While there has been a significant amount of research around human resource management (HRM) and organizational outcomes, most of it has focused on for-profit organizations. What about nonprofit organizations and social enterprises? Do the same findings apply in different contextual factors across various types of organizations? This article suggests that they do not. 

Social enterprises can be considered a hybrid between for-profit and nonprofit organizations as they simultaneously seek to achieve a social mission while generating profit. These are often competing priorities—investing in social mission can come at the expense of financial gains. Given the limited financial resources, HRM is especially crucial in attracting and retaining the talent pool of both paid and volunteer staff in social enterprises.

Through in-depth interviews with representatives from 20 social enterprises in the U.K., researchers found that “ethics of care” is at the core of most HRM-related decisions made in social enterprises. Specifically, this value is reflected in the way social enterprises hire disempowered employees even when it’s not part of the mission, embody a culture of acceptance and inclusion, and employ HRM practices that cater to the needs of different workforce groups. Even within a social enterprise, there are several differentiated systems used in attracting, motivating, and retaining different groups of employees (i.e. established professionals, recent graduates, and volunteers). In this study, the authors categorized them into five HRM systems: flexibility, empowerment, giving purpose, advancement, and inspiration. 

Rather than having one “best” HRM strategy, this study suggests that social enterprises can benefit from having differentiated HRM systems catered towards unique groups of employees. As social enterprises have the potential to achieve both financial gains and social purposes, understanding how they can effectively manage their workforce will benefit the organizations as well as the larger society. 

Citation: Roumpi, D., Magrizos, S., & Nicolopoulou, K. (2020). Virtuous circle: human capital and human resource management in social enterprises. Human Resource Management, 59(5), 401-421. https://doi.org/10.1002/hrm.22002