Some call it “The Great Resignation.” Or the “Big Quit.” Or the “Great Reshuffle.” No matter how we refer to it, it’s having an impact on staffing and hiring, especially for not-for-profit organizations.
Last year, an estimated 47 million people quit their jobs, according to the U.S. Chamber of Commerce. Common reasons for their decisions include the desire for higher salaries, more flexibility, and an improved work-life balance.
The result is that businesses and not-for-profits are hiring. This past Spring, the unemployment rate dropped to 3.6 percent as employers added 372,000 jobs. In many states, that’s a near-record low.
Yet this change in workers’ attitudes and desires creates challenges, as employers – especially not-for-profits – seek to accommodate what employees want in order to create a stable and reliable workforce. Insight about this is provided in a Fall 2021 survey of over 1,000 charitable not-for-profits in all 50 states by the National Council of Nonprofits.
Job Vacancies Abound
Charitable organizations can’t meet their missions without staff in place, and current job vacancy rates are concerning. More than a quarter (26 percent) of survey respondents reported that they had openings for 20 to 29 percent of their positions, and 16 percent of respondents said they had more than 30 percent of their positions open.
Reduced services. For many organizations, this vacancy rate translates directly to an inability to provide services. For example, client waiting lists are growing longer or are being closed altogether, services are being limited or reduced, and staffs are being asked to do more.
Salary constraints. Even in the best of times, not-for-profit organizations have a hard time competing for staff due to salary constraints. Pay disparity between for-profit and not-for-profit organizations became even more of an issue during and after the “Great Resignation,” with workers able to negotiate ever higher salaries in the face of a labor shortage. In many cases, fundraising hasn’t kept up with increased salary demands.
In the survey, a whopping 79 percent of respondents identified salary competition as a factor preventing them from filling job openings. Many organizations also noted an inability to provide competitive benefits and retirement packages as a factor. Nearly a quarter of respondents cited workers’ inability to find childcare as a hinderance to recruiting and retention.
Remote work. The popularity of remote work also hampers some not-for-profits’ hiring. While certain jobs can be accomplished remotely, others cannot. For organizations that provide direct services, remote work doesn’t work. This has also spilled over into the volunteer arena. Many volunteers haven’t returned to in-person service post-pandemic, creating a need to hire staff to replace them—which leads back to the root labor shortage.
Burnout. And don’t overlook the nature of some not-for-profit work as a downside. Serving people in crisis at shelters or behavioral health facilities is stressful. Worker burnout is rampant, and the pandemic left many without the emotional capacity to cope with more stress.
Fixing the Big Picture
Many not-for-profit organizations are feeling especially vulnerable, left reeling by the pandemic and struggling to find qualified workers to join their staff. Survey respondents shared several ideas for reform.
Shift culture. A number of funders won’t cover not-for-profit operating costs, which creates enormous challenges at the heart of not-for-profits’ budgets. Donors are also generally less interested in covering operating costs than they are funding services. Several survey respondents described a “culture shift” required to cover infrastructure, competitive salaries, and benefits. Not-for-profit organizations must be prepared to communicate these needs in a compelling way.
Create stability. Many not-for-profit respondents underscored the idea of securing “multiyear support” (versus shorter duration support) from funders so the organizations can create longer staffing plans without relentless budget fears. This change will require a concerted effort to impact funding cycles and expectations.
Reform funding. A significant number of not-for-profit organizations perform services on behalf of governments under grants or contracts. Unfortunately, many of these agreements use outdated and insufficient reimbursement rates that don’t fully cover the cost of services or salaries. A lobbying effort is required to raise awareness of this issue with state and federal governments.
Capture true costs. There’s a lack of timely and accurate data regarding not-for-profit employment and cost of services. In fact, the National Council of Nonprofits reports that the U.S. Bureau of Labor Statistics doesn’t currently collect employment data for charitable not-for-profit employers, and not-for-profit employment data is only released every five years. No other major employment sector is ignored in this way.
Keep up with costs. Many not-for-profits provide services based on fixed rates established years ago that are not adjusted regularly for cost of living, inflation, or other increases. Some states only adjust their rates for inflation every five, 10, or even 20 years. Without these built-in “escalators,” not-for-profits face inordinate strain to cover costs and provide services. Similarly, while federal rules require governments to cover the full cost of services—including indirect or overhead—many government entities do not comply. A review of these reimbursement policies is a must.
What to Do
Of course, fixing the big picture will take years. In the meantime, not-for-profits are struggling to fill employment vacancies and maintain their levels of service. If competing on salary isn’t currently a viable option, not-for-profit HR executives have other suggestions.
Push the mission. Your organization’s good work will attract those who want to make an impact. Seek those with a passion for your organization’s mission by promoting your values and sharing successful program results.
Use your network. Your volunteers, your board, and your current employees provide the best endorsements for your organization as a place to work. Be sure everyone is aware of open positions and candidate requirements. In addition, share your job vacancies with your professional networks. Your financial, legal, and insurance advisors are well connected and in contact with groups of people you typically might not interact with.
In related action, consider lobbying state legislators to bring awareness to your mission and challenges. While not-for-profits often avoid political involvement, trade organizations must lean in to capture attention and resources.
Promote from within. The overall labor shortage is creating enormous opportunities for employees to rise to meet next-level challenges. Consider promoting from within your existing workforce to retain good workers and give them a chance to shine. Be aware of where you need to spend your training and development efforts and dollars. You may need to invest more in skill building for mid-level workers.
Hiring is both a challenge and an opportunity. Not-for-profits need to respond to what employees want while revising processes and systems for a constantly-changing environment. We suggest that having thoughtful, experienced and skilled advisors on your team can help the transition, and set a new course for future stability and growth.
We’re ready to be your advisors as you meet these challenges and explore these opportunities. Contact us to see how we can help.