Overworked and underpaid.
These two words likely spring to mind when one thinks of nonprofit employees.
And that’s not a great reputation to have if you want to attract and retain great talent.
As a rule of thumb, nonprofit organizations struggle to recruit and retain the right talent. This is an issue as human capital drives success. Talent is recognized as the most important asset in today’s knowledge economy.
Further, poor employee engagement means high turnover, low morale and poor customer service (for both beneficiaries and donors). This poses a blow to your fundraising and other efforts towards achieving your mission.
Lack of investment in talent can lead to high turnover and hurt organizations’ sustainability and mission impact.
However, we can combat this problem by strategically investing in employee retention activities.
Employee retention is the conclusion of strategic actions that organizational leaders take to motivate and encourage employees to maintain employment and produce within an organization.
Let’s start by looking at why nonprofit organizations face challenges in attracting and retaining employees:
“These individuals (elite university graduates) can disrupt industries and make real change in the world, but they rarely enter the social sector because it “suffers from lower salary scales” and lacks “organizational infrastructure,” making it “less appealing to young people who are entering the workforce”. Even if they work for a non-profit, a majority of these graduates do not stay for long as “55 percent of emerging nonprofit leaders” believed they had “to leave their organizations to advance their careers.”
In addition to that, one of the areas in which millennials differ from previous generations is in their remarkable absence of loyalty to the organizations that they work for.
A 2016 study by Deloitte reported that 44% of this age group expects to quit their organization within the next two years. This has forced organizations to revisit, rethink, and – in some cases – reset previous practices to remain relevant.
So, whether you need to create a formal retention program from scratch, or you simply need a tune-up.
According to a survey by Nonprofit HR, 84% of nonprofits report they do not have a formal recruitment strategy. This makes attracting and retaining employees less intentional and therefore less efficient.
Before diving deep, measure where you are now so you know if your efforts are successful. Start by benchmarking your employee retention rate (see the calculation here). Then, check if you know why your employees are leaving in the first place. An easy way to understand this is by conducting exit interviews. Identify trends and then take action to minimize voluntary employee turnover.
Finally, brainstorm and then put in writing your employee retention strategy and activities.
Pro tip: Ensure your employee retention expenditures tie to your organizational goals and results.
Nonprofits face many unique limitations that impact their ability to operate completely like a for-profit company. One of those challenges is to hire qualified staff within a limited budget.
Competitive compensation and benefits play a key role in hiring and retaining valuable employees. The challenge lies in aligning market value with the expectations of donors and communities.
This can be a sensitive topic for many nonprofits. Restrictions on the allocation of donations, grants and government funding often require the prioritization of direct-service programming and resources over capacity-building and talent management. On top of that, nonprofit organizations that compensate generously are often criticized by the public for ‘mismanaging their funds.’
To start compensating your employees fairly, you will need to start changing your stakeholders’ views on money through clear and consistent communication.
To help your nonprofit communicate the compensation or other benefits and perks, calculate the cost of turnover. The cost of losing an employee varies by industry and role at the organization. See this article for sample calculations. By sharing more about how much it costs to lose an employee, and then recruit and train another one, you might start softening some of the views on money and compensation.
Annually, evaluate your paygrades to compare your salaries to those offered at similar nonprofits. Also, consider that the annual cost of living often increases, and so should your salaries – as the budget allows. To benchmark against the national average for the industry, the role, and other nonprofit organizations, you can use Glassdoor. For example, here’s how much a Nonprofit Program Director would be paid in New York.
Pro tip: Always communicate honestly about your compensation and the limits of your funding to all of your employees, as well as prospective employees during your hiring process.
If you’re really serious about transforming your nonprofit culture and making it a place where your employees can learn, there’s much more you can do.
For example, you can set up a talking partners/buddies system where employees are paired to leverage each other to review feedback, vent out frustrations, and then use that feedback to improve. This is a simple and easy way to introduce a co-mentoring or peer-to-peer mentoring to your nonprofit.
Mentorship, in general, can be a great way for your employees to learn and grow. Consider pairing employees based on their career development interests and experience. You could also connect mentees and mentors across departments to expose individuals to new and different perspectives within the organization. Not only does mentorship help employees grow, but it also helps build connections and trust across the organization and develops leadership skills.
Pro tip: If possible, create lines in your budget for personal and professional development. These would then allow you to subsidize conferences, training, further education, and courses for your employees.
Employees are more engaged and more likely to stay if they feel like they can grow within your organization.
When considering growth opportunities for your employees, it’s important to include both lateral and vertical growth opportunities.
Lateral growth helps increase employees’ knowledge about the organization and allows them to grow their skill sets, learn new strategies for addressing everyday challenges – all within their current role. Providing employees with a challenging and ‘stretch’ assignments helps to grow that specific talent pipeline, in addition to better engaging them. You could also, alongside them, identify any current skill gaps and ways to address those gaps.
If you overlook lateral growth, you risk having talented employees hit their vertical growth limit quite fast.
Both types of growth are important to develop emerging leaders and foster a culture of learning.
Connect upper management with entry-level team members, write clear job descriptions that demonstrate upward mobility, and when possible, hire from within.
Have a succession plan in place so that you’re prepared for the departure of key employees. Co-create a formal career path strategy for those employees you would like to retain.
Pro tip: Hire well in the first place. Make sure your hiring strategy is top-notch. If you hire people that are the right fit for your organization in the first place, it will decrease your turnover rate. How do you do that? Be very clear about your values, needs, and expectations, and then make sure your interview questions and other assessment methods reflect them.
When you encourage your employees to find new, creative ways to solve problems and accomplish everyday tasks, you show them trust.
When employees feel trusted, they are much more likely to stay and much more likely to refer new hires to you. Win-win!
Furthermore, when the organizational culture matches the personalities/work styles of employees, they are more likely to enjoy their time at work.
And when people feel like they’re happier in their current position than they could reasonably expect to be somewhere else, they stay.
On that note, make sure you walk your talk. If transparency is one of your values, but there’s a stigma around many conversations and a lot of hiding – you’re sending your employees a mixed message.
Pro tip: To increase transparency in your nonprofit, consistently keep the employees/team up to date with where the organization is headed. Whenever possible, allow employees to guide the direction of your nonprofit. Consider organizing quarterly meetings where important conversations can happen and feedback can be given. Encourage and appreciate independent initiatives within the organization. For example, empower your employees to run their own mini-projects as a side hustle. Autonomy and freedom are powerful forces when it comes to increasing employee satisfaction.
Employee retention is driven by acknowledging and recognizing employees for their work. While many ‘corporate’ benefits might not be feasible for a nonprofit, there are still some strategies a nonprofit could realistically implement.
For example, you could have ‘employee of the week or month’ put up on your website, reward your employees for referring their friends to your nonprofit’s services, or professional development programs that check-in with employees to determine how their role fits into their current and long term career goals.
If your employee nails that major donor call, let them know quickly. Share your appreciation with a hand-written note or verbally. Maybe post a thank you on Slack. Ideally, recognize them publicly.
Encourage a recognition culture. Acknowledgments and recognitions don’t have to be reserved for top management. Encourage employees to acknowledge and thank each other.
Pro tip: Inc.com suggests to use a 7:1 ratio – ensuring you have seven times as many positive interactions with employees compared to negative ones.
Before purchasing a table for ping-pong, identify what your employees really want and value through a simple survey.
With limited budgets, nonprofits must allocate donor dollars strategically before investing in benefits or perks.
Whether you’re investing in being able to bring pets to work, on-site low-cost childcare, free or low-cost meal options, low-cost exercise classes, discounts at cinemas and in stores, it’s important that your perks are strategic and that they’re something your employees really want.
And little can go a long way. Something as small as a birthday card can go a long way toward employee satisfaction.
Furthermore, consider customizing your perks for different types of employees – especially with big-ticket items such as health benefits. For example, you could offer a larger healthcare allowance per month to your senior employees. Not only will it incentivize them to stay, but it will also incentivize junior employees to stick with your organization.
Employees want to feel heard and seen, want to be taken care of holistically, and want to matter.
People who feel they have good work-life balance work 21% harder than those who don’t, according to a survey from the Corporate Executive Board, which represents 80% of Fortune 500 companies.
In the academic world, this phenomenon is referred to as “the social exchange theory”. When an organization offers something that benefits the employee, the employee reciprocates in the form of going beyond the call of duty, going the extra mile.
Work-life programs that allow flexibility in how tasks are done, where they are done, or when they are done give employees that sense of value with the vote of confidence that comes with a choice, options, and responsibility.
Long commutes and the daily grind can make employees restless, exhausted, or bored. Flexible work schedules help employees add variety to their life and tackle important personal obligations. They also enable employees to work during their peak productivity. Most importantly, they make employees feel like they’re trusted to do their work.
An engaged employee is one that feels like their opinion counts and that they’re actually heard. Do your best to create an environment in which your employees don’t feel intimidated to speak or feel like their voice doesn’t matter.
Talk to your employees often, and when you do – truly listen. Ask questions to understand what they mean and take the time to genuinely consider their feedback and comments.
Clearly communicate your expectations to your employees. When employees know what’s expected of them, they experience less stress and work more efficiently.
For best results, co-create your employees’ goals with them. This increases their sense of ownership and autonomy – both proven to contribute to increased employee engagement and satisfaction.
Keep the conversation with your employees alive by checking in on them, asking them about how they feel and how they’re progressing towards their goals.
Don’t forget to share the “big picture” with your employees to help them connect their roles to the mission and feel more engaged.
Pro tip: Make sure your employees have the materials and equipment they need to effectively do your work. Use tools like Slack and Basecamp to maintain transparent communication, track progress on tasks and projects, appreciate others for their work, and collaborate across the organization. You can even use tools like lead.app, a simple and easy way to introduce a co-mentoring or virtual mentoring to your nonprofit
Nonprofits have an extremely valuable advantage because most of their employees base their career choice on passion. This is not what most for-profit organizations can say.
Nonprofit organizations can capitalize on this invaluable edge.
Organizational leaders must counter high voluntary turnover with all available resources because organizational success depends on the talent existing within the workforce.
Organizations are only as good as their employees.
As you take care of your employees, they will take care of your donors, and the rest will take care of itself.