Incentives can work for nonprofits

NONPROFITS INC

May 31, 1993|By LESTER A PICKER

In the world of small, for-profit businesses, saving your boss a few thousand bucks in postage could very well result in a tidy little bonus in your next paycheck. In larger corporations, money-saving ideas are regularly rewarded with ample bonuses. These incentives encourage employees to take some responsibility for producing a healthy bottom line.

So why not offer financial incentives to nonprofit employees? Heresy, you say? Unthinkable in the nonprofit world?

"It just wouldn't work" is the phrase I most often hear when I suggest an incentive system, including noncash incentives such extra vacation days for nonprofit employees.

Employee incentive programs can and do work for many nonprofit organizations. Just look at one of the Baltimore area's best-known nonprofits, the Central Maryland Red Cross. Its innovative incentive program is working. Readers of this column know that I have been following the work of the local Red Cross' Blood Services Division for more than a year, as it implements one of the most progressive Total Quality Management programs I've seen at any nonprofit organization.

Sandra Herman, vice president for organizational development and training, has been working for a year on the Lifesaver program. Lifesaver encourages paid and volunteer employee suggestions designed to improve the effectiveness of the organization. Ideas are encouraged not only to save money, but also to help the organization do what it does best even better -- save lives.

In the first six months of operation, the program brought in 240 suggestions. During the trial period, 28 percent of the suggestions were adopted, as compared with a meager 5 percent of suggestions in the years before the program. More than $67,000 in projected savings is a welcome side benefit.

"It's amazing how few gripes and silly suggestions have come in," reports Ms. Herman. "The suggestions are all well thought out and sincere."

In part, that is due to the well-thought-out, sincere and comprehensive program developed by Ms. Herman and her colleagues.

Aside from excellent brochures, tracking forms and employee communications vehicles, Ms. Herman has developed a series of informational meetings that explain the program to volunteer and paid staff members and motivate them to participate. Here the employees get an overview of the big picture for the Red Cross, including five-year projections. Then they learn of the goals and strategies designed to improve services, all developed with the involvement of staff at every level. Finally, they see how their participation in Lifesaver will benefit everyone, especially the clients served by the Red Cross.

Typical of the quality orientation of this organization-on-the-move, every suggestion is acknowledged immediately and tracked, to ensure a 30-day turnaround. Employees are kept informed of progress throughout this waiting period.

What are the incentives for participating? For just making a suggestion, you get a Lifesaver mug (from which I am sipping my coffee right now . . . and yes, I did make a suggestion while I spoke with Ms. Herman). The first time you make a suggestion, you also get a certificate signed by the two CEOs (Blood Services and Community Services divisions). Future suggestions earn stickers to be placed on the certificate. As the excitement spreads throughout the organization, significant culture-based changes are occurring.

All adopted ideas also earn a $50 check and a thank-you note, along with continuing communications on how the suggestion is faring in practice. If the suggestion is a cost-saving idea, it gets tracked for one year. The employee earns 10 percent of any actual savings to the organization. What a great win-win-win-win idea. The employee wins by receiving the incentive pay, the organization wins by saving money, the client wins by getting more services with the dollars saved and donors win by getting more bang for their bucks.

Every quarter, the names of every person making a suggestion are put into a drawing for a weekend trip for two to a regional resort, which is a high-value, low-cost incentive for employees. Every year, there will be a drawing of all adopted suggestions for a one-week vacation.

(Les Picker is a philanthropy consultant. Write to him at 7 Bathon Circle, Elkton, Md., 21921; [410] 392-3160.)

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