In a Tight Job Market, Nonprofits May Suffer Unless They Use What They’ve Got

September 4, 2017; Associations Now

The latest Nonprofit Employment Practices Survey administered by Nonprofit HR found that though nonprofit organizations are still growing their workforces at a rate that outpaces for-profit companies, the hiring gap between the two sectors has narrowed by about 11 percent. As nonprofit organizations gear up to replace retiring baby boomer leaders as well as keep up with the growing demand for services, the closing of this gap could be problematic moving forward.

Two notable issues highlighted by the Nonprofit HR report point out areas where the nonprofit sector must focus in order to attract high quality candidates. The study found that 64 percent of the nonprofits surveyed did not have a formal strategy for recruiting employees, and 56 percent indicated no plans on changing this. Part of this may be due to funding issues. The report states, “Hiring qualified staff within limited budget constraints continues to be the top talent management challenge for nonprofits for the sixth year in a row.” A previous NPQ article indicated that 40 percent of nonprofit organizations expressed concern over losing a main revenue source. It is understandably difficult to focus on creating a hiring strategy, when the funds to make any hires are uncertain. Unfortunately, the nonprofit field is notorious for underpaying highly qualified employees, and its silence on the minimum wage issue sends the message that the field does not support paying a livable wage. Armed with this information, high-paying corporate jobs are more likely to appear favorable to potential employees. Nonprofit organizations now more than ever need a plan to attract employees since it may take more time to find the right candidate.

The data paints an even worse picture when it comes to retention, with 81 percent of nonprofit organizations indicating that they have no retention program. Retaining the employees an organization does have should be a high-ranking priority for all nonprofits, but even more so for those that are operating under constrained budgets. Studies looking at the cost of staff turnover versus investment in an employee indicate that turnover is more expensive in the long run, once you take into consideration lost productivity, errors, and the impact on other staff on top of hiring costs. Moreover, employees want to work at organizations that invest in their development and wellbeing. Offering benefits and reasonable salaries can encourage employees to stick with a nonprofit even during rough patches that result in pay decreases.

The nonprofit sector in general has not felt the need to invest in employee acquisition or retention because the field offered employees one benefit that for-profit companies could not: satisfaction from purpose-driven work. But, with the advent of social entrepreneurship and more companies recognizing that employees, especially millennials, want to engage in community service and value employers who offer these opportunities, nonprofits may be at some risk of losing their edge in this aspect.

Nonprofit organizations work towards solving major issues facing our society; they need highly qualified staff in more than just the executive suite to make progress. Nonprofits must develop both internal and external initiatives that offer what workers want—not just fair and livable wages, but also an environment where skills can be built and intelligence and passion can be well deployed. What a boost it would be for our hiring edge to be known as the sector that champions and models respect for the work of our entire staffs.—Sheela Nimishakavi