nonprofit performance management

The nonprofit executive director’s time and energy are precious commodities, particularly in small organizations where a single individual is often the director of HR, IT, finance, and, well…everything. It’s easy to see how performance evaluations (not to speak of nonprofit performance management) can feel like another large spoonful on an already heaping plate. Nevertheless, performance management is critical to organizational success, and directors who want to deepen their organization’s impact have to make space for it.

There are several reasons organizations need performance management systems, but they all add to this: performance management links individual performance to organizational outcomes. A survey of 278 organizations, primarily multinational corporations, found that organizations that implement performance management systems are 51% more likely to see positive financial results than other organizations. As we know, financial health is critical for nonprofit organizational success as well as for-profits. 

Nonprofit Performance Management vs. Evaluation

First, we have something to clear up—a performance management system is not synonymous with annual employee evaluations. Performance management is an ongoing process of identifying, evaluating, and developing team members’ performance aligned with an organization’s strategic goals. Performance appraisals are one small part of performance management systems (Agunis, 2013). 

Real-Time Performance Management

If the idea of implementing a full-fledged performance management system feels overwhelming, fear not. Researchers propose a simplified, integrated approach that most busy directors should be able to work with. That solution is real-time performance management. Real-time performance management means keeping an eye on performance measures, diagnosing problems regularly, looking for opportunities, and relentlessly correcting course. Organizations that do this are more resilient, agile, and competitive.

How to Start Managing Performance

The first step to implementing real-time performance management is carefully choosing a performance-tracking metric that provides feedback regarding the individual’s contributions to the organization’s goals. Because every organization is different, there is no one-size-fits-all data point that will work for everyone. 

Here’s a real-life (non-organizational) example that researchers offer to explain the concept of real-time performance management: An individual wants to lose weight. They go to a restaurant and see calories listed next to menu items. The calorie counts impact what the person orders to eat. In this scenario, the goal is weight loss; the performance-tracking metric is the calorie count. The best data for real-time performance management is accessible, reliable, easy to understand, and connects directly to desired organizational outcomes.

Data: An Objective Basis for Feedback

Using performance measures can also make it much easier for directors to provide feedback. When the data tells the story, it’s less likely that the employee will take the feedback personally. The expectations are clear, and if the individual isn’t meeting targets, the manager and employee have to correct course—it’s hard to argue with numbers. Then, when the annual evaluation time rolls around, there are few surprises. The employee has been receiving feedback all year and knows where they stand regarding performance. 

Does this sound like a lot? It will undoubtedly mean a little more work upfront, first identifying performance measures and making employees aware of expectations. However, once it gets rolling, real-time nonprofit performance management can pay proverbial dividends by exceeding organizational targets and, hopefully, help create space on the director’s plate for new possibilities and opportunities. 

Article Sources:

Agunis, H. (2013).  Performance management  (3rd ed.). Upper Saddle River, NJ: Pearson.

Pulakos, E. D., Kantrowitz, T., & Schneider, B. (2019). What leads to organizational agility: It’s not what you think. Consulting Psychology Journal: Practice and Research, 71(4), 305-320. doi:10.1037/cpb0000150

Nonprofit Sustainability

Sheena Sullivan
Sheena Sullivan is an executive director and organizational development consultant. She has a master’s degree in social work with an emphasis on leadership and development from Loyola University Chicago and is a candidate for a Ph.D. in organizational development and leadership from Ashford University. You can connect with Sheena on LinkedIn.
Sheena Sullivan