The people who work for a nonprofit organization are its most valuable asset.
Nonprofits also rely heavily on volunteers to help them achieve their goals and missions. This is especially important for small organizations that may not have the people power or resources to get the job done otherwise.
How Lacking A Retention Strategy Impacts An Organization
The most direct result of not having a retention strategy is high employee turnover. If a company doesn’t do anything to keep its employees, they will eventually leave.
An organization without formal retention principles is more likely to have employees leave, which costs the organization a lot of money. It costs 20% of an employee’s salary to replace them. This is especially true for positions that require more specific skills, like director or executive level positions.
Additionally, these replacement costs can continue long after the hiring date, taking into account the amount of time it takes for a new employee to be fully effective.
Impact On The Sector
Lack of specific and effective retention strategies at the sector level leads to two distinct outcomes: “invisibility” of nonprofit career paths and sector switching.
a. Invisible career paths
Nonprofit organizations often have high staff turnover which can create obstacles to achieving their goals. Low staff turnover can also be an issue as it can result in an “invisible” career path for employees, where opportunities for advancement are not clear.
The lack of visibility for nonprofit careers means that people may not consider the sector as a viable option for employment. One potential outcome of this is that fewer people will pursue careers in the nonprofit industry.
Hence, the lack of retention strategies in the nonprofit sector often leads to decreased professional advancement.
This industry’s negative connotation also impacts those currently employed within it, at nearly every level of a nonprofit organization. In an older study, fifty-five percent of up-and-coming nonprofit leaders said they needed to leave their current organization to further their careers.
b. Sector switching
Many employees believe that they must leave their current organization in order to advance their career. They often enter other sectors as a result.
According to a recent study, only 31% of nonprofit sector employees would stay at their current workplace if offered the same job elsewhere at the same rate of pay. This means that almost 70% of nonprofit workers would leave their current position for no increase in salary.
Nonprofit employees do not have to stay in the sector, especially during difficult financial times like the COVID pandemic.
A study done in 2017 found that during times of fiscal turmoil, nonprofit employees are more likely to leave their jobs and look for work in the private sector at a rate of 26% higher than private sector employees. This means that during an economic crisis, the things that usually make someone want to work for a nonprofit (such as the mission of the organization or the ability to have a flexible schedule) are outweighed by the desire for economic stability.
This leads not only to employees leaving an organization but also to a higher probability of them entering other sectors that offer similar or slightly better pay.
Simple Employee Retention Strategies To Help
The data points in this pandemic are alarming, but leaders in the sector shouldn’t be alarmist in their response. This pandemic has created lots of uncertainties, but it has also created opportunities to change or start fresh. The nonprofit sector is in a stage of recovery from the labor loss.
The sector has the resources and smarts to take preemptive, lasting action, given any economic and employment situation. Below are three places to start:
1. Make retention practices a publicized priority… today
It is important for nonprofits to keep the employees they have. What can you do to make sure you are doing this today?
What motivates your team to work with your organization? Gather this information through an online survey or a brainstorming session in person. Listen for the themes that emerge from these conversations and what ideas could be acted upon.
Look at recent staff losses. Why did employees leave? Where did they go? Are there any patterns?
2. Design initial strategies that draw from motivation and maintenance activities
Retention strategies that motivate and inspire employees include recognition programs, formal and consistent support from peers and supervisors, and ongoing training and development.
There are two types of retention strategies: maintenance strategies and retention strategies. Maintenance strategies are the consistent elements of an employment agreement, including pay and reward structures, time off, and bonuses. Retention strategies are more beneficial when thinking about employee retention.
3. Provide value to your team members with training and development
There is a growing need for employees to either learn new skills or improve their existing ones due to changes in the labor market. Consider investing in training and education for your employees. Early evidence indicates this need, and employer-provided training is often the best way for individuals to gain employable skills and for employers to get the skilled workers they need.
4. Create a formal retention strategy
The vast majority of nonprofits do not have a formal recruitment strategy, making it harder to attract and retain employees, according to a survey by Nonprofit HR.
Before making any drastic changes, measure your employee retention rate and see where you stand. This will give you an idea of whether or not your efforts are actually effective.
Another way to gauge why your employees are leaving is by conducting exit interviews. This will help you identify any patterns or trends. Once you know what the issues are, you can take steps to try and reduce the amount of voluntary employee turnover.
In the past two years, the general workforce has experienced a significant loss of practical skills. A study from August 2021 indicates that nonprofits can retain employees and ensure their teams have the right skills by offering their own training programs. There is significant interest in building up the capacity and skills of nonprofit teams in high-value programs.
5. Compensate your employees fairly
Hiring qualified staff can be a challenge for nonprofits because they often have limited budgets.
Although offering competitive compensation and benefits to employees is crucial to attracting and retaining talent, doing so while still being aligned with the expectations of donors and communities can be challenging.
To ensure your employees are compensated fairly, you will need to be clear and consistent when communicating with your stakeholders about money.
You can help your nonprofit communicate compensation or other benefits and perks by calculating the cost of turnover. The cost of losing an employee varies by industry and role in the organization, but you can find sample calculations with some basic research. By sharing more about how much it costs to lose an employee and then recruit and train another one, you might be able to change some negative views on money and compensation.
You should compare your salaries to those offered at similar nonprofits every year. It’s also important to keep in mind that the cost of living often goes up from one year to the next, and your salaries should reflect that as much as the budget allows. There are a few different ways to find out what the national average is for salaries in your industry, role, and location. You can use Glassdoor.com, Simplyhired.com, or the United Way’s compensation comparison tool.
6. Boost your employee training and development programs
There are many things that can be done in order to make a nonprofit culture one where employees can learn.
If you want your employees to learn and grow, consider setting up a mentorship program. You can pair employees based on their career development interests and experience, or connect employees from different departments so they can get different perspectives on the organization.
Mentorship not only helps employees grow, but also builds connections and trust across the organization while developing leadership skills.
7. Ensure lateral and vertical growth
When looking for ways to help your employees grow, it’s important to offer both lateral and vertical growth opportunities.
Lateral expansion enables workers to become more familiar with the company and hone their abilities, as well as learn new ways to deal with common problems, all while keeping their present job.
Giving employees assignments that are challenging and require them to ‘stretch’ helps them develop the skills needed for future positions, as well as keeping them engaged. You can also work with them to identify any skills they are currently lacking and ways to improve those skills.
Both fostering a culture of learning and developing emerging leaders are important.
It is important for upper management to be connect with entry-level team members. This can be done by writing clear job descriptions that demonstrate upward mobility. When possible, it is also beneficial to hire from within the company.
8. Build a culture of trust
When you give employees the freedom to solve problems in new and creative ways, you are showing them that you trust them.
If you want your employees to stay and refer new hires, you need to create a trusting environment.
Furthermore, when employees’ personalities and work styles match the organization’s culture, they are more likely to enjoy their time at work.
When people are content with their current situation and don’t feel that they could have it any better somewhere else, they stay put.
9. Acknowledge and recognize your employees for their work
Employee retention can be increased by showing appreciation for their work. Although some benefits that for-profit corporations offer may not be possible for nonprofits, there are still some other options that could be realistically implemented.
You could reward your employees in various ways, such as by putting up an “employee of the week or month” notice on your website, or giving them rewards for referring their friends to your nonprofit’s services. You could also provide professional development programs that help employees determine how their current role fits into their long-term career goals.
If an employee does a good job, tell them right away. Thank them with a handwritten note, verbally, or on Slack. Give them public recognition if possible.
Make sure to encourage a culture of recognition in your workplace. This way, workers will feel appreciated and motivated to do their best. Acknowledgments and recognitions don’t have to be given out only by top management; let employees thank and acknowledge each other, too.
10. Invest in perks
You can find out what your employees want and value by conducting a survey before purchasing a table for ping-pong.
Nonprofits have a limited amount of money to spend and need to be strategic about where they invest it. They should not invest in benefits or perks without due consideration.
If you want to invest in making your workplace more attractive to potential employees, it is important to offer perks that they will find valuable. This could include things like being able to bring pets to work, on-site childcare, free or discounted meals, exercise classes, or discounts at local businesses. By offering benefits that your employees will actually use, you can make your workplace more appealing and increase the chances of attracting top talent.
Little things can have a big impact. Something as small as a birthday card can make a big difference in employee satisfaction.
11. Ensure work-life balance
According to a survey from the Corporate Executive Board, people who feel they have good work-life balance work 21% harder than those who don’t. The Corporate Executive Board represents 80% of Fortune 500 companies.
This is called the social exchange theory in academic circles. It posits that when an employer offers something that benefits the employee, the employee will return the favor by working harder than required.
Programs that allow employees to choose how, where, or when they do their work give them a sense of value and responsibility.
12. Listen and talk
An employee who is engaged feels that their opinion is valued and that they are heard. Do your best to create an environment in which your employees feel comfortable speaking up and feel that their opinion matters.
Make sure you’re frequently talking to your employees, and listening to them earnestly when you are. Ask questions to get a clear idea of what they’re saying, and give thought to their feedback and remarks.
The following is a clarifying statement to ensure that employees are aware of what is expected from them in order to work more efficiently and with less stress.
The best way to achieve desired results is to collaborate with employees to set goals. This will make them feel more invested and in control, both of which have been shown to lead to increased employee engagement and satisfaction.
Make sure to frequently communicate with your employees to see how they are feeling and if they are meeting their goals.
Nonprofits have an advantage because most of their employees care about the cause, not just their career. This is not what most for-profit organizations can say.
Nonprofit organizations can capitalize on this invaluable edge.
Organizational leaders need to do everything they can to stop people from leaving their jobs voluntarily, because the success of the organization depends on the quality of its workforce.
Organizations are only as good as their employees.