It’s the little things that make the difference
Retention of qualified employees is a challenge, especially, for small to mid-size nonprofit agencies. But they are not alone. Some very large nonprofit agencies seem to have a revolving front door. While the challenge of retaining employees is not unique to nonprofit organizations, research shows that generally nonprofits have higher annual employee turnover than in the government sector or business sector. All nonprofit organizations, no matter the size must develop new methods in order to keep qualified employees. The reasons for employee’s exits are very different. The biggest workforce challenge appears to be the agency’s ability to offer competitive salaries, some benefits and to recruit qualified staff. There are several main reasons employees leave the field of nonprofit work other than pay, including lack of training and poor support by their agency. Those that do stay are typically motivated by values and a sense of mission that is stronger than the work’s disincentives. Employees who had a positive attitude toward the agency’s mission had higher levels of job satisfaction and were more likely to remain with the organization. However, dissatisfaction with pay tended to override employee’s mission attachment as of why they may leave the organization.
Barriers to Retention
Across the nation, the high rate of turnover among workers in the nonprofit industry is a serious workforce problem. Compensation is one of the stickiest problems that nonprofit organizations face. While studies have shown that employee productivity is not as closely linked to monetary rewards as one might have thought, you should do your best to ensure that employees are financially secure and feel that they are being paid what they are worth to make them happy. Nonprofit employers have a reputation for underpaying and overworking their employees. Commonly, staff-members have responsibilities that would traditionally fall outside the role that their job-title suggests.
Nonprofits provide services, with often limited resources, to challenging segments of the population. Limited funding resources from government contracts, decreased donations and fees for services affect the amount of financial compensation these agencies can provide as a tool to retain good employees. The small size of nonprofit organizations also reduces their employees’ opportunities for career advancement and promotions. Because these agencies cannot provide equal or competitive compensation packages to their workers, they must rely on other methods to hold on to qualified employees.
Low Wages and High Stress
As previously mentioned, people working in the nonprofit sector typically receive lower pay compared to their private and public sector counterparts. Therefore, it is not surprising that employees often are looking for a new job that would have offer an increase in salary. Many observers tend to agree that dissatisfaction with pay is one of the leading causes of staff turnover in nonprofit organizations and that there is a strong relationship between turnover and compensation. Dissatisfaction with pay means that nonprofit workers often seek better offers from within or outside the sector or tend to have more than one job to meet their compensation expectations.
In addition to low wages, another underlying reason for the challenges associated with retention in the nonprofit human sector is the high stress that frontline workers experience. In addition to the difficulty and stressful nature of the work, other aspects of the job, such as feeling unappreciated, little or no career advancement potential, better opportunities in another field, attainment of higher education, and lack of administrative support, may seem unappealing to many potential and current employees.
The Costs of Turnover
Concern about elevated turnover rates has led to considerable focus on understanding the challenges associated with retention of this critical workforce. Poor wages, emotional burnout and feeling unappreciated are three leading factors that cause employee turnover are some of the top reasons for making a move. Regardless of the passion employees may feel for the mission of a nonprofit organization, when their time is diverted from performing tasks that align with the mission and reallocated to tasks such as paperwork and reporting, their job satisfaction decreases, and turnover increases. As performance based funding and contracting becomes a requirement for most funding sources, nonprofits must explore and implement new ways to keep employees engaged. Turnover can be damaging to the overall effectiveness of the organization.
The difficulties in retaining quality nonprofit workers incur high costs to employers, staff members, and most importantly, clients. The direct and indirect costs of the workforce crisis are as follows:
Costs to Employers
- Separation costs: exit interviews and administrative costs. (Direct Cost)
- Fill-in/vacancy costs: temporary workers and overtime pay for other staff members. (Direct Cost)
- Replacement costs: advertising, interviewing and training. (Direct Cost)
- Loss of efficiency and productivity: before employees leave and while training new employees. (Indirect Cost)
The direct costs include advertising, time spent by human resources personnel, new employee training and overtime pay for remaining staff. However, the true costs of turnover maybe far greater than these immediate management issues. High turnover not only damages employee morale, because of the increased workload for remaining workers, but also compromises the quality of service that directly affect client’s welfare.
Costs to Staff Members
- Over-burdening of workers to make up for insufficient staffing, resulting in:
- High rates of stress and burnout due to increased hours and responsibilities. (Indirect Cost)
- Decreased ability to provide quality care. (Indirect Cost)
- Poor interpersonal relationships between staff and clients as well as between staff and management. (Indirect Cost)
While nonprofits are making an important contribution by addressing a wide variety of human service and community needs, they are forced to do more with less. Consequently, this has created quite a challenge for local nonprofits in relation to retention as there are fewer dollars to pay staff; less incentive for potential employees to work in the industry; increased loads for current workers; higher stress levels reported by staff; decreased employee satisfaction levels; and ultimately, increased turnover. In order to address these challenges and reform the system, nonprofits must find new and creative ways to retain qualified frontline workers.
Costs to Clients
- Lower quality of care from overburdened or newly trained staff. (Indirect Cost)
- Lack of stability for clients due to frequent staff turnover. (Indirect Cost)
- Longer waiting lists to receive services, causing some clients to “give up” on getting assistance. (Indirect Cost)
- Poor interpersonal relationships between staff and clients. (Indirect Cost)
Addressing the Crisis
In order to change the trend; nonprofit organizations need to find a new policy for employee retention that to change this crisis.
- Improve Human Resource Practices, reduces employee turnover and keeps costs low.
In order to retain staff/employees, nonprofits need to be more selective in the individuals they hire. It takes a special person to do the work of nonprofits, especially with the low pay and the high stress level that comes with the job. Rather than hiring the first person they can find in order to fill a vacancy quickly, nonprofits need to be selective in their hiring and find someone who not only can do the work, but is passionate about it too. More in-depth interviews should be done with potential employees to ensure it is someone who has a passion for the work and understands the demands of the jobs. Time should be taken to find the right person, with the right passion, to provide service for what can be challenging work to an even more challenging clientele. During the interview process with a potential candidate, nonprofits should take the time to review each of the applicant’s former positions in detail, asking the applicant where they excelled in their former position and what aspects of their former job allowed their talents and skills to shine. This will give the nonprofit agency a better understanding of the applicant’s strengths, as well as the ability to determine if these strengths will help them to succeed with the organization. Agencies should also ask potential candidates about their passions outside of work. Generally speaking, people who do not have a driving passion about something in their personal life will most likely not bring passion to their work. Another way to test a potential candidate’s passion for their work is to make a statement or bring up a topic that may be controversial to the mission of the organization to determine the candidate’s willingness to stand up for their beliefs. Hiring someone who’s been a former client of the nonprofit is another way that nonprofits can find a person who understands the demands of the job, because they have been on the receiving end of the services. Two of the agencies that participated in the focus groups hired employees from the client base, and the administrative staff said it was extremely helpful in recruiting and retaining employees.
Organizations can actually save money by retaining employees, rather than having to constantly recruit and re-train. By retaining their employees more funding can go toward agency programs and services where it is most needed.
- Identifies alternatives to raising salaries.
Because nonprofit organizations do not often have it in their budget to offer high salaries, they must find alternative ways to retain employees. These alternatives include flexible work schedules, training and professional development, employee involvement, appreciation and celebration, workplace culture and pay-for performance.
- Find Ways to Develop Staff
Although money for training is not always easy to come by, nonprofit organizations need to find creative ways to develop staff and give them opportunities to continue learning that is low cost. For example, nonprofit organizations could provide online training to their employees on topics such as how to become a better leader or to improve their computer skills. One administrative team focus group participant said,
“You can teach a person work skills, but you cannot teach them passion.” By offering this type of training that is little cost, the organizations are making an investment in their employees, which leads the workers to feel valued and more likely to stay with the organization. Also, once a position at the nonprofit becomes available that is higher pay, that employee would be qualified and could advance in the organization.
Some of the ways that organizations were able to retain their employees that had a big impact and low cost were by offering professional development opportunities, family-friendly job benefits such as flextime, telecommuting, family leave time, transportation subsidies, health benefits, career ladders, and childcare and eldercare subsidies. Another way to retain employees was through “public recognition and reverse mentoring, and reward longevity through anniversary gifts”
- Support and Mentor Employees
During the focus group sessions, what was clear was that the organization that had a supportive administration, with an open-working environment where they could question administrative decisions, had a happier workforce and was able to retain employees better. The employees at one of the nonprofits indicated they stayed with the organization because of the leadership of their administration. This shows that the
administration in charge of the nonprofit needs to be supportive of its employees and provide opportunities for employees to vent their frustrations and concerns. This type of positive work environment can counteract the fact that the pay is low and conditions are stressful. If it is the nonprofit’s board that is ultimately in charge of hiring someone to run the organization, than they need to choose a leader that has these qualities.
- Offer Flexible Work Schedules and Other Benefits
Higher pay does not seem to be an option for workers, as increasing salaries takes away from the organization’s ability to provide much needed services to their clientele. Therefore, organizations need to offer flexible work schedules, banked holidays and other incentives that cost the organization little to nothing. Flexible work schedules, vacation days and other benefits give workers the time to meet their family obligations, as well as a respite from the stress of the work.
- Minimizes employee burnout.
Because a lack of administrative support and excessive regulations and paperwork are main causes of employee burnout, alternatives like mentoring and supporting employees, and streamlining the data collection method, can be an effective way to help reduce staff burnout.
- Use Volunteers
The use of volunteers should be explored. Nonprofit agencies should further consider how to effectively use volunteers to assist with their day-to-day operations. Often nonprofits see volunteers as a burden, people who have to be trained and closely monitored, and that takes staff time away from program duties and responsibilities. But qualified, passionate volunteers can be a valuable resource to agencies that cannot afford to hire additional staff members to assist with program and service delivery. Volunteers could assist with the workload and even handle some of the less technical aspects, like data entry. This could free up caseworkers who are bogged down with paperwork and other routine tasks.
- Streamline the Data Collection Method
Employees from the three agencies agreed that data collection was extremely difficult and time-consuming because of the varying and multiple database systems. Most agencies receive funding from multiple sources. Individual funders often ask for the same data on the clients being served using the funding they provide. Agency staff members are asked to input the same information on the same clients into multiple databases to
comply with grant requirements. If federal, state and local government agencies could agree on one system for data collection that could be used by all Clark County nonprofits, it would save employees time and energy by allowing them to enter client data one time and still meet all of the data reporting requirements of their funders. This would result in employees not taking so much time to do paperwork and would standardize the process. For purposes of time and effort, there should only be one database that nonprofits could use to access information on clients.
This conclusion, in order for nonprofit agencies to be successful, agencies must develop and implement new methods for employee retention. The low pay offered to staff members will continue to be an issue as long as nonprofit agencies are challenged with making the most impact on their clients using very limited resources. In an ideal world, a good strategy for retaining employees would be to raise their salaries, but with scarce and often restricted funding for most agencies, this will never be an option. However, there are tactics nonprofits can use to increase their employee’s satisfaction in their positions, thereby influencing them to stay with the agency, which does not impact the agency’s budget. While adequate pay for job performance and earning enough money to comfortably support themselves and their families is a strong motivating factor, it is not the primary reason why frontline staff members leave nonprofit agencies. Nonprofit employees are also motivated by the satisfaction they receive from their work, the support of their leadership and the feeling that they are a valued part of the agency and that their thoughts and opinions are heard and appreciated.
Reference: Armstrong, Liz; Bluitt-Fisher, Jocelyn; Lopez-Newman, Lori; Paul, Diana R.; and Paul, Keith R., “Nonprofits in crisis: How to retain employees in the nonprofit sector” (2009). UNLV Theses, Dissertations, Professional Papers, and Capstones.