Review of Public Personnel Administration

31(3) 248­–269
Strategic Human © 2011 SAGE Publications
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DOI: 10.1177/0734371X11402878
in Nonprofit http://roppa.sagepub.com

Organizations

Chao Guo1, William A. Brown2, Robert

F. Ashcraft3, Carlton F.Yoshioka3, and
Hsiang-Kai Dennis Dong1

Abstract
This study explores the prevalence of strategic human resources management (HRM)
practices in nonprofit organizations as well as the organizational and contextual
determinants. Based on survey data collected from 229 charitable nonprofit organizations,
we find that organizations that are larger in size, technologically savvy, and dependent
on the work of independent contractors all appear to be more likely to implement
strategic HRM practices. Local affiliates of national organizations are more likely to
implement strategic HRM practices. In addition, younger organizations, educational
organizations, and organizations that do not have dedicated HR staff are also more
likely to implement strategic HRM practices. Although dependence on volunteer labor
has no significant effect on the outcome, further analysis indicates that volunteer-
dependent organizations differ from others in several aspects of strategic HRM.

Keywords
strategic human resources management, nonprofit organizations, charitable organizations

The nonprofit sector in the United States continues to grow as we approach the end of
the first decade of the twenty-first century. Constituting a significant part of the
national economy, the sector today accounts for 5% of gross domestic product (GDP),
8% of wages and salaries, and 10% of employment (Wing, Pollak, Blackwood, &

1
University of Georgia, Athens
2
Texas A&M University, College Station
3
Arizona State University, Mesa

Corresponding Author:
Chao Guo, Department of Public Administration and Policy,
University of Georgia, 204 Baldwin Hall, Athens, GA 30602
Email: cguo@uga.edu
Guo et al. 249

Lampkin, 2008). Nonprofit organizations rely on the dedicated work of their employees
to achieve their social missions, and yet they often experience difficulties in recruiting
and retaining top-quality workers (Ban, Drahnak-Faller, & Towers, 2003). Given the
importance of the human resources (HR) functions to nonprofit organizations, the
processes of attracting, selecting, and retaining staff require greater attention from
practitioners and scholars (Watson & Abzug, 2004).
In recent years, leaders in the nonprofit sector are increasingly aware of the impor-
tance of nonprofit capacity building and organizational effectiveness (e.g., Kearns, 2004).
Meanwhile, they have begun to realize that “doing good” is not good enough and that
knowledge of best business practices may be helpful in improving organizational
effectiveness (Cunningham, 1999). Within this context, there have been strong pres-
sures on nonprofit managers to reevaluate their human resources management (HRM)
approaches and to integrate HRM with the missions of their organizations in a strategic
manner. Accordingly, growing scholarly attention has been paid to strategic HRM in
nonprofit organizations (e.g., Akingbola, 2006; Kong & Thomson, 2006; Lynn, 2003;
Pynes, 2004). Strategic HRM integrates HRM practices with the strategic purposes of
the organization.
Notwithstanding the considerable promise of the concept for improving organiza-
tional performance, the nascent body of literature on strategic HRM in nonprofit orga-
nizations suffers from an important limitation: the lack of empirical data. Indeed, this
limitation is part of a broader issue in the existing research on HRM in nonprofit orga-
nizations. Despite the publication of numerous prescriptive studies about recommended
HRM practices, there is surprisingly scant empirical evidence describing how nonprofit
organizations have used these practices and the factors that influence the adoption of
these practices (Ridder & McCandless, 2010). The existing empirical studies focused
on specific HRM practices such as executive compensation (e.g., Carroll, Hughes, &
Luksetich, 2005; Gray & Benson, 2003) and recruitment and retention (e.g., Ban et al.,
2003; Nickson, Warhurst, Durron, & Hurrell, 2008; Watson & Abzug, 2004).
This study attempts to address this limitation by exploring the prevalence of str-
ategic HRM practices as well as their organizational and contextual determinants.
Two research questions guide the development of this study: What current strategic
HRM practices are used in nonprofit organizations? What organizational and contex-
tual factors are associated with the prevalence of such practices? Based on survey data
of 229 charitable organizations in Maricopa County, Arizona, we find that organiza-
tions that are larger in size, technologically savvy, and dependent on the work of inde-
pendent contractors all appear to be more likely to implement strategic HRM practices.
Local affiliates with national organizations are more likely to implement strategic
HRM practices. In addition, younger organizations, educational organizations, and
organizations that do not have dedicated HR staff are also more likely to implement
strategic HRM practices. Although dependence on volunteer labor has no significant
effect on the outcome, further analysis indicates that volunteer-dependent organiza-
tions differ from others in several important aspects of strategic HRM.
250 Review of Public Personnel Administration 31(3)

The rest of the article is organized as follows. We begin with a review of relevant
literature that leads to our main hypotheses on factors affecting the adoption of strategic
HRM practices by nonprofits. The third and fourth sections describe the methodology
and present findings respectively. We conclude with a discussion about the implications
and limitations of the study.

Literature Review
Traditionally treated as merely an administrative function, HRM is now recognized as
a vital contributor to organizational success (Phillips, 1996). Highlighting the value of
integrating HRM practices with the strategic objectives of the organization (Daley,
Vasu, & Weinstein, 2002; Delery & Doty, 1996), strategic HRM focuses on “designing
and implementing a set of internally consistent policies and practices that ensure a
firm’s human capital contributes to the achievement of its business objectives” (Huselid,
Jackson, & Schuler, 1997, p. 172). Delery and Doty (1996) identified seven core stra-
tegic HRM practices: internal career opportunity, formal training systems, appraisal
measures, profit sharing, employment security, voice mechanisms, and job definition.
Research shows that when organizations employ such practices, they are more able to
achieve their goals and objectives (Daley et al., 2002). As part of the movement toward
strategic HRM, there has also been a call for a systematic approach to attracting and
retaining talented, committed employees (e.g., Berger & Berger, 2004; Buckingham
& Vosburgh, 2001; Morton, 2004). Morton (2004), for example, presented a talent
management strategy that covers eight categories of initiatives: recruitment, retention,
professional development, leadership/high potential development, performance manage-
ment, feedback/measurement, workforce planning, and culture.
In the context of public and nonprofit sectors, strategic HRM has also been increas-
ingly regarded as essential to organizational performance (e.g., Condrey, 1998;
Farazmand, 2004; Perry & Mesch, 1997). In the face of a constantly changing
resource and institutional environment, the contributions of HRM functions and strate-
gies to the mission and future direction of public and nonprofit organizations are too
important to ignore: public and nonprofit organizations must think strategically, and
HR departments must take a proactive role in guiding and supporting agency efforts to
meet the changing demands of their environment (Lynn, 2003; Pynes, 2004).
However, evidence shows that HRM in the nonprofit sector might be different in
many ways from its counterparts in the private and public sectors. Without a clear finan-
cial bottom line, nonprofit organizations rely on the mission to attract resources
(including employees and volunteers) and guide decision making (Drucker, 1989).
Mission statements are recognized as a strong management tool that can motivate
employees and keep them focused on the organization’s purpose (Ban et al., 2002;
Brown & Yoshioka, 2003; Kim & Lee, 2007). Within this context, financial incentives
and controls become less effective, as many individuals in nonprofits regard money as
a means to achieve larger purposes and not as an end in itself, either personally or orga-
nizationally (Mason, 1996). Nonprofit managers are therefore inclined to use strategies
Guo et al. 251

that draw on employees’ intrinsic motivations rather than on the extrinsic motivation
of money (Brown & Yoshioka, 2003; Nickson et al., 2008). There is accumulating
empirical evidence that nonprofit jobs provide more satisfaction and intrinsic rewards
than those in business or government (e.g., Mirvis, 2006; Mirvis & Hackett, 1983).
In light of the unique nature of the nonprofit sector and the tremendous potential of
strategic HRM to achieve mission and enhance performance, it is imperative that we
empirically explore the prevalence of the adoption of strategic HRM practices in non-
profit organizations, as well as the organizational and contextual factors that influence
it. Existing literature suggests that approaches to HRM are influenced by the context
in which an organization operates and the strategy which it is pursuing (Tyson, 1997;
Legge, 1995; Schuler & Jackson, 1987; Parry, Kelliher, Mills, & Tyson, 2005).
Accordingly, we posit that strategic HRM practices are influenced by the following
organizational and contextual factors.

Organizational Size
The effect of organizational size on HRM practices is well documented (e.g., Ng &
Maki, 1993; Wagar, 1998). The pressures for larger organizations to invest more in
HRM come from both resource and institutional dimensions. In terms of the resource
environment, larger organizations are more likely to have the necessary resources and
experience to make considerable investment in a more sophisticated system of HRM.
Ban et al. (2003) found that limits imposed by funders constrained nonprofits from
devoting resources to management functions including HR. Many smaller organiza-
tions reported that funders want their money to go to direct service activities rather
than administrative staff. In terms of the institutional environment, institutional theory
suggests that the size of an organization indicates its visibility and level of attention
from institutional stakeholders (Goodstein, 1994). As an organization grows in size,
it becomes more visible and is under growing pressure to gain legitimacy, and therefore
needs to adopt more sophisticated and socially responsive HRM practices (Jackson &
Schuler, 1995). Following these lines of reasoning, we expect that larger organizations
will implement more extensive strategic HRM practices.

Hypothesis 1: Organizational size is positively associated with the extent to

which an organization adopts strategic HRM practices.

Affiliation With an Umbrella Organization

A significant number of nonprofit organizations operating in the United States are affili-
ates of national nonprofits, organized as either branch offices or franchises (Oster,
1996). It is estimated that at least 20% of all nonprofit organizations belong to a
national (or umbrella) association. Most of the local nonprofits are incorporated sepa-
rately from the national organization (Hodgkinson, Weitzman, Noga, & Gorski, 1993;
Young, 2001). Examples of such organizations include the United Way organizations,
YMCAs, Boys and Girls Clubs, and Goodwill Industries, and so on.
252 Review of Public Personnel Administration 31(3)

Grossman and Rangan (2001) identified two important benefits or advantages of

belonging to a national (or umbrella) association. First, national affiliation enhances
an affiliate’s ability to attract volunteers and donors through a strong brand name, and
facilitates the sharing of best practices and emerging trends. Second, national affilia-
tion allows for the economies of scale by pooling resources to gain franchise-wide
cost advantage in performing certain functions (e.g., accounting, marketing, and so
on). Within the context of HRM, these benefits seem to suggest that the affiliation
with a national organization may foster the diffusion of standardized HRM practices:
it is probably more cost effective to implement standardized HRM practices throughout
the franchise network as a larger number of entities undertaking the practices will
reduce the average cost per employee (Whitfield, 2000).
Its benefits notwithstanding, this “cookie-cutter” or one-size-fits-all approach to
HRM might reduce a local affiliate’s incentive to adopt strategic HRM practices.
Ban and colleagues (2003) found that some organizations relied on umbrella organiza-
tions that manage HR and other business functions for small nonprofits. As one
respondent in their study explained, “The umbrella organization is an incubator for
nonprofits. For a fee, you can buy back-office services and piggyback off its nonprofit
status. . . . The organization can focus on what it needs to do instead of all the other stuff”
(Ban et al., 2003, p. 136). As such, belonging to an umbrella organization might
result in the use of “cookie-cutter” HRM policies that are not responsive to the stra-
tegic needs of local affiliates.

Hypothesis 2: Affiliation with an umbrella organization is negatively associated

with the extent to which an organization adopts strategic HRM practices.

Dependence on Government Funding

There appears to be two contrasting effects associated with government grants and
contracts. On one hand, Akingbola (2004) found that the increased dependence on gov-
ernment funding affects recruitment and selection in that nonprofits are increasingly
recruiting more of their staff on temporary contracts. Moreover, nonprofit agencies
that are dependent on the government for most of their revenue are reluctant to be
seen as “spending too low a proportion of resources on direct services and too high
a proportion on administration, staff development and internal communications”
(Cunningham, 1999, p. 22).
On the other hand, the recent trend of professionalization among those nonprofit
organizations that receive government funding (Salamon, 1995) might lead to a more
strategically proactive approach to managing HR. Government agencies often establish
sophisticated regulatory and procedural requirements as well as rigorous program-
evaluation systems for their contracts (Krashinsky, 1990; Siegel, 1999). To implement
the contracts in compliance with these complex requirements, nonprofit contractors
must rely on experienced employees who have more professional and technical skills
(Frumkin & Kim, 2002; Pynes, 2004; Smith & Lipsky, 1993). Within this context, estab-
lishing a more sophisticated HRM approach such as strategic HRM in an organization
Guo et al. 253

might lead to successful funding applications and help maintain its relationship
with funding agencies by showing that it can deliver the required quality of service
(Cunningham, 1999).
In light of the two competing effects associated with government grants and con-
tracts, we propose that reliance on government funding has influence on the use of
strategic HRM practices, though the exact nature of the relationship between the two
has yet to be determined.

Hypothesis 3: Dependence on government funding is associated with the extent

to which an organization adopts strategic HRM practices.

Dependence on the Work of Independent Contractors

In the United States today, nearly one in three workers are in nonstandard jobs, including
on-call work and day labor, temporary-help agency employment, independent con-
tracting, other self-employment, and part-time work in conventional jobs (Kalleberg,
Reskin, & Hudson, 2000, p. 256; Knoke & Yang, 2003). Independent contracting in
particular has become an increasingly popular form of nonstandard employment in
recent years (Connelly & Gallagher, 2006). As independent contractors are pre-
dominantly self-employed, they provide the organization with a means of obtaining
specialized worker capabilities while retaining employment flexibility and control-
ling cost (Davis-Blake & Uzzi, 1993; Gallagher & Sverke, 2005).
The increased use of independent contractors has important implications for strate-
gic HRM. Knoke and Yang (2003) discussed two alternative HRM strategies: a con-
tingent workforce strategy of hiring both permanent and contingent employees, and an
employability strategy of enhancing their employees’ human capital. Organizations
adopting a contingent workforce strategy are usually reluctant to invest in improving
their nonstandard employees’ job skills, as investments in improved human capital do
not necessarily lead to enhanced productivity in the absence of a long-term employment
relationship. By contrast, organizations following an employability strategy are more
willing to upgrade the job skills of their employees, despite the absence of a long-term
employment relationship.
Although it is difficult to determine the exact nature of the association between the
use of independent contractors and the implementation of the above two HRM strate-
gies due to the scarcity of empirical evidence, we argue that an organization that uses
independent contracting will likely implement both strategies: the contingent work-
force strategy in managing independent contractors, and the employability strategy in
managing permanent employees. On one hand, independent contracting allows the
organization to acquire specialized skills and knowledge (Gallagher, 2002). On the
other hand, the use of independent contractors allows the organization to outsource its
peripheral functions and focus strategically on investing in permanent employees who
are instrumental to its core functions and competencies (Connelly & Gallagher, 2006).
Taken together, this combined strategy not only provides the organization with greater
254 Review of Public Personnel Administration 31(3)

staffing flexibility, but also enables the organization to free up valuable resource for
improving the skills and commitment of permanent employees. It thus seems rea-
sonable to expect that the use of independent contractors will have a positive effect
on the prevalence of strategic HRM practices in an organization. Therefore, we
propose the following:

Hypothesis 4: Dependence on the work of independent contractors is positively

associated with the extent to which an organization adopts strategic HRM
practices.

Use of Information Technology

Although often characterized as a “soft” or nontechnical profession, the HRM function
has been on the forefront of integrating information technology in an organization
(Lengnick-Hall & Moritz, 2003; Townsend & Bennett, 2003). There is accumulating
evidence that information technology helps achieve strategic HRM by relieving
HR professionals from the burden of administrative tasks to being a strategic partner
to the organization (Bell, Lee, & Yeung, 2006; Gardner, Lepak, & Bartol, 2003; Haines
& Lafleur, 2008). In public and nonprofit sectors, information technology is regarded by
some as “the central intelligence of strategic human resource management,” providing
“a strategic tool for collecting, processing, and managing strategic data and information”
that facilitates organizational decision making for managing HR (Farazmand, 2004,
p. 11). As such, information technology changes the way work is organized and
managed, and therefore challenges public and nonprofit organizations to recruit
and hire people with a new set of skills and orientations in response to these changes
(Pynes, 2004).
More specifically, information technology offers an organization a number of
advantages in recruiting job candidates, such as broader access to job candidates;
improved ability to target specific audience; reduced cost of placing job announce-
ments; faster speed; absence of middlemen; convenience; better quality of candidates;
and less paperwork; among others (Kay, 2000; Singh & Finn, 2003). For job seekers,
the organization’s technology adeptness increases its attractiveness (Dicke & Ott,
2003). Besides recruitment, information technology also enables nonprofit organiza-
tions to reward and motivate current employees by creating opportunities for continu-
ous learning and career development. As Saidel and Cour (2003) point out, “While
technology demands new skills, the introduction of updated technology also fre-
quently creates new positions. From Web site administrators to help desk professionals,
nonprofits may develop new jobs that current employees can fill” (p. 13). Thus,
employees are able to move laterally into more challenging jobs and even develop a
new career path.
All nonprofit organizations are not equally ready for the use of information technol-
ogy. Extant research indicates that substantial variation exists across nonprofit organi-
zations in the adoption of such information technology as computers and the Internet
Guo et al. 255

(e.g., Corder, 2001; Hanna, 1995). This variation might result from the lack of resources
necessary for nonprofits to invest in information technology, the lack of organizational
discretion in purchasing and choosing technology, among others (Corder, 2001). If, as
its advocates suggest, information technology serves as a valuable facilitator for stra-
tegic HRM, then we should be able to observe that strategic HRM practices are more
prevalent among those technologically savvy organizations.

Hypothesis 5: The use of information technology in an organization is positively

associated with the extent to which it adopts strategic HRM practices.

Data and Method

This study is part of a larger research project designed to examine the compensation
and HR practices in nonprofit charitable organizations. In June 2004, 1,119 nonprofit
charitable organizations in Maricopa County, Arizona, were mailed a letter inviting
them to participate in the study. The mailing list was derived from the National Center
for Charitable Statistics (NCCS) core data file. The NCCS is a national repository of
data on the nonprofit sector in the United States; its core data file is comprised of
charitable organizations and contains information obtained from form 990, the annual
financial disclosure to the IRS.
We limited the mailing list by applying the following study selection criteria: orga-
nizations had to be located within Maricopa County and had to have at least one paid
employee. Hospitals, foundations, and institutions of higher education were eliminated
from the study and from the mailing list, due to the differences in their compensation
practices and the availability of other compensation information for these specific types
of organizations. All other classifications of charitable organizations were included in
the study. Organizations that met the selection criteria comprised the final mailing list
of 1,119 organizations. Data were collected primarily through an online survey instru-
ment. A letter addressed to the HR director was mailed to these organizations. The
letter introduced the study and included a website address where the survey could be
completed online. Instructions were also given for downloading or requesting a paper
copy. A follow-up postcard was sent 2 weeks after the survey was mailed, reminding
participants to fill out and return the survey. A total of 229 eligible organizations com-
pleted the survey (a 20.5% response rate).
As this fairly low response rate can often produce biased samples, we performed
checks to find out whether our sample differs from the state and national data in poten-
tially significant ways. Of the 229 participating organizations in the present sample,
79 (34%) were human service organizations, 32 were health organizations (14%),
25 were education and research organizations (11%), and 18 were arts organizations
(8%), among others. By comparison, the NCCS core data file for 2004 reports the fol-
lowing breakdowns of registered public charities in Maricopa County: human service
organizations, 28%; health organizations, 10%; education and research organizations,
15%; and arts organizations, 9%. According to an analysis of the national data during
the same time period, the most common categories of reporting public charities are
256 Review of Public Personnel Administration 31(3)

Table 1. Strategic Human Resources Management Practices in Nonprofit Organizations

Strategic human resources management practice Ma

Use the mission and values of the organization to attract employees 5.56
Encourage and allow flexibility in work schedule and working ar- 5.7
rangements
Have internal communication practices that consistently reach all 5.36
employees with valuable information
Use recruitment practices that might include recruiting college 4.14
graduates and targeting experienced individuals
Engage in practices to retain employees such providing competitive 4.60
wages and bonuses
Provide professional development opportunities for employees 4.78
Specifically target high quality employees for leadership 4.67
development
Evaluate employees through multiple performance assessment 4.10
strategies such as supervisor assessment, peer evaluations, and
customer feedback
Link indicators of effective employee performance to organizational 4.68
objectives
Provide opportunities for systematic employee feedback through 4.06
surveys, exit interviews, etc.
Conduct planning related to workforce needs 4.60
Communicate and reinforce a widely recognized corporate culture 4.80
Practice workforce diversity initiatives 5.00
a. Seven-point scale with 1 being not at all to 7 being used to a very high degree.

human services (35%); education and research (16%); health (15%); and arts, culture,
and humanities (11%; see Weitzman & Jalandoni, 2002). Although the overall distri-
bution pattern of the current sample appears to be consistent with those of the county
and national data, it should be noted that education and research organizations
are slightly underrepresented, whereas human service and health organizations are
overrepresented, in the present sample. This difference might be partially due to
the relatively small size of the sample, where the breakdowns of organizations
might vary significantly with the addition (or reduction) of a few organizations in any
particular category.1

Strategic HRM Practices

Our variable of interest is the prevalence of strategic HRM practices. We constructed
this variable as follows. First, we created a strategic HRM Index, which included a
total of 13 practices derived from the existing literature (Berger & Berger, 2004;
Morton, 2004; see Table 1 for a complete list of items). The respondents were asked to
indicate the extent to which their organizations used these strategic HRM practices
on a scale of 1 to 7; 1 being not used at all to 7 being used to a very high degree. Table 1
Guo et al. 257

lists the strategic HRM practices and the mean scores for all the organizations included
in our study.
As shown in Table 1, some of the strategic HRM practices were widely adopted by
the responding organizations. These practices include “encourage and allow flexibility
in work schedule and working arrangements” (5.7), “use the mission and values of the
organization to attract employees” (5.56), and “have internal communication prac-
tices that consistently reach all employees with valuable information” (p. 5.36). By
contrast, a few other practices were less widely adopted. These practices include “pro-
vide opportunities for systematic employee feedback through surveys, exit inter-
views, etc.” (4.06), “evaluate employees through multiple performance assessment
strategies such as supervisor assessment, peer evaluations, and customer feedback”
(4.10), and “use recruitment practices that might include recruiting college graduates
and targeting experienced individuals” (4.14).2
Second, we conducted a principal component factor analysis to determine whether
or not there was a large principal component in these items. The results revealed two
factors, with eigenvalues of 5.39 and 2.75. To determine which factors are meaningful,
we considered two criteria: the Kaiser test, which suggests only factors with an eigen-
value of 1.0 or greater are meaningful; and the Scree test, which uses a graphical
method and keeps the factor up until the line becomes flat or flatter. According to the
Kaiser test, both Factors 1 and 2 would be worth keeping. In contrast, the result of the
Scree test clearly showed that only Factor 1 was worth keeping. For the purpose of
our study, we decided to go with the Scree test and keep Factor 1 only. We then calcu-
lated the index score using Factor 1 and used the calculated index as the measure of
our dependent variable.

Independent Variables
Organizational size. This variable is measured by the total number of full-time
employees (35 or more hr per week) on the organizational payroll as of June 2004.3
The number of full-time employees in our sample ranges from as few as 1 and as many
as 600. Because this variable is substantially nonnormal, logarithmic transformation is
applied to this variable.
Dependence on government funding. This variable is measured by the percentage
share of the average government grants and contracts in relation to average total reve-
nues in the year prior to the survey.
Dependence on contractors. This variable is measured by the percentage of inde-
pendent contractors on an organization’s payroll.
National affiliation. This variable indicates whether an organization is affiliated with a
national organization. It is defined as a binary variable and takes on two values: 1, indi-
cating that an organization was part of a larger (“parent”) organization; otherwise 0.
Use of information technology. This variable examines the extent to which an organi-
zation’s staff used information technology. The respondents were asked to indicate
what percentage of your staff currently uses computers on a daily basis (from 0 to
100%), uses an email account provided by the organization (from 0 to 100%), and
258 Review of Public Personnel Administration 31(3)

what percentage of computers have Internet connections (from 0 to 100%). The scores
were then averaged to obtain a single measure for this variable.

Control Variables
Organizational age. This variable is measured by the difference between the year of
2004 and the year when a given nonprofit organization was founded. The youngest
organization in our sample was 1-year-old, whereas the oldest organization was 112
years old. Logarithmic transformation is applied to this variable due to the substantially
nonnormal nature of the variable.
Dependence on volunteer labor. This variable is measured by the percentage of total
work in the organization that was done by volunteers.
Industry of operation. The nonprofit sector is diverse and ranges from small local
community groups to large international organizations. Charitable organizations alone
include the subsectors of arts and culture, education and research, health care, and
social services, among others. Each subsector also has unique characteristics that drive
HR tradition and practice (Watson & Abzug, 2004). More specifically, industry is
controlled by coding respondents according to four broad industries.
Arts and culture, education and research, health services, and human services. Each
industry is defined as a binary variable.
HR staff. This variable is measured by the total number of dedicated HR positions in a
given organization. The descriptive statistics shows that the dominant majority of the
responding organizations (79.9%) do not have dedicated HR staff. Among those orga-
nizations that have dedicated HR staff (20.1%), the number of HR staff ranges from 1 to 6.

Findings
Correlation Analysis

Table 2 provides the means and standard deviations of all variables and the correlation
matrix.
A brief discussion of the relationship between independent variables is appropriate to
ascertain how they might work together. There is a strong and positive correlation between
staff size and number of dedicated HR staff (r = .57, p < .01) recognizing the obvious
relationship between these variables. There is also a positive yet rather weak correlation
(r = .35, p < .01) between percentage of government funding and organizational size, sug-
gesting that larger organizations tend to rely on a larger percentage of their funding from
the government. Similarly, there is a positive yet weak correlation (r = .29, p < .01)
between percentage of government funding and health services organizations.

Multiple Regression Analysis

The dependent variable in this study—the prevalence of strategic HRM practices—is
a continuous variable measured by a Strategic HRM Index. We employ the weighted
 Table 2. Descriptive Statistics and Correlation Matrix

Observations M SD 1 2 3 4 5 6 7 8 9 10 11 12 13
  1. Strategic HRM
229 4.77 1.12 1.00
Index
  2. Org. age 229 27.4 23.8 0.03 1.00
  3. Arts and culture 229 0.08 0.27 –0.11 0.02 1.00
  4. Education and
229 0.11 0.31 0.07 0.13 –0.10 1.00
research
  5. Health services 229 0.14 0.35 0.08 –0.08 –0.12 –0.14* 1.00
  6. Human services 229 0.34 0.48 0.01 0.12 –0.21* –0.25* –0.29* 1.00
  7. Size of staff 229 40.98 82.14 0.26* 0.45* –0.22* 0.06 0.10 0.17* 1.00
  8. Govt. funding (%) 229 23.84 32.03 0.12 0.08 –0.08 –0.08 0.29* 0.02 0.35* 1.00
  9. Contractors (%) 228 14.47 22.42 0.09 –0.15* 0.04 –0.09 0.03 –0.04 –0.29* –0.03 1.00
10. National affiliation 229 0.27 0.45 0.15* 0.16* –0.07 0.10 0.07 0.01 0.03 –0.07 0.03 1.00
11. Info. technology 229 84.34 22.48 0.10 –0.02 0.10 –0.06 –0.03 –0.07 –0.16* 0.05 0.14* 0.04 1.00
12. HR staff 229 0.29 0.72 0.05 0.26* –0.05 0.05 0.24* –0.04 0.57* 0.17* –0.16* –0.02 –0.08 1.00
13. Work done by
229 20.57 25.45 –0.10 –0.12 0.03 –0.12 –0.11 –0.03 –0.37 –0.33* 0.04 0.11 0.02 –0.18* 1.00
volunteers (%)
*Associations are significant at 5%.

259
260 Review of Public Personnel Administration 31(3)

Table 3. Factors Associated with the Prevalence of Strategic Human Resources Management
Practices: WLS Regression Analysis
Independent variables Coefficient Beta
Size of staff 0.370** (0.051) 0.69
Percentage of government funding -0.001 (0.002) -0.02
Percentage of contractors 0.715** (0.230) 0.20
National affiliation 0.301** (0.104) 0.18
Information technology 0.007** (0.002) 0.18
Percentage of work done by volunteers 0.002 (0.002) 0.05
Organizational age (log) -0.203** (0.061) -0.23
Arts and culture -0.056 (0.265) -0.01
Education and research 0.401* (0.155) 0.19
Health services 0.016 (0.172) 0.01
Human services -0.027 (0.133) -0.02
HR staff -0.260** (0.077) -0.26
Constant -1.084** (0.315)
Observations 228
R2 0.278
Adjusted R2 0.238
F 6.90
p 0.000
Note: Robust standard errors in parentheses.
*p < .1. **p < .05. ***p < .01.

least squares (WLS) regression model to analyze the data in the presence of heteroske-
dasticity.4 The results are presented in Table 3.
Hypothesis 1 maintains that organizational size is positively associated with the use
of strategic HRM practices. Consistent with our prediction, this variable has a positive
and significant coefficient in the model, indicating that a larger organization (i.e., an
organization with more full-time paid staff) tends to demonstrate a higher level of
prevalence in the adoption of strategic HRM practices.
Hypothesis 2 predicts that an organization’s affiliation with an umbrella organiza-
tion is negatively associated with the extent to which it adopts the strategic HRM
practices. Contrary to our prediction, the variable national affiliation has a positive
and highly significant coefficient in the model, suggesting that an organization that is
affiliated with an umbrella organization tends to demonstrate a higher use of strategic
HRM practices.
Hypothesis 3 examines the effect of dependence on government funding on the
adoption of strategic HRM practices. It posits that an organization’s dependence on
government funding is associated with the extent to which it adopts the strategic HRM
practices. The variable dependence on government funding does not have a significant
coefficient, thus providing no support to our prediction.
Hypothesis 4 examines the effect of independent contractors on the adoption of
strategic HRM practices. It posits that an organization’s dependence on the work of
Guo et al. 261

independent contractors is positively associated with the extent to which it adopts the
strategic HRM practices. Consistent with our prediction, the variable dependence on
contractors has a positive and highly significant coefficient in the model, suggesting
that the use of independent contractors is related to a higher level of prevalence in the
adoption of strategic HRM practices.
Hypothesis 5 examines the effect of the use of information technology on the adop-
tion of strategic HRM practices. Conforming to our prediction, the variable use of
information technology has a positive and highly significant coefficient in the model,
suggesting that the use of information technology in the organization is positively asso-
ciated with the extent to which an organization adopts the strategic HRM practices.
Among the control variables, organizational age is found to be related to a lower
use of strategic HRM practices. One of the industry dummies—education—has a sig-
nificant coefficient in the model, suggesting that organizations operating in the educa-
tion industry seem more likely to adopt strategic HRM practices. In addition, the
number of dedicated HR staff is found to be negatively related to the adoption of stra-
tegic HRM practices.
Because the coefficients in the Beta column are all in the same standardized units,
we can compare these coefficients to assess the relative impact of each of independent
variables. For example, “size of staff” has the largest Beta coefficient, .69, and “HR
staff” has the second largest Beta, .26 (in absolute value). Thus, a one standard devia-
tion increase in size of staff leads to a 0.69 standard deviation increase in predicted
Strategic HRM Index, with the other variables held constant. And, a one standard
deviation increase in HR staff, in turn, leads to a 0.26 standard deviation decrease in
predicted Strategic HRM Index with the other variables in the model held constant.
Next, a one standard deviation increase in the organizational age, leads to a 0.23 stan-
dard deviation decrease in predicted Strategic HRM Index, whereas a one standard
deviation increase in the percentage of independent contractors leads to a 0.20 stan-
dard deviation increase in predicted Strategic HRM Index.
Finally, we conduct Chow tests to check if the coefficient estimates in Table 3 are
the same in different subgroups of the sample (defined by national affiliation, indepen-
dent contracting, organizational size, and dependence on volunteer labor). Although
dependence on volunteer labor—one of our control variables—has an insignificant
coefficient in Table 3, our further analysis shows that volunteer-dependent organiza-
tions (i.e., organizations where more than 10% of work was done by volunteers) actu-
ally develop different patterns of strategic HRM practices than others.5 The regression
results for the subgroups are presented in Table 4.
Based on the results, the percentage of contractors is positively and significantly
associated with the prevalence of strategic HRM practices only in volunteer-dependent
organizations. Similarly, dependence on government funding is negatively and sig-
nificantly associated with the prevalence of strategic HRM practices only in volunteer-
dependent organizations. On the other hand, however, national affiliation and use of
information technology are significant only in organizations that are not volunteer
dependent. Organizational size (size of staff) remains positive across both groups.
262 Review of Public Personnel Administration 31(3)

Table 4. Effects Associated with the Prevalence of Strategic HRM Practices (Volunteer-
Dependent Organizations vs. Others)
Volunteer-dependent
organizations
(more than 10% Other organizations
of work done by (10% or less of work
volunteers) done by volunteers)
Size of staff 0.508*** (0.097) 0.397*** (0.067)
Percentage of government funding –0.010** (0.005) 0.001 (0.002)
Percentage of contractors 1.277*** (0.349) 0.452 (0.311)
National affiliation 0.146 (0.187) 0.315** (0.133)
Information technology 0.001 (0.004) 0.009*** (0.003)
Percentage of work done by 0.000 (0.003) 0.015 (0.019)
volunteers
Organizational age (log) –0.156 (0.118) –0.257*** (0.076)
Arts and culture 0.194 (0.415) –0.179 (0.337)
Education and research 0.598** (0.282) 0.287 (0.201)
Health services 0.379 (0.249) –0.326 (0.245)
Human services 0.09 (0.178) –0.123 (0.191)
HR staff –0.837*** (0.183) –0.157* (0.092)
Constant –0.76 (0.504) –1.190*** (0.434)
Observations 93 135
R2 .373 .337
Note: Robust standard errors in parentheses.
*p < .1. **p < .05. ***p < .01.

Discussion and Conclusions

This study contributes to the existing literature by providing rare empirical evidence
on the prevalence of strategic HRM in nonprofit organizations and the organizational
and contextual factors that are associated with such practices. Major findings from the
study indicate that there exists substantial variation in the adoption of strategic HRM
practices by nonprofit organizations. More specifically, organizations that are larger in
size (i.e., have more full-time paid staff), technologically savvy, affiliated with national
organization, and dependent on the work of independent contractors all appear to be
more likely to implement strategic HRM practices. In addition, younger organizations,
educational organizations, and organizations that do not have dedicated HR staff are
also more likely to implement strategic HRM practices.
Some of the findings require further discussion. The finding that older organiza-
tions are less likely to adopt strategic HRM practices is consistent with the organiza-
tional ecology theory and research, which suggests that older organizations may be
more inertial, thus making it more difficult to implement organizational change and
innovation (e.g., Carroll & Teo, 1996; Hannan & Freeman, 1984). Interestingly, and
perhaps counterintuitively, having dedicated HR staff is found to be negatively
Guo et al. 263

associated with the adoption of strategic HRM practices. This finding suggests that
having dedicated HR staff does not facilitate adopting strategic HRM practices. A pos-
sible explanation is that, in organizations without dedicated HR staff, it is often the
chief executive or a member of the top management team who is in charge of the HR
function, which allows the organization to implement strategic changes to its HRM prac-
tices in a timely manner; by contrast, HR professionals in organizations with a more
formalized HR department may not be strategic decision makers, but primarily engaged
in administrative HR functions such as payroll processing and record keeping.
Our additional analysis indicates that volunteer-dependent organizations may
develop different patterns of strategic HRM practices than other organizations. This
finding corroborates with earlier observations that volunteers differ from the paid employ-
ees in many aspects such as job attitudes (Clary & Snyder, 1999; Liao-Troth, 2001;
Pearce, 1983, 1993). Certain strategic HRM practices (e.g., monetary compensation
and professional development) that are appropriate for paid employees might not be
feasible for the management of volunteers. Moreover, volunteer dependence might
moderate the effects of other context factors on strategic HRM. For example, national
affiliation has no impact on the adoption of strategic HRM practice among volunteer-
dependent organizations, though it serves as a valuable facilitator for strategic HRM
among other organizations. One possible explanation is that, given their stronger ties
with the community, volunteer-dependent organizations might have a stronger com-
mitment to their community-based character (Guo, 2007) and therefore might be more
hesitant to follow the recommendation of national umbrella associations to implement
strategic HRM practices. Further investigation is needed to determine whether this is
actually the case.
Several important lessons for nonprofit practitioners can be drawn from our find-
ings. First, if an organization’s technology savvyness facilitates the transition of the
HR function from routine administrative tasks to a value-adding strategic partner, then
nonprofit leaders may consider introducing and expanding the use of information
technology in their organizational practices before the adoption of strategic HRM prac-
tices. Second, the positive relationship between national affiliation and strategic HRM
revealed in our study carries an encouraging message: rather than hindering the ability
of local affiliates to adopt innovative HRM practices in response to their strategic
needs, national affiliation might actually facilitate innovation diffusion while offering
association-wide cost advantage. National umbrella associations therefore should
be encouraged to realize more of their potential in this area. Third, our finding sug-
gests that the use of independent contractors is associated with the adoption of strategic
HRM practices in an organization, as it allows the organization to outsource its periph-
eral functions and focus on implementing strategic HRM practices in its core func-
tions. Finally, the observation that having dedicated HR staff is negatively associated
with the adoption of strategic HRM practices serves a reminder for nonprofit lead-
ers: if they expect the HR function to contribute to organizational strategy and
performance, then efforts should be made to include HR staff in the organizational
decision-making process.
264 Review of Public Personnel Administration 31(3)

The limitations of the study suggest several avenues for future research. First, although
our results suggest the association between various contextual factors and the preva-
lence of strategic HRM practices, the cross-sectional nature of the survey data pre-
cludes causal interpretations of these relationships. Future research should collect
longitudinal data so as to examine lagged effects of organizational and contextual
factors. Second, all the sampled organizations in our study operate in Maricopa
County, Arizona, a typical urban, metropolitan setting; therefore we have to use caution
when generalizing findings and applying them into organizations of different settings
(e.g., a suburban or rural area). Third, the fact that our model produced only a small
level of explained variance (24%) suggests the possibility that some important factors
might have been omitted. For example, there is a great amount of discussion about
how organizational culture influences performance in public organizations (e.g., Rainey,
2003). The effect of organizational culture on certain HR practices (e.g., employee
retention) has also been well documented (e.g., Sheridan, 1992). Future research in
this direction might offer additional insights on the relationship between organizational
culture and the implementation of strategic HRM. Finally, due to the scope of the
article and the limitation of our data, we have not examined the possible relationship
between the adoption of strategic HRM practices and organizational performance.
Prescriptive studies have suggested a positive relationship between strategic HRM
and organizational performance, yet the empirical test is lacking, and it is unclear
which mechanisms are involved in translating strategic HRM practices into increased
organizational effectiveness. One challenge associated with this line of research, of
course, is the lack of consensus on how to understand and measure nonprofit perfor-
mance (Forbes, 1998; Herman & Renz, 1999). In view of this challenge, future research
should consider empirically testing the link between strategic HRM practices and vari-
ous objective (e.g., fiscal efficiency) and subjective measures (e.g., stakeholder percep-
tions; Herman & Renz, 1997) of organizational performance.

Acknowledgments
The authors would like to thank the editor and three anonymous reviewers of this journal for their
excellent suggestions. They are also grateful to Stephanie La Loggia for her contribution to
this project.

Authors’ Note
Earlier versions of this article were presented at the 2006 annual meeting of the Association for
Research on Nonprofit Organizations and Voluntary Action in Chicago, Illinois, and the 2008
annual meeting of the Academy of Management in Anaheim, California.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interests with respect to the authorship and/or
publication of this article.

Funding
The authors received no financial support for the research and/or authorship of this article.
Guo et al. 265

Notes

1. To further validate our sample, we followed the work of Osterman (1994) and Shaw, Delery,
Jenkins, Douglas, & Gupta (1998) and ran a logistic regression analysis to detect any dif-
ferences between respondent and nonrespondent organizations. The dependent variable was
dummy coded: 1 if a questionnaire had been completed and returned; 0 otherwise. The inde-
pendent variables for this bias check included organizational revenue and four industry dum-
mies. None of these variables was significant, suggesting that response bias should not have
affected our statistical results.
2. A potential methodological problem is that socially desirable responding might have exag-
gerated the extent to which strategic HRM practices were adopted. In light of the fact that
the values for the strategic HRM variables are skewed slightly to the right, this possibility
of social desirability bias cannot be ruled out. This said, it seems less likely to be a serious
problem in an anonymous web survey like ours than in a telephone survey or face-to-face
interviews, as previous research has demonstrated (e.g., de Leeuw, 2005, pp. 245-246).
3. Two variables, namely size of staff and size of revenue, were originally created to measure
organizational size. Given the fairly strong correlation between the two variables (r = .84,
p < .01) and the fact that size of revenue has more missing observations, only size of staff is
used as the proxy for organizational size in the article.
4. Results of the Breusch–Pagan test show a chi-square value of 23.99 and a p-value of .000,
indicating that the variances of observations are not homogenous. In such cases, WLS
regression provides more efficient parameter estimates than ordinary least squares (OLS).
5. In terms of the percentage of work done by volunteers, the median value in our data is 10%.
The F-statistic for the Chow test is 2.02 with a p-value of .028, indicating significant differ-
ences between the two subgroups. We have also tried alternative measures of volunteer
dependence based on “number of volunteers” and “percentage of volunteers.” Similarly, the
Chow test results show significant differences between subgroups.

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Bios
Chao Guo is an associate professor in the Department of Public Administration and Policy at
University of Georgia.
William A. Brown is an associate professor in the Bush School of Government and Public
Service at Texas A&M University.
Robert F. Ashcraft is an associate professor in the School of Community Resources and Devel-
opment and the executive director of the Lodestar Center for Philanthropy & Nonprofit Innovation
at Arizona State University.
Carlton F. Yoshioka is a professor in the School of Community Resources and Development
and the director of academic affairs of the Lodestar Center for Philanthropy & Nonprofit Innova-
tion at Arizona State University.
Hsiang-Kai Dennis Dong is a doctoral student in the Department of Public Administration and
Policy at University of Georgia.