Nonprofit Remix

Translating business research into nonprofit language

Translator, Volunteers

Can a volunteer-staffed company scale?

By Ian Rickard from Santa Cruz, CA, United States (Standout) [CC-BY-2.0], via Wikimedia Commons

In each issue, Harvard Business Review
includes a shortened, fictionalized version of one of their famous HBS case studies.* They’re shortened versions because the full ones would probably induce seizures in former MBA students. They’re fictionalized, because if they were real cases, current students would surely use them to cheat.

The authors then invite two experts to comment on the case, who may have some special insight into the issues being discussed.

In the May 2014 issue, the case describes a video game developer, which uses volunteer labor to design, code and market their games. Expert commentary is by Noam Bardin, CEO of Waze, and Verena Delius, cofounder and managing partner of Fox & Sheep.

TL;DR: Volunteers take the place of employees in a tech company, and provide an essential service (software development, marketing, sales, customer service and R&D.) Executives within the company are wondering whether or not to replace the volunteers with hired staff. Can the company grow if they’re that reliant on volunteers?

Why should nonprofits care? That’s a fairly familiar scenario for most of us. Can a particular position be filled by a volunteer, or does it need to be a paid staff person?

Pro volunteer argument
  1. Volunteers are cheap.
  2. The business model is built with volunteers factored in. It may not work if volunteers are converted to paid staff.
  3. Volunteer software development is a meaningful product and brand differentiation for the company.
  4. Committed volunteers (who are also customers) provide a great boost to marketing.
Con volunteer argument
  1. Volunteers cost time and money to manage.
  2. Traditional performance incentives don’t work.
  3. Walkouts and strikes are a huge risk if the volunteer’s various needs aren’t met.
  4. Future investors may be put off by the inherent risk of relying on volunteer labor.
  5. When your customers are also unpaid employees, there’s additional importance placed on keeping both happy. The unstated implication is that “while the customer is always right, an employee isn’t,” and that causes friction.
The nonprofit perspective

It’s nice to be on the teaching end of a case study, isn’t it? As most nonprofits already know, volunteers are critical to your success. They not only provide cheap labor, but they’re also your ‘true believers,’ useful for funding, community building and advocacy work. Bardin points this out perfectly — the one thing a company needs is rabid fans, and while it’s time consuming and resource intensive to keep those rabid fans happy, they’re worth every penny.

On the other hand, could you replace your critical staff with volunteers? In this particular case, volunteers are engaged with the company because they find game development work creative and engaging. And that’s your answer. As long as the volunteer finds the work rewarding (and nonprofits have a great way to do that,) there’s no reason you couldn’t use volunteers for anything.

Read it yourself:  Sutton, R.I. & Rao, H. “Can a Volunteer-Staffed Company Grow?” Harvard Business Review. May 2014.

*They’re not all actually Harvard Business School cases. In fact, this one is from the Stanford Graduate School of Business: “Mozilla: Scaling Through a Community of Volunteers.” by Hayagreeva RaoRobert I. SuttonDavid W. Hoyt

Image: Thiman lecture hall at UCSC by Ian Rickard from Santa Cruz, CA, United States (Standout) [CC-BY-2.0], via Wikimedia Commons

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