.) (2002): Handbuch der Nonprofit Organization. Stuttgart
Berthel, J. (2002): Personal-Management, Grundzge fr Konzeptionen betrieblicher
Personalarbeit. Stuttgart
von Eckardstein, D./Ridder, H.-G. (eds.) (2003): Personalmanagement als Gestaltungsaufgabe im Nonprofit und Public Management. Mnchen
Hermann, R.D. (ed.) (1994): The Jossey-Bass Handbook of Nonprofit Leadership and
Management. San Francisco

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