The nonprofit sector is the third-largest employer in the United States and continues to grow, so it is more crucial than ever for business owners to boost job satisfaction and retention. The good news is most nonprofit employees are happy (85% are satisfied, highly satisfied, or extremely satisfied). Nonetheless, any CFO’s goal should be to shift the standard from simply satisfied to truly engaged so staff will stay on at the organization.
Engagement in a broad sense can be defined as a level of commitment and involvement. While satisfaction is often used interchangeably, engagement extends further. Employee engagement requires willingness to expend extra energy and time toward achieving the organization’s goals, and the employee must also believe that those goals mirror his or her own. This is especially important at not-for-profits, given their limited resources and smaller budget when compared to their for-profit counterparts.
The challenge for nonprofit C-level staff is to create an organization where employees are engaged and stay for the long-term. But in order to make changes, you need to know what can and needs to be changed. Although 90% of business executives understand the importance of retaining staff, less than half have any idea of how to do it. The necessary responses are multifold, but the following 3 areas should be significant considerations for those directing a not-for-profit organization.
1. It Starts at the Top
As the business owner or director of a nonprofit, you need to demonstrate the value of engagement yourself first. According to Dr David Dye of Deloitte Consulting LLP, “When the CFO leads on an issue, it gets more attention than when it’s sponsored just by HR.” If you want your staff to be engaged, you have to be their example. Every day. Inspire your employees with your words, communication, and action. This is essential for creating a real culture of engagement for your organization.
But it’s also vital that engagement with the work and other employees trickles down throughout the organization. If managers below the C-level don’t all seem committed to functioning as a team with the staff they are responsible for, your example will make a limited impact. The problem is, your managers may not realize this, or they may not realize that they’re not doing this effectively.
Managers have a habit of overestimating just how effectively they communicate on a daily basis with their employees. 87% of supervisors stated they had an open-door policy, while just 64% of employees agreed. Though 68% of managers stated they consistently held meetings, only 45% of their employees reported that they met their managers on a regular basis. Engagement has to flow down the command chain on a daily basis for all staff to see it and start to embody it themselves.
2. Making Your Mission Key
Passion separates employees at nonprofits from other industries; “A strong affinity for the organization’s mission” continuously rates as the top relationship to an employee’s job satisfaction in nonprofits, whereas it ranks 20th out of 25 factors in for-profit sectors. This is a real edge for nonprofits, as it’s been proven that mission-driven companies have a 40% higher level of staff retention. The key is to bring your mission to the forefront of your operations so that your employees can really appreciate it, connect with it, and become more engaged with work as a result.
And it’s not just about what your not-for-profit is trying to do for society. How your organization operates on a daily basis is of great importance to your staff, too. This is why it’s essential to ensure you have the right culture in place. The organization’s culture will be determined by the values that are expressed by leadership, as we have previously discussed. So, the desired beliefs of the nonprofit must be clearly stated, reinforced, and celebrated. When an employee acts in a manner consistent with those desired core values, management should recognize and praise that employee. This is especially true as more millennials (18-35 years old) enter the workforce, for whom “positive culture” and “a calling in work” are vital mindsets. If team members think they’re on the right track, they’ll enjoy a boosted morale – while your nonprofit enjoys better staff retention rates.
3. The Many Forms of Compensation
Without putting too fine a point on it, money matters. Nearly half of employees report dissatisfaction with their pay given their skill set and effort exuded. You should strive to match individual wages with expectations and needs. But studies have also shown that while increasing wages to meet employee expectations drastically improves morale, boosting wages beyond that level has a flat effect on job satisfaction. In other words, employees find it more important to be appropriately paid than to make more money overall.
Given the difficulty and apparently limited effectiveness of increasing nonprofit salaries, CFOs should explore alternative financial vehicles for staff retention. The Merrill Lynch Retirement Study reports that younger employees are going to become more dependent on their savings and investments, as opposed to social security, to support themselves during retirement. By offering retirement and death benefit plans, nonprofits can tap into staff needs, and retain key talent without having to augment pay.
Customized financial wellness programs are another potential offering. With their individual tailoring to each employee’s situation, these programs can save staff a considerable amount of money. Not only does this create goodwill towards your company and encourage employees to stay on, but it doesn’t bite into your equity either. This kind of cost-effective retention solution is ideal for a cash-strapped nonprofit organization.
This checklist is but a start for CFOs who want to lead a nonprofit where enthusiastic employees work hard, emulate a culture of engagement, and stay on. The best part is, none of these changes cost you any of your equity.
But don’t overlook these tips as quick fixes for later. Only 55% of nonprofit employees plan to stay with their current organization beyond the next two years. Make sure that’s not the case at your not-for-profit by giving your staff the right example, the right mission, and the right benefit package today.
Where do you see a need to improve at your nonprofit? Let us know in the comments section.