Nonprofit organizations, by nature, are dedicated to serving others. From advocating for social justice to providing assistance to marginalized communities, nonprofits have a critical role to play in creating a better world. However, to achieve their goals, nonprofit organizations must also cultivate a positive and healthy workplace culture. When done correctly, this process can help improve your workforce’s overall performance, creating a more productive, motivated, and engaged team. Below are some ways cultural transformation can benefit your workforce.

1. Improved Communication – Communication is the key to any successful organization. Without it, the employees will not be able to work together efficiently, resulting in reduced productivity and missed opportunities. An effective cultural transformation within a nonprofit organization can ensure that everyone is on the same page, working towards the same goals, and communicating in the most transparent and open way possible. When employees feel their voices are heard and valued, they will be more likely to share their thoughts and ideas, leading to better decision-making and increased innovation.

2. A Greater Sense of Purpose – Nonprofit organizations have a unique advantage when it comes to inspiring their employees. Most individuals who work in the nonprofit sector are driven by a sense of purpose, making their work extremely fulfilling. However, this motivation can wane over time if not cultivated and nurtured properly. Cultural transformation within nonprofit organizations can provide employees with a renewed sense of purpose and direction, reminding them of the critical work they do, the value it brings, and the greater impact it has on the community as a whole.

3. Builds Trust and Respect – Building trust and respect among employees is an essential aspect of any positive work culture. A cultural transformation can help create a more harmonious workplace, where employees trust and respect one another. This type of environment fosters an atmosphere where employees feel more comfortable taking risks, collaborating better, and working seamlessly together to achieve the organization’s goals.

4. Reduces Employee Turnover – Employee retention is a significant challenge for many nonprofit organizations. Without a healthy workplace culture, high employee turnover is likely to happen, which can have devastating effects on the organization’s overall performance. A cultural transformation can address this issue by creating a more attractive workplace, which can reduce employee turnover. By nurturing an environment in which employees feel respected, engaged, and challenged, nonprofit organizations can retain their best employees and create long-term value.

5. Increases Innovation – Nonprofit organizations must stay innovative to remain competitive and maintain their relevance in the community. Without innovation, these organizations can become stagnant, lose relevance, and eventually fail. A cultural transformation can help fuel innovation by encouraging creativity, experimentation, and risk-taking. When employees feel liberated to challenge the status quo, they become more open to trying new things, leading to new discoveries, new methods, and ultimately better outcomes.

In conclusion, cultural transformation is essential for nonprofit organizations to thrive in today’s competitive world. By investing in positive workplace culture, these organizations can create a more fulfilling work environment, where employees feel valued, engaged, and motivated. By building trust, improving communication, creating a shared sense of purpose, reducing employee turnover, and encouraging innovation, nonprofit organizations can leverage their full potential and deliver on their missions in the most efficient and impactful way possible.

Voluntary turnover harms your bottom line. Your team must focus on providing meaningful work, goal-setting, and communicating that you value their worth. Please note: Masking difficult work conditions with “fun” items like free beverages will not build the employee engagement necessary to break many organizations’ cycle of preventable terminations.

Consider the following sensible suggestions to help your team reduce employee turnover:

Know Your Stuff with Workforce Analytics

You might notice your managers losing employees, but do you know which few are high on the retention scale? Take care to standardize your metrics across the organization, using the same rules for all teams. Performance management software can help you track conversations and responses. Your job profiles will be more accurate, and you can set clear expectations of others. Keep everyone on the same page regarding meeting notes and performance evaluations. Determine which managers have markedly kept employees engaged, so you can set up a program allowing them to teach those skills to other managers.

Make the Most of Personalities

Teams excel when a variety of  key personality types are orchestrated. If you blend risk-takers with detail-oriented individuals, you’ll benefit from an innovative team that can finish projects. Too many of any one type of personality, and you risk losing innovation or failing to meet project completion deadlines. Blend these two with some people-oriented relationship builders to help everyone work together. When selecting personality assessment tools, choose one that is appropriate for the work environment, such as trengthsFinder, the DiSC assessment or the Core Values Index.

Find the Right People

It may seem like a lot of work to define skills, values, and personalities that work best for the roles you need to fill. And it’s even more work to confirm that your pay and benefits are within reasonable benchmarks for your region and industry. But hiring someone who stays for years will make it worthwhile.Repeatedly filling a slot with wrong-fit people will cost you money, time, and missed deadlines.

If an employee has been given ample time, onboarding, and additional training but just can’t finish projects or fit your values and culture, you need to let him go. Don’t give poor-fit workers the time to frustrate and drive away your productive staff members. The more you find right-fit employees, the less often you’ll be forced into one of these situations.

The Nonprofit Equation

In large part, people do not take employment at nonprofits for the money. They go into it to feel a strong sense of purpose. Just be aware that their initial interest does not solve employee turnover. People burn out. Lack of investment in a workplace infrastructure can leave staff overworked and underpaid—which will demolish employee engagement. Yet, for decades, the “low pay, make do, and do without” culture of the nonprofit sector has prevailed.

Shockingly, more than 80% of nonprofits have no formal retention strategy. They are not prepared to withstand the varied and tangled reasons for their high turnover. There are countless reasons why employees leave, including: low pay, no upward mobility, excessive workloads, lack of career development, missing mentors, lack of growth opportunities, no rewards or recognition, poor leadership, lack of organizational vision, stifled communication, challenging or even hostile culture, inadequate job reviews, long work hours with no flexibility. Nonprofit leaders simply accepted the resulting high turnover as the cost of doing business.

Before you lose another needed staff member, consider these steps to addressing the causes:

• Transparency and Support. Be sure to model a culture of acceptance to encourage sharing. In one-on-one discussions and group support meetings, allow staff to speak freely. This is not the time to be defensive or accusatory. Provide opportunities for self-care. Some nonprofits create opportunities for walking or jogging. Invest in a small library of relaxing and fun eBooks that can be shared with remote workers. Humor, science fiction, travel, romance, and adventure—these stories allow people to escape without ever leaving their chair.
• Help Them Grow. Even in the nonprofit sector, employees value career development more than any other perk. Professional development opportunities and potential for career advancement go hand-in-hand to explain why they choose their jobs. Yet, a recent study reported that more than a third of respondents felt their organization lacked interest in their development or advancement. If you’re not promoting from within, your employee morale is suffering as a result. Start resolving this by creating some training opportunities—anything from books to online classes.
• Design Realistic Workloads. Employee burnout is a huge problem for nonprofits. Start fixing it by balancing projects across your team, so that some aren’t working longer, harder hours than others. Assign work based on an employee’s job, skills, talents, and interests … taking care regarding the workload level of everyone on the team.

Support Their Talents, Capabilities, and Dreams

There is a delicate balance to consider when summing up each employee’s strengths. On the one hand, you don’t want to push your staff members to do things they’re not equipped to handle. For example, a sensitive introvert might not be the best choice to handle cold calling or outbound fundraising approaches. All those rejections might scare them right out of your organization. On the other hand, you must do your best to avoid unconscious bias in project assignments. If you think someone might be unable to handle technology because of their age, think again. The same goes for gender, race, country of origin, or any other unreliable indicator. An employee’s demonstrated strengths are very different from your assumption of an employee’s weaknesses based on gut feelings. So, as you get to know employees, follow their work, and talk with them about their career goals, your genuine knowledge of their talents, skills, interests, and career goals can help you guide them in directions where they will feel engaged and motivated to pursue excellence.

Counting the Cost of Turnover

If your nonprofit is struggling with loss of staff, especially as we climb out of the COVID-19 pandemic, developing a robust retention management plan can help. It’s worth your time to learn some metrics and calculations. If you’re not paying attention to your turnover metrics, you’re missing key information necessary for your nonprofit’s ongoing survival. These numbers will help you know with clarity and certainty how your organization is doing and where it needs help.

Metrics can lead you to ask questions and find out why particular people are leaving so you can formulate targeted retention strategies that work. In all, your retention management plan will empower you to determine the extent of your losses, diagnose exactly what’s causing the problem, and then develop strategies you can implement to improve your situation. Ensure your success with the following metrics:

• Overall Retention Rate. Divide your current number of employees by the number of employees at the start of your measurement period. Then, multiply that by 100. So, if your nonprofit currently has 75 staff members, and you began the year with 80 people, divide 75 by 80 to get .9375. Multiply that by 100 to get an overall retention rate for those months at 93.75%. This gives you a quick look at how your staff might have been shrinking in recent months.
• Overall Turnover Rate. This is the opposite of your retention rate. It can inform you about your team’s health. Divide the number of employees who left during a specific time frame by the average number of employees during that time. Multiply the answer by 100. So, if you averaged about 50 employees during that time frame, and 5 people left, you divide 5 by 50, giving you .1 as your first answer. Multiply that by 100, and your turnover rate is 10%.
• Voluntary Turnover. Track the number of employees who choose to resign and leave your nonprofit. It’s a strong indicator that your engagement is low, and your retention strategies are not working. It can also mean that the wrong person was hired for the job.
• Involuntary Turnover. When you fire or lay off an employee, it’s generally your decision to make the change. The reason could be for low job performance or a poor fit between your culture and that staff member. For both voluntary and involuntary turnover, try to ask key questions and discern what led to that point.
• The Costs of your Losses. Measuring the costs can be tricky to calculate, but if you keep good records of your expenses, that will simplify the job. The reason for tackling this is that every nonprofit leader wants to keep costs under control. It’s part of their job description. So, if your turnover costs are high, you must implement this effective and efficient tool for measuring and controlling your costs significantly.

The expense of replacing a single employee can be as high as 60% of her annual salary. Total costs go much higher. And these expenses are harder on smaller nonprofits. No matter how you feel about working with numbers, your organization is counting on you to intervene with crucial information. The numbers you generate will help you influence turnover rates and save your organization from painful costs.

Take the Turnover Tour

There are many reasons that employees leave a job. The first distinction, of course, is whether that turnover was voluntary or involuntary. They require different management techniques. First, be sure to handle the legal requirements for involuntary turnover as well as the root causes of such loss (such as an inadequate job description or depleted talent pool).

Next, pay attention to your voluntary turnover. Among workers who leave voluntarily, there are two types: Functional and Dysfunctional. Watch out for the latter. Functional turnover doesn’t generally hurt an organization, as you’re losing poor performers or easily replaced employees. Dysfunctional turnover, on the other hand, will hurt your nonprofit in many ways. You could lose your high-performers and employees with hard-to-replace skills. You also risk losing your diverse culture, as women and minority group members leave.

The final distinction separates two types of dysfunctional turnover: Unavoidable and Avoidable. If someone leaves to move out of state with their spouse, there will be little you can do to prevent it (though remote work is becoming a widespread new option). Generally, if there is nothing you can do to prevent the change, it’s unavoidable. Every employer will face a certain amount of this. Avoidable turnover is where you must focus. Find ways to improve employee satisfaction. And before you decide if a case of turnover is unavoidable, it might be time to consider how to change it. An employee who quit in the past to start a family may stay with you, now, if your organization starts offering paid maternity leave, on-site childcare, and other working-parent benefits. Some solid number crunching that compares the cost of replacing lost talent against the cost of keeping employees from leaving will help you determine your best case-by-case course of action.

Why They Leave

In considering why employees leave your organization, be sure to consider the following reasons they could be exiting your nonprofit:

• The job is unsatisfying. Your nonprofit has not been able to tip the scale of inducements over their Contributions. Look deeper at their desire to leave and ease of leaving.

• Something better became available. They may or may not be dissatisfied with their current job, but perhaps an even more appealing job was offered elsewhere.

• They’re following a plan. This could involve educational or family goals or some other life transitions that preclude their staying in the job. There will likely be little you can do about these departures unless remote work and flexible hours sweeten the inducements to stay on-staff.

• They’re leaving without a plan. This is an impulsive action. It might be their response to something negative happening at work, such as losing out on a promotion. If they’re leaving due to some preventable workplace experience, such as sexual harassment, you must find better ways to protect your employees.

Why They Stay

Employees who stay in one job for years usually find themselves embedded in their workplace, culture, and community. They’ve grown a thriving network of relationships and professional connections that fulfill both their professional and personal lives. When they leave a job, they often lose most of those long held ties. Here’s where you can support your embedded employees:

• Links. People, such as co-workers, mentors, friends, and volunteers make up the people who are linked to your employee. To foster these connections, try to provide mentors, design work in teams, encourage team cohesiveness and employee referrals. Support participation in outside service events or sponsor community activities such as bowling or softball leagues and participation in outside service events.
• Fit. This is the compatibility your employee feels for the position, organization, and surrounding community. For example, if your employee was drawn to your organization because you help people with diabetes, and they happen to be a Type 1 diabetic, they probably feel a personal connection to their job that they wouldn’t feel working for another type of nonprofit. To encourage a team with more right-fit employees, provide realistic information during recruitment, make job and organizational fit a part of candidate selection, and communicate clearly about your nonprofit’s culture and values.
• Sacrifice. What would your high-performing employee have to give up in order to leave their job? Could it be loss of tenure-based financial rewards or perhaps the loss of a positive work environment, promotional opportunities, or even name-recognition in the community at large? The more they have to lose, the more embedded they become, and the less likely they are to leave.

The Pandemic’s Influence

Even before the pandemic hit, approximately a quarter of American workers were quitting their jobs in order to find something better. With the economic recovery, many are now seeking to leave after the pandemic ends. Approximately 80% are concerned about career advancement, a common problem in the nonprofit sector. However, it’s even more important to note that 72% of American workers say the pandemic forced them to rethink their skill sets. More than half of those planning to leave their jobs spent the pandemic months training to build new skills. Many did so in preparation to change jobs within the next few months. The reality of moving from job to job to increase your pay and boost your career status reportedly works better for white males than for women or minorities. In fact, this kind of post-pandemic shift carries the potential to worsen income inequality and other inequities, as college educated white workers increase their remote-work options while other employees remain unable to job hop. Take these three steps to maximize employee retention in the post-pandemic economy:

1. Reconnect. Months of remote work left many employees feeling dissociated from their employers. This leaves them more open to changing jobs, especially when another employer reaches out to them. Rather than rush everyone back into the office, consider increasing your flexibility. Giving your employees options, especially after the pandemic, will make your organization more attractive as an employer. Some nonprofits are choosing a hybrid model, splitting time between the office, and working from home. Nearly 70% of workers find this balance to be an “ideal” model.
2. Open Pathways. The pandemic worsened anxieties already plaguing employees about their career development. When your staff went home, did you invest in training them on technical skills for the new employment landscape? Many nonprofits were forced to focus on providing emergency resources for childcare and mental health. They had to shift their business model, but training beyond the immediately necessary was lost in the mix. It’s time to accommodate your employees career goals and give them the additional training required to be able to function in a technical world.
3. Support Financial Wellbeing. Understand that new jobs are opening up at such a rate that many workers are finding new opportunities where none existed before the pandemic. Your employees need to feel financially safe if they will continue working for you. With their new training and opportunities, you will lose talent if you don’t pay them enough to remain resilient.

This is an excerpt from UST’s eBook, “3 Essential Practices to Cultivate a Positive Employee Experience” in collaboration with Beth Black, Writer and Editor.

Question: Do we need to investigate rumors of harassment even if no one has made a complaint?

Answer: Yes, you should investigate. A company always has some inherent liability in relation to discriminatory or harassing comments or behavior. The level of liability usually correlates to the nature, severity, and context of the comments, the position of the employee who made them, and what the employer does or does not do about it. 

Since you have knowledge of a potential situation, you should investigate the matter and take appropriate disciplinary action if it turns out your antiharassment policy was violated. As you conduct the investigation, document the discussions you have as well as your findings, and reassure those you interview their participation will not result in retaliation. 

This Q&A was provided by Mineral, powering the UST HR Workplace. Have HR questions? Sign your nonprofit up for a FREE 60-day trial here. As a UST member, simply log into your Mineral portal to access live HR certified consultants, 300+ on-demand training courses, an extensive compliance library, and more.

It is nearly impossible to talk about compensation increases without inflation figuring in every discussion. In 2022, amidst the first global pandemic in over a century, the average price of gas skyrocketed to $5.75 per gallon (up from a low of $2.68 in May of 2020). The inflation rate for 2022 finished at 6.5%, and today (for the moment), gas prices sit as low as $3.49 in some areas.  The federal minimum wage will increase to $9.50 per hour this year, varying significantly from state to state.  You can visit The Horton Group page on minimum wages for the state-specific wage rates.

Investopedia.com defines inflation as “a rise in prices, which can be translated as the decline of purchasing power over time.” Among today’s inflationary pressures we can count damage to crops, livestock, lives, and property from recent climate change events, Russia’s invasion of Ukraine spiking the costs of natural gas and grain, and a new strain of avian flu resulting in eggs at $6.00 per dozen.  The pandemic itself was a force majeure expense for everyone, with shortages ranging from microchips to baby formula.

And yet, we have emerged from this tough time with an appreciation for U.S. workers that we haven’t experienced since the 1950s. Employers continue to be affected by the great labor shortage and unexpected increases in opportunities, pay, and benefits for workers.  Driven in no small part by younger workers unwilling to settle for low-wage gigs, companies have been hiring at significantly competitive salaries and vying for new workers by burnishing their employer brand as emphatically as they do their brand. Things have changed.

BDO USA, a global accounting firm, anticipated that budgets for merit increases in 2022 would hover around 3%, but found that in the final quarter of 2021, the increases topped out just below 4%. The talent shortage had pushed raises into the 4% range. Concurrently, inflation was approaching 1982 levels, which BDO anticipated would push salary increases still higher (the term for this is a wage-price spiral, which Americans last heard about in the mid-1970s). BDO conducted a poll of 440 organizations across multiple industries–including 127 nonprofits—in January and February of 2022 and determined that compensation budgets for all participating companies averaged 5.1%, with nonprofit firms averaging 4.4%. The last time salary-increase budgets exceeded 4% was in 2001.

BDO cautioned, “For nonprofits, this may be a significant shock for their 2022 budgets, as a 4.4% budget increase represents a 47% hike (emphasis also mine) compared to the previously standard 3% budget. It is likely that many organizations are not in a position to increase salary budgets to this degree.”

Journalist and social media strategist Lia Tabackman succinctly laid out the good and bad news in her article in 501c.com, Nonprofit Compensation Battles with Inflation: “Salary and wage increases at U.S. organizations have not kept pace with the rising prices of inflation, and recent trends suggest that in many cases there is financial gain to be had from leaving workplaces that can’t keep up. To put a fine point on it: employers who aren’t able to provide compensation increases that account for inflation risk losing their employees to those who can.”

Fortunately, there are plenty of voices in the for-profit and nonprofit worlds who offer useful guidance in addressing the challenge. BDO suggests inflation’s impact on salary gains will vary by situation.  Here are some of their tips to bolster your workforce.

• As energy prices rise, consider extra financial support for employees that need to commute by car or drive as part of their job duties. This can be delivered in the form of gas cards, parking vouchers, or passes for public transportation.
• If increasing your budget for merit increases is not feasible, consider doing a mid-year assessment to determine whether a second pay adjustment is needed and can be supported.
• Identify personnel that are mission-critical, as well as top performers to ensure their contributions are recognized and reflected in pay levels according to the organization’s pay policies and financial condition.
• While there are always exceptions, lower wage employees are the most impacted by inflation. Their salary increases typically do not result in a significant change in purchasing power. Focus salary increase dollars on those who are most impacted.
• Allocating more of the budget to pay increases for lower-paid employees can do more than just promote retention, it can help differentiate your organization as one that prioritizes fair compensation practices and demonstrates that management values its employees.

Lauren Mason, senior principal for the Career Business Division at Mercer (an HR consulting partnership) made these recommendations for employers to consider for this year’s compensation planning period:

• Prioritize Hourly Pay.  With unprecedented levels of churn in the labor market, wage growth at record pace and increasing external scrutiny, now is the time to focus on hourly pay strategies.
• Consider A Segmented Approach.  Ensure budget dollars “are focused on addressing gaps in competitiveness . . . Consider a segmented approach by offering higher wages to both new joiners and high-performing current employees in critical business segments, as well as those whose pay is below market rates.
• Keep In Mind The Employee Experience.  Employees have heightened expectations around pay, so equip leaders with the resources to communicate pay decisions effectively.

CapinCrouse, a national CPA and consulting firm serving nonprofits, provided the following from their three-part series Inflation’s Ripple Effect on Nonprofits and Their Employees.

• Nonprofit compensation is enough of a puzzle without the added challenge of market fluctuations. But while every organization is different, there are options for leaders who want to communicate the value of their team members through more than just cash compensation.
• Many nonprofits are opting to give their employees one-time bonuses rather than setting themselves up to maintain promised increases in future years. This provides an immediate benefit to employees who are feeling the real-time impact of market conditions without setting the precedent of an increased baseline wage.

• Since times of economic inflation tend to put more strain on lower-level (and lower-earning) employees, nonprofits may also want to consider providing tiered incentives such as:
• Increased retirement plan contribution percentages
• Stipends to accommodate elevated gas prices (consult with a tax advisor first to ensure they understand and disclose the potential tax implications for the organization and employees)
• Higher merit increases or one-time bonuses

In March 2022, hundreds of nonprofit workers gathered in New York City to demand that the city write a minimum wage of $21 per hour and a 6% cost of living adjustment into the city budget for nonprofit workers. Minor Sinclair, Executive Director of The Center for Progressive Reform (CPR) wrote for The Chronicle of Philanthropy to explain how CPR increased their employees’ wages, beginning with a “contingency fund” to augment salaries to help offset the impact of inflation. Staff members received a $1,000 payment from the fund in spring 2022, which CPR planned to renew in the fall. CPR also upgraded employees’ benefits packages, including a “modest allowance” to help cover utility and internet costs for staff working from home. Employees also received an extra week of vacation to be taken at the end of the year. Additionally, CPR made short and long-term disability-pay plans available to staff.

It is important not to lose sight of the fact that the nonprofit sector is the third largest employer in North America, employing one out of every ten working Americans (about 12.5 million workers). Think about the strength in those numbers. If nonprofits can’t retain quality employees, their fundraising and program delivery will suffer. During tough economic times and good, investing in people pays dividends for your nonprofit’s present and future successes.

This blog post was written by Amélie Frank, consulting copywriter to UST. To learn more about Amélie’s professional portfolio you can find her online at https://www.linkedin.com/in/amelie-frank/.