How the Great Resignation Impacts Nonprofits

A survey conducted by the National Association for Human Resource Professionals (NAHRP) revealed that nearly half of nonprofit human resource professionals expect their organization’s turnover rate to rise next year. And 80 percent of them say they don’t have a plan in place to address the issue. One significant challenge is the great resignation, which is impacting nonprofits and ministries.

If you find that you’re experiencing high levels of employee churn. Turnover costs are quite high and can be detrimental for an organization’s health. So it’s always a better choice to retain valued employees rather than focus on recruiting, onboarding and acclimation with new hires. With limited funds and even governmentally mandated salaries, some nonprofits face greater restrictions than for-profit companies. When it come to attracting employees, these constraints can be extremely limiting.

Why Did the Great Resignation Occur?

Anthony Klotz, associate professor of management at the Texas A&M School of Business, says the phrase, “the great resignation,” describes what he sees happening now. He believes it began with people delaying retirement because of the coronavirus outbreak. But Klotz predicts it won’t end there. Klotz says the virus could cause a mass exodus of employees, especially those who are burned out. And he thinks this could lead to a broader change in how Americans view work.

Klotz believes the pandemic forced Americans to reassess priorities and values. People are questioning whether we’re doing enough to help others. They’re asking questions about why some people are getting sicker than others. And that’s where the term, “the great resignation” came into play.

This may seem like a huge win for nonprofits, however, as people have questioned the best ways to help others they are evaluating how nonprofits expenses impact the bottom line for an organization. This has led to less donations where companies aren’t transparent about donations. Reducing the impact of the great resignation for nonprofits is two-fold.

Employee retention and donor retention are both necessary. In many cases, the same action steps will improve employee satisfaction and donor loyalty. Read on to learn more.

How the Great Resignation Has Impacted Nonprofits

During the 2020 pandemic there were widespread business closings and layoffs across both the nonprofit and for profit sectors. As the country opened back up most leaders expected people to come back to work, but this didn’t happen.

Instead, people started reevaluating their values to better protect free times and work with a greater feeling of purpose, sparking the Great Resignation Movement.

Many for-profit companies have adapted their business models to meet the needs of an increasingly educated and empowered workforce by offering greater compensation, better employee benefit packages, enhanced work-family balance, and flexible working arrangements.

Before the pandemics hit, nonprofits had already been operating with limited resources. And the pandemics only serve to further limit their resources. A recent salesforce trends report found that 75 percent of nonprofit organizations saw an increased demand for their programs, while about 68 percent were facing a decline in funding.

Because nonprofit organizations haven’t had to pivot as quickly, they’ve been unable to adapt to changing market conditions. It has left many of them understaffed and experiencing even faster staff turn­over rates.

Nonprofit trends: why nonprofits employees quit according to the earlier mentioned nonprofit HR survey, the most common reasons for voluntary employee turnover include:

• 49% of employees found better opportunities.

• 44% invisible career paths (lack of opportunity, career growth or professional development).

• 35% disengagement or dissatisfaction with the culture or organization.

• 32% reported benefits and pay with the deciding factor.

• 20% left for personal or family reasons.

• 19% changed career path.

If you want to keep your nonprofit’s staff members from leaving, you need to develop a strategy for retaining them. You should also measure its impact and make changes if necessary so that employees remain satisfied.

Five Best Practices To Reduce Nonprofit Employee Turnover

1. Stay Competitive with Employee Hiring by Watching Trends.

A recent survey by UST HR Workforce Solu­tions found that two-third of nonprofits plan to hire new employees this coming fiscal yea­r.

If you’re one of the companies looking for new employees, then there will be a large number of applicants vying for the position. Your pay, benefit package, office environment, company structure, and overall job opportunities must be attractive enough for potential employees to want to join your organization.

2. Reduce Overhead by Outsourcing Where Possible.

Your nonprofit’s primary operations should remain in-house, but if you’re already doing so, then you might want to you can outsource everything that isn’t something you’re an expert at, like legal services, market­ing, CRM, book keeping and accounting.

It’s a common practice for companies to outsource their operations. You’ll be able to connect with industry experts who are the best at their jobs while saving money by not having to hire full-timers in-house. This allows your employees to concentrate on their jobs instead of having to deal with administrative duties. Additionally, employees will learn best practices about areas of the organization they do not have training in. Outsourcing your non core competencies allows you to spend more of your valuable resources on focusing on your mission and advancing your business’ goals.

3. Focus on Employee Culture and Well-Being.

Evan Feinberg, the executive vice president of the Stand Together Foundation, wrote a piece for Forbes about the importance of organizational culture for nonprofits. In it he explains what makes a good organization culture and offers some suggestions for improving yours.

Feinberg notes that the American Workforce Survey found that employees seeking jobs look for more than just money. They want “a place where they feel valued, respected, trusted and supported; a workplace that provides opportunities for growth and development; and a workplace that feels like home.”

He adds that many organizations fail to provide these things because they think that “paying someone more money will solve everything.” But he points out that pay alone doesn’t explain employee satisfaction or retention.

Open the Door to Experimentation

Employees should be allowed to try new ideas without fear of being punished or reprimanded. This could include experimenting with different compensation packages, allowing employees to take on additional responsibilities, or offering flexible hours.

Impose Top-Down Decisions.

Instead, let employees decide what works best for them. If a team member wants to start working remotely, let her go ahead and do it. This has the added bonus of reducing overhead costs such as barely used office space, office equipment rentals, and additional utility bills.

Don’t Rely on How Things Have Always Been Done

Finally, don’t revert to the “This is how we do things around here” attitude. When employees know that their opinions matter and that there are no rules except those set forth by the board, they tend to be happier and more productive. A growth mindset from the top down allows for innovative ideas to take root.

4. Offer Training Opportunities

A second strategy to increase employee engagement and to give employees a sense of fulfillment is to provide them with clear pathways for career development within your company. Evidence suggests that invisible career paths are one reason why people quit their jobs at nonprofits and the nonprofit sector.

Providing training might seem expensive, but it’s smart to think of it as an investment in your people. Plus, if they quit, you’re likely going to end up spending more money to replace them anyway.

5. Hire the Right People for the Culture

You should also consider your nonprofit’s organizational culture and be mindful of it when hiring new employees. Instead of always hiring people with the most relevant skills or qualifications, you should be looking for people who share your company’s core beliefs and cultural traits.

People who are more loyal, helpful, and committed to your company will stick around longer than others. They’re less likely to jump ship when offered an even better job elsewhere.

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