Factors Attracting Individuals to Nonprofit Management over Public and Private Sector Management

• Date: 01 September 2013
• Published date: 01 September 2013
• DOI: http://doi.org/10.1002/nml.21079
• Author: Kelly LeRoux,Mary K. Feeney

Factors Attracting Individuals

to Nonprofit Management

over Public and Private

Sector Management

Kelly LeRoux, Mary K. Feeney

University of Illinois at Chicago

Little research has sought to identify the distinct advantages

that nonprofits offer employees, particularly managers. Draw-

ing upon Weisbrod’s theory of managerial sorting (1988), we

test a series of hypotheses about the differences among non-

profit, public, and for-profit organizations that may explain the

preference of managers to work in one sector over the other. We

use pooled cross-sectional data from the General Social Survey

to test managerial sorting. We find many similarities in the

perceptions of managers in the nonprofit and public sectors as

compared to the for-profit sector. However, when we examine

the sorting of managers into nonprofit versus public sector jobs,

we find differences in work environment. Compared to those

working in the public sector, managers in nonprofits report

greater freedom in deciding how to carry out their job func-

tions, more control over their work schedules, and greater

opportunities for pay increases. We conclude with a discussion

of the implications of these findings for the practice of nonprofit

management.

Keywords: public management, nonprofit management, sector

differences, sorting

ALTHOUGH THE REASONS INDIVIDUALS choose jobs in public ser-

vice over profit-driven firms have been widely studied, few

have considered why public service-minded individuals

Correspondence to: Kelly LeRoux, Department of Public Administration, Univer-

sity of Illinois at Chicago, 412 S. Peoria St., 130 CUPPA Hall (MC 278), Chicago,

IL 60607. E-mail: kleroux@uic.edu

NONPROFIT MANAGEMENT & LEADERSHIP, vol. 24, no. 1, Fall 2013 © 2013 Wiley Periodicals, Inc 43

Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/nml.21079

44 LEROUX, FEENEY

Nonprofit Management & Leadership DOI: 10.1002/nml

choose nonprofit work settings over government, or vice versa

(Feeney and Rainey 2010). Early studies that compare nonprofit

employees to those in the for-profit and public sectors have found

that nonprofit employees report more satisfaction with their jobs

and have more trust in management than those in other sectors

(Mirvis 1992; Mirvis and Hackett 1983). Although both the public

and nonprofit sectors are regarded as “public serving” and attract

individuals who are motivated more by the opportunity to make a

positive contribution to society than by prospects of great financial

reward, nonprofits are nevertheless private enterprises that display

unmistakable business sector tendencies in their quest to sustain

themselves financially. Many have noted that nonprofits are be-

coming increasingly businesslike, evident in the fact that commer-

cial income is the fastest-growing source of nonprofit revenues

(Independent Sector 2002; Weisbrod 1998) and by the growing

trend for nonprofit managers to hold business degrees.

This raises critical questions about whether nonprofits are more

like public or for-profit organizations, and how this blurring of

boundaries might be related to the choice to work in a particular

sector. What factors account for a manager’s decision to work in the

public, nonprofit, or for-profit sector? Among those who choose

careers in public service, why might individuals choose to work in

the nonprofit sector versus the public sector?

To answer these questions, we draw upon and extend Weisbrod’s

(1988) theory of managerial sorting to develop and test proposi-

tions about the incentives and work environment for managers in

the three sectors: nonprofit, public, and for-profit. We find evidence

that the incentives attracting individuals to nonprofit and public

management are somewhat similar when compared with the option

of working in for-profit management, yet there are indeed some

important differences between public and nonprofit workplaces that

may attract individuals to one sector over the other.

The following section describes Weisbrod’s theory of managerial

sorting and briefly examines the literature on the differences among

public, for-profit, and nonprofit management. Based on this discus-

sion we present a set of hypotheses that are then empirically tested.

We conclude with a discussion of the results and the implications of

our findings.

Managerial Sorting

Weisbrod’s theory of managerial sorting (1988) posits that contrast-

ing incentives are embedded within the nonprofit and for-profit sec-

tors, and thus each institutional form will attract managers who are

motivated by the incentives that each offers. Weisbrod argued that

“Managers will sort themselves, each gravitating to the types of orga-

nizations that he or she finds least restrictive—or most compatible