What is HR governance?

The word governance has several definitions and meanings; however, in its simplest terms, it is the practices and processes that are put in place to help organizations achieve their goals ethically and in the best interest of all stakeholders.

Human resources governance in the nonprofit sector focuses on managing power and resources for the benefit of all stakeholders. This includes management, employees, the clients, and the larger community that the organization serves.

The framework for HR governance often includes, but is not limited to, the process and practice introduced by an organization in determining the roles, authority, responsibilities, decision-making, and ultimately the accountability of all employees and management for the benefit of its stakeholders.

Despite the seeming complexity of HR governance, management in the nonprofit sector can simplify the process by introducing four basic pillars as their governance framework: developing human resources policies, implementing and adhering to the policies, reviewing and updating polices, and making sure that human resources expertise is represented as part of the skill set of the board of directors.

Policy

As a starting point, it’s important to have a set of human resources polices that are documented and approved by both senior management and the board of directors. These polices should comply with the human rights code, employment standards, workplace and occupational health and safety and all relevant legislations applicable to the sector, and the provinces in which the organization operates.

Most nonprofits set out their human resources management policies in the form of an employee handbook that is available either in print or online. Regardless of the format, policies filed away and forgotten in desk drawers’ filing cabinets or on computer drivers and USB keys are just as ineffective as having no policies at all.

Once the policies are developed, they should be followed by on-going audit and updates relevant to changes both in the internal and external environment. Policies must be read and understood by both new and existing employees. They must also be accessible by all employees within the organization. This means that the language, content and format of policies need to be developed with respect for the diversity of the employee population.

It is also imperative that written acknowledgement is received from all employees confirming that they have read and understood the policies of the organization. This should be done for new hires and each and every time there is a change to a policy as a result of HR audits, legislative changes or organization change, as this further strengthens the governance framework for human resources.

Practice

In their initial stages, nonprofits tend to focus on first fulfilling the mission of their organization, such as their clients and stakeholders needs. As a result, the employees or others involved in getting a nonprofit up and running (for example, board members) are often professional experts in a given area, such as social service work. This focus on the fundamentals without dedicated consideration for human resources management sometimes leads to unintended consequences such as contravening employment legislations or developing practices that are not aligned to the policies that may have been developed for the organization.

Organizations should of course continue to focus on fulfilling their missions. However, it is important to allocate some resources to gaining human resources expertise and education, to more effectively manage and govern people resources and to reduce and avoid potential risks.

The importance and benefit of practicing good HR governance often is realized only after an issue such as harassment, wrongful dismissal, inappropriate budget allocation, or voluntary attrition has incurred a cost to the organization. All of these unintended consequences direct resources away from the overall objective and goals of nonprofits, and serve to undermine the management of the organization.

The old adage “practice what you preach” is very important in the framework of HR governance. If your practice is not aligned with your policy and there is an issue, judgment will be based not on your policy, but rather on what has been practiced in the organization over time. Policy on paper becomes totally irrelevant if your standard of practice is well below accepted norms or legislative requirements.

Periodic review/audit

The third pillar is to implement a regular review or an audit of both practice and policy. Periodic review of policy is built into the culture of the organization to ensure that both policy and practice continue to be aligned to the organization’s vision, mission, goals and objectives. In addition to periodic audits, policies and practices need to be updated to reflect all changes to legislation as well as innovative human resources practice that will help to govern the organization to further serve the interest of all stakeholders.

Management staff accountable for human resources should be conducting a regular “environmental scan” to keep abreast of both external and internal factors that may impact human resources practice. The sector may use existing resources readily available in the sector, found in places such as the CharityVillage® resource centre, HR Council for the Nonprofit Sector, or workshops and seminars to inform the process. Forward thinking organizations and those with resources also hire human resources professionals to assist with both building the policies and conducting the auditing process. Those with limited resources, or those who have not yet started building the framework for HR governance, can enlist the services of volunteers or co-op students from local community colleges enrolled in post-graduate human resources diploma and certificate programs. These students are a great resource for assisting nonprofits with basic policy development and audits as part of a work-term requirement.

Professional expertise on boards

A board of directors’ ultimate goal is to support the realization of the organization’s mission through effective strategic planning.

In order to develop an effective strategic plan, input is required from a variety of areas of expertise. As such, professional expertise represented on the board should be diverse, including members that represent the community and clientele that is being served by the organization, as well as from a variety of disciplines, including human resources. Human resources expertise can offer guidance to executive directors and management staff in clearly delineating the roles and accountability of managers, human resources staff, employees and the board and also in building the basic pillars required for an effective HR governance framework.

The four pillars of HR governance are essential for sustained growth and development of the nonprofit sector. They ethically support the achievement of the sector’s goals and operate in the best interest of all stakeholders.

Carla Moore MIRHR, CHRP, is a Human Resources Consultant, The MoreDen Group. Write to Carla at ckamoore1@sympatico.ca.