Work and work force characteristics in the nonprofit sector Nonprofit jobs provide more challenge, variety, satisfaction, and intrinsic rewards than those in private enterprise or government, according to a small national sample of workers in schools, hospitals, philanthropic and other tax-exempt organizations PHILIP H . MIRVIS AND EDWARD J. HACKETT Increasing proportions of the U .S . work force have been tion's mission-to make a profit, to serve the citizenry, attracted to employment in private nonprofit institutions or to educate, entertain, and cure privately but without -organizations which constitute the third sector of the profit-permeates its culture and identity . It serves economy.' The popular view is that these persons are both as a selector and a socializer, attracting particular attracted by the ideals of selfless service and work fulfill- segments of the work force and motivating and satisfy- ment, and have chosen to avoid the competitiveness of ing them with particular rewards . To assess the degree profitmaking firms, and the impersonality of government to which sector shapes the quality of employment, this bureaucracy . But the view also holds that low pay, job study compares third-sector working people with gov- pressures, and lack of resources cause these workers to ernment and profit-sector employees . seek employment in other sectors. This study examines Studies of the characteristics of the work force have such popular views by comparing characteristics of work been conducted in each of the three sectors, but assign- and the work force in the for-profit, government, and ment of employees to sector has been based on Stan- nonprofit sectors, using data from the 1977 Quality of dard Industrial Classification codes which only approx- Employment Survey, conducted by the Institute for So- imate the contours of the sectors, and the data analyzed cial Research at the University of Michigan . have not addressed all of the questions of interest here= Sociologists, psychologists, and economists have There have also been surveys of employment conditions treated organization size and technology, employee back- in selected industries and occupations, in firms, the Fed- ground and personality, and industry and occupation as eral Government, and in the work force at large.' And the key explanatory factors in their models of the quali- studies have compared working conditions in the pri- ty of employment . Sector-for-profit, government, or vate versus public sectors .4 But these surveys and stud- nonprofit-represents an important but neglected facet ies have varied in content, purpose, and sampling of the work environment . The nature of an organiza- framework and, in the case of national surveys, have not compared employment conditions in the three sec- Philip H. Mirvis and Edward J. Hackett are Research Associates of tors . Available data suggest that the characteristics and the Center for Applied Social Science, Boston University . Mirvis is an earnings of third-sector workers may differ substantially assistant professor in the School of Management at the same universi- from those employed in the other two sectors. But it is ty . Hackett is also with the Center for Research on Women, Wellesley College. not known whether employee attitudes, work orienta- MONTHLY LABOR REVIEW April 1983 e Work and Workers in the Nonprofit Sector tions, job characteristics, and motivations and satisfac- produce public goods through private means. In each tions differ across the sectors. sector, the output, particularly of service employees, is difficult to measure and the production process is diffi- Understanding intersectoral differences cult to monitor. Profitmaking firms are able to rational- Theories of for-profit organization emphasize that ize their production functions by assigning a dollar there is a common bond linking the interests of stock- market value to components and computing a rate of holders, employees, and consumers based upon the effi- return on resources expended. A hierarchical form of cient distribution of resources. There is also a bond in organization monitors the overall production process government between voter-constituents and public ser- and employees seek efficiency in service delivery to max- vants based upon the equitable distribution of re- imize their earning potential. This may ensure that em- sources. In nonprofits, however, there are no governing ployees have clearer objectives and more resources to distribution criteria because it is impossible to monitor do their jobs in for-profit organizations. It may also and measure whether beneficiaries have received dona- mean that they have less autonomy and influence in the tions. And, even where beneficiaries partially subsidize production process. In the same way, government bu- services, as in the case of public radio listeners and tele- reaucracy provides an administrative rationality that vision viewers, theater- and museumgoers, or private gives governmental employees a clearer perspective on school attendees, it is not possible to ensure that their job duties and freedom from conflicting demands. But resources are used efficiently or equitably. To make the it may also limit their autonomy and influence. The nonprofit form viable, or "trustworthy," Federal and question here is whether nonprofit workers avoid both State laws bar nonprofits from distributing net earnings the costs and benefits of bureaucracy. Does it follow to members, officers, or trustees.' Most nonprofit orga- that they have greater autonomy and influence but nizations are incorporated, and this "nondistribution" more ambiguous goals and fewer resources? Further- requirement ensures that no one within the firm profits more, do goal ambiguity and limited resources contrib- from inefficiencies or inequities . Incorporated nonprofits ute to employees' desire to look for another kind of include philanthropic organizations, private tax-exempt job? institutions to which donors' contributions are tax ex- empt, as well as membership groups such as social Data and method for the study clubs and labor unions (not included in these analyses).' The 1977 Quality of Employment Survey was de- Credit unions and other financial nonprofits are not signed to examine the physical and social characteristics treated as third-sector organizations.' of work and the work force in the United States From these legal differences between nonprofit and through personal interviews with a representative sam- other forms of work organization, there may follow eco- ple of employed persons (details on the survey and its nomic, political, and social differences that invite inves- administration are presented in the appendix). The sur- tigation. First, the nondistribution requirement becomes vey did not categorize respondents by employment sec- an economic constraint limiting the earning potential of tor but it did provide information needed to make this nonprofit employees. Does it follow that the sector may determination. Respondents were categorized by exam- attract only those who can "afford" to work in non- ining the survey forms of those persons employed in in- profits or, alternatively, those who cannot find work in dustries which might be found in the nonprofit and the other two sectors? Or do other factors attract em- governmental sectors. Most government employees were ployees to the third sector and motivate them in their clearly identifiable and those employed in religious or- jobs? Second, the weak links among members, benefi- ganizations were categorized as nonprofit employees. ciaries, and contributors in the nonprofit sector limit Surveys of teachers, health-care employees, and persons the degree of external control over the organization's employed in arts and cultural organizations were scruti- actions. There are few market forms of accountability nized for identifying information about employment sec- for governmental and nonprofit workers. In govern- tor. In this way, public and private schoolteachers and ment, however, controls are internalized through politi- governmental and nongovernmental health-care and so- cal appointments, administrative reviews, and formal cial-service employees were distinguished.' To further policies, procedures, and work rules. In nonprofits, identify the employment sector of respondents, employ- boards of directors perform policymaking and adminis- ers' names and addresses were checked against State trative functions, but mechanisms for translating policy records to ascertain sector status and, in some in- into procedures and actions are often less formal .' Does stances, employers were contacted (preserving the re- it follow that alternative forms of political and social spondent's anonymity) regarding profit-nonprofit status . control may be in force? For cases lacking information about sector or place of A third difference between sectors concerns their employment, the Institute for Social Research contacted functioning. Nonprofits are an amalgam because they interviewers for more information. Identification was es- tablished for 70 nonprofit, 239 government, and 1,171 ditions. Differences are expected in worker profiles in profit-sector sector employees (35 respondents' sector each of the sectors and in the conditions of employment could not be ascertained and these persons were because of the predominance of particular industries in dropped from the analysis). each sector and occupational "screening processes ."" Based upon the entire 1977 Quality of Employment