For-profit firms are well-oriented. The managers within firms may not make profit their only explicit priority, but it is pre-requisite to their other concerns. Without profits, firms eventually cease to exist. Non-profits are different. They might have revenues due to sales and operate much like a for-profit firm. But, they many times operate on revenue from donations and endowments. Because the success of non-profits is harder to measure, the signals of triumph and defeat do not orient the employees as clearly. The result can be that there is a lot of ruin in a non-profit. Plenty of tasks are done inefficiently, poorly, or not at all.
Mission-driven non-profits are able to attract enthusiastic, dedicated employees given the pay that they offer. But, supporting the mission of such an organization often acts as an implicit “belief test”, filtering out other would-be job applicants who self-select out of applying to open positions for which they are otherwise qualified. Indeed, part of the purpose of mission statements is to filter for the kind of employees that the organization managers or donors desire. While the employees may be enthusiastic and dedicated to the mission, that is mostly separate from whether they have the technical skills to flourish in their position and to effectively serve the organization.
The problem is doubly so at Catholic non-profits.* Funnily enough, one reason is the emphasis on virtue. Catholic education in particular explicitly encourages virtues with a capital ‘V’. Those are the ones discussed by Plato, St. Augustine, St. Aquinas, and so on. Some examples of virtues include:
The Cardinal Virtues: temperance, justice, prudence, and fortitude
Theological Virtues: faith, hope, and love
Capital Virtues: Chastity, Faith, Good Works, Concord, Sobriety, Patience, Humility (Later revised to: Chastity, Charity, Temperance, Diligence, Kindness, Patience, Humility)
Do not get me wrong. Virtues are great (like, really, really great). And, as many dead men have noted, moderation is required among them. If someone is too diligent, then they may lose patience. If someone is too temperate, they may lose any meaningful expression of fortitude. Living a virtuous life means emphasizing the appropriate virtues at the appropriate times, given the circumstances and temperaments of one’s self and others. The economist in me sees exhibiting the appropriate degree of each virtue as a weighted average in which the optimal weight function is governed exogenously.
What’s the problem? Intrinsically, there is no problem. No specific weighting on the virtues is always correct for one’s behavior. However, humans have some biases. Seven virtues? We are ready to imply 1/7th weight to each virtue as a good starting point. Four virtues? We tell ourselves that 25% weighting probably isn’t too far from optimal. But that ain’t right.
Think about the well-functioning organizations in which you’ve worked. Did they create a space for feedback? For improvement? For constructive conflict? If we look at the initial seven virtues, which of them supports the endeavor of communicating to another of their job poorly done? Except for sobriety, they seem to mostly promote agreeableness. The updated seven virtues? Diligence and temperance seem best suited for providing constructive feedback, but at only 28% of the weighting, they can easily drown in a sea of patience and deference feigning as righteousness. If you think that it’s hard to get fired at a government job, then update your priors. A mission-fit employee is just as hard (if not harder) to fire at a Catholic non-profit.**
One result of mistaking agreeableness for virtue is that it lowers performance expectations. An employee takes two weeks to create a report? Patience will keep it that way. Another person has too much on their plate and isn’t able to complete their job tasks? Charity helps us sympathize with them rather than give them that swift kick in the pants they might need. Someone low on the totem pole has great ideas and talent? Humility will ensure that their gifts remain undeveloped and unapplied. Mis-weighting the virtues has vicious consequences that masquerade as dignified solidarity. Maybe most insidious is that the least capable adopt the masquerade reflexively as a way of increasing patience for their own short-comings and scandalizing others with poor standards.
Less lovey-dovey are the four cardinal virtues. Justice means appropriate compensation for right and wrong behavior. Fortitude means standing by what you think is right, especially in the face of opposition. And Prudence! Man, I love prudence! It’s doing what is right for yourself and those for whom you are responsible. Economists thrive on prudence. Investment advice? Prudence. Health economics? Prudence. Human capital investment? Prudence. Business success? Still prudence. Constrained maximization? Prudence again!
Company culture is a hard thing to change. It takes a lot of time, effort, and intentionality. Making non-profits more effective means having the courage and fortitude to pursue greatness for the organization. Serving the mission with prudence means setting high expectations, calling a spade a spade, and exhibiting a willingness to bite when a bark is insufficient. Justice, prudence, and fortitude demand righting the ship and righting colleagues… With temperance, of course.
*I suspect that Catholics aren’t special and that plenty of non-profits promote pro-social cultures of low competency.
**This may be appropriate if senility or hysteresis has set in. There is something to be said for caring for the whole person and not just their job performance.
Economist Writing Every Day 