NonprofitEmployee costs generally make up more than 50 percent of a nonprofit’s budget so nonprofit talent management is critical to the health of every nonprofit’s “bottom line”. This will be highlighted as the economy continues to grow and nonprofits face two major workforce trends: the need to add staff to meet demand and the reality of losing experienced staff to retirement or “better” jobs.
Adding nonprofit staff has been a trend for the last three years. Nonprofit HR Solutions’ 2013 survey of 588 nonprofits found that 40 percent added new staff in 2012 and 44 percent plan to create more new positions this year. Turnover is expected to remain at 17 percent in 2013, the same as 2012, but voluntary turnover and retirement now account for 11 percent of total turnover. This may grow as the economy’s recovery leads to more job options for good employees.
After hiring, retention of good employees is key to sustainability, but in the Nonprofit HR Solution study 90 percent of respondents reported they have no retention strategy even though they see it as a challenge. Losing good employees is expensive. Writing for www.philanthropy.com, Raymund Flandez found the average tenure of a fundraiser is only 16 months and the direct and indirect costs of replacing that fundraiser add up to a staggering $127,650! For other employees hiring costs range from 25 percent to over 100 percent depending on the job and responsibilities.
Here are strategies that work to improve hiring decisions, reduce voluntary turnover, and improve workforce retention.
Hire the right person in the first place.
Most organizations have made at least one hiring mistake in the last 12 months and report spending thousands of dollars to fix it. Hiring mistakes are not only expensive, they negatively affect the morale of other employees and can damage donor relations. Hiring the right person, on the other hand, results in 10 percent - 50 percent higher productivity and revenues.
Why is hiring so hard? Most nonprofits base hiring decisions on resume reviews and interviews. Yet over 50 percent of resumes contain erroneous information and applicants can be coached on interviewing tactics, so decision data may be flawed. The best way to get objective, accurate talent data is to use pre-hire assessments - candidates can’t “fake” assessment responses as they can fake interview responses or experience on a resume. Be sure to use an assessment validated for pre-hire use, one that matches job requirements with applicant preferences and strengths.
Pay attention to pay
In a 2012 study, Penelope Burke of Cygnus Applied Research surveyed 1700 fundraisers and 8000 nonprofit CEOs. She found that good fundraisers begin to be recruited away after only three to six months in a position! She reports that it would cost about $46,000 to keep a good fundraiser happy by providing better salaries and other benefits like more vacation... a bargain compared to $127,650!
The best pay strategy is to match the market rate for the job whenever possible.The closer pay is to the market rate, the less likely an employee will think about quitting. When employees find the work interesting and feel valued, most will not look for a new job as long as the pay is competitive in their geographic area and the industry.
Pay is not the most important factor in most decisions to stay in a job or to quit, but it is one of the top reasons employees choose to stay when they are offered another job. Fundraisers are an exception – most report that higher pay is the number one reason they leave current jobs. Helping someone decide to stay rather than take a new job saves money every time.
Research has repeatedly found that a flexible work schedule is a key reason for staying with the current organization when an employee is offered employment by another organization.Flexible work schedules improve employee satisfaction and productivity while helping to reduce absenteeism.
Let managers to handle employee scheduling requests on a case-by-case basis or permit cross-trained employees to “trade” hours as needed to meet both business and personal demands on employees. The key is to be as flexible as possible while meeting the needs of the business.
The bottom line? Talent management is an increasingly important driver of nonprofit sustainability and every investment in hiring and retaining good talent goes straight to the bottom line. With projections for increased service demand in 2013, nonprofits must continue to grow the workforce while trying to hire and retain high performers. Now is the time to review talent practices and make the changes needed to reduce costs and improve bottom line performance.