“They’re lucky to have a job.”
These are, unfortunately, actual statements I’ve heard in the past year from nonprofit managers, offered as rationales for not taking steps to advance human resources practices within their organizations. While there is no question both the economic downturn and its effect on labor markets have limited employment opportunities for many nonprofit employees, it has by no means brought the market to a halt, and staff turnover and retention continue to be important issues on which nonprofit employers should focus.
Rather than becoming less of an issue because of limited job mobility, controlling costs associated with turnover is actually more critical nowadays as nonprofit organizations seek to do more with fewer resources due to reduced giving and government funding. Every departure results in at least temporarily diminished capacity and productivity. Where the position is re-filled, the organization incurs expenses associated with recruiting, selection, onboarding and training of new employees.
In recent posts, I’ve taken a look at the changing market for fundraising positions, where demand appears to be heating up, and for information technology positions, where employers are cautioned against hiring overqualified but available talent who may not stay when the job market improves. A recently released survey report from Opportunity Knocks provides a comprehensive look at the turnover issue in the nonprofit sector and suggests strategies to consider to reduce turnover and improve retention. Here are some of the findings I found most striking and potentially useful to nonprofit employers.
How much of an issue is it?
The report found that among all participating nonprofit organizations, the average turnover rate — including both voluntary and involuntary departures — was 16% in the past year (down from 21% in 2008) and attributes the reduced turnover rate to economic conditions. Put another way, one out of every six employees in the nonprofit sector left his or her job during the year compared to one out of five in 2008.
The rates were significantly higher for smaller organizations — nearly 25% among organizations with annual operating budgets less than $2 million. There was also considerable variation in turnover rates among various subsets of the nonprofit sector. By far, the highest turnover rates — more than 35% — were found among arts, culture and humanities organizations while the lowest rates were found among housing/shelter and education organizations.
Despite the reduction in actual turnover numbers, 37% of organizations participating in the survey indicated turnover and retention are a problem.
Why are they leaving — and what can you do about it?
The following chart reports the reasons nonprofit employees left their organizations during the past year:
A little more than a third of the turnover reported was involuntary, i.e., initiated by the employer. Approximately 18% was the result of layoffs — a sobering reminder of the economy’s impact on the sector and, to some extent, beyond the control of employers. Another 18% was the result of terminations for disciplinary reasons.
I was most interested in the causes of voluntary turnover, i.e., departures initiated by the employee. I not only I see these as most costly to organizations, but I also believe these issues are within the ability of employers to control and, also, are those to which they can respond.
The leading cause of voluntary turnover — accounting for 14% of all turnover — was the employee receiving a competitive offer from another employer. This finding shows that while the nonprofit labor market may be chilled, it is far from frozen. It remains important that employers ensure reward offerings remain competitive. In addition to salary levels, employers should seek to ensure they are doing all they can to remain competitive in terms of benefits, to ensure employees understand the value of their reward packages and to utilize non-monetary rewards where possible to enhance retention.
Reported as the second leading cause of voluntary departure was employee dissatisfaction which accounted for 10% of all turnover. There can be many sources of dissatisfaction, so the first step in managing this source of turnover is understanding what factors are important to your employees and how they feel about them. Employee surveys and exit interviews are among the tools effective in this area. (My recent post “How to Be a Great Nonprofit Employer” takes a closer look at nonprofit employee satisfaction.)
Another 8% of turnover is attributable to factors I consider within organizations’ sphere of influence including limited professional growth potential, salary, conflict with supervisor and conflict with co-workers.
The balance of voluntary turnover is attributable to personal reasons largely beyond employers’ control including family issues, relocation, retirement, change of profession and continuing education.
These findings, and the other benchmarks in the report, illustrate that even in the current economy, turnover and retention are significant issues within nonprofit organizations, and many causes of a great deal of turnover can be directly addressed by employers. As the economy improves, voluntary turnover will increase, and it will become even more important to ensure the ability to retain valuable employees. As a nonprofit human resources professional or organization leader:
- Are you aware of your organization’s voluntary and involuntary turnover rates and how they have changed over time?
- What have been the leading causes of turnover within your organization?
- Do you consider turnover and retention a concern for your organization?
- What is happening in your organization — or can be done — to control turnover and enhance retention?
- What do you need to do to retain and compete for talent as economic conditions improve?
This post originally appeared on the Mission Connected blog on May 5, 2010.
photo credit: Dan4th