Q:  Some members of our organization have demanded to see personnel documents including but not limited to employment contracts, salaries and performance reviews. For many reasons I do not feel this is appropriate. For example, legal counsel and HR experts have historically advised that an organization should not make public employee performance but simply verify employment to prospective employers. Otherwise employees may sue a former employer for remarks or comments that could hinder their ability to obtain future employment, or the hiring firm might sue the previous employer for misrepresentation if the employee does not live up to the performance remarks made.

If this is true (and I believe the advice to be sound), how then can an organization rightly make public these personnel documents. Does this not place the organization in legal jeopardy? Not to mention the potential operational ineffectiveness that could result if current or future employees are reluctant to work for the organization because of its personnel policies.

Do you have any thoughts or suggestions on how to handle this matter given the growing cries for transparency in nonprofits?

 

A: Without knowing the clout your bylaws give to your members, I can’t answer with total certainty, but it would be the very rare organization that would allow its members to have access to personnel files. Typically, even board members do not have this kind of access other than in narrowly defined circumstances such as approving personnel policies, where they might note certain characteristics they wish included in employment contracts; determining parameters for salary increases/decreases during budget discussions – and this is in the aggregate, not for individuals, the responsibility for that falls to you as executive director; or in dealing with a grievance or employment-based law suit for which the board requires specifics of the employee’s job history. You’ve nicely summarized some of the reasons for this.

What this sounds like to me is either a lack of trust in management or a gross misunderstanding of the concept of transparency. In both cases, I would approach the situation in a similar manner. Before I offer any suggestions, however, let’s talk briefly about transparency and privacy.

All organizations today, nonprofit and for-profit alike, are expected to be transparent. Nonprofits have an added burden of accountability to the publics that support them. However, even the nonprofit watchdog group Guidestar, which promotes transparency both philosophically and through the annual publication of nonprofit 990s, warns that the release of information must still respect and maintain privacy. So what should be made public? Essential is your frequently updated program information, statistics on impact, audited financials, latest annual report, Form 990 and use of contributions. The salaries of your five top-earners and the names of board members are already reported in your 990, so highlighting these is reasonable. You might even indicate how you benchmark compensation packages or include your privacy policy. But the potential disclosure of anything else must be considered in light of your privacy and confidentiality policies, as well as local, state and federal laws, including employment laws. Here it’s important to note that while local and state laws can vary widely, generally personnel issues are protected from indiscriminate disclosure.

I would ask your members for a meeting. At that meeting I would begin by updating everyone on the impact the organization has made with the contributions from the community. I would stress that the members are a key part of the organization’s success and that you want them to remain close to the organization, so that you are happy to provide them with whatever information you legally and ethically can. I would ask what their concerns really are. To set the stage, I might review the natural tension between transparency and privacy and share your privacy and key personnel policies, indicating how these limit to some degree what information you can give them. But, I would fight any urge to become defensive and would instead be very forthcoming.

Based on their concerns, I might direct them to your 990 and where specifically to find the salaries of the top five earners, as well as to your financial statements. I might provide dashboards with the information you can share that you know they are interested in. If you do annual evaluations, I might tell them that, and explain how the results of those evaluations are acted upon. I might explain how the board determines a fair and comparable compensation package.

At the conclusion of your time together, I would promise to get back to everyone with answers to questions you did not have at your fingertips. I would provide your email address or direct line and invite follow-up questions. I would ask what other information they as members feel they would like to see on the website. And, I would ensure that this becomes just the first of a series of ongoing dialogs with the members.