First in a two-part series.
Recently, when I have read or written about talent, the focus has been on the skills gap and the challenge of upskilling workers so that they are prepared for today’s jobs and future opportunities. Employers in all sectors are struggling to fill open positions. For complex social enterprises, the challenge of attracting and retaining is especially heightened.
The 2016 Nonprofit Employment Practices Survey found that although there is a 19 percent turnover rate in the social sector, 84 percent of nonprofits surveyed do not have retention strategies. Lack of leadership development and mentorship opportunities consistently rank high in the list of reasons why a person leaves an organization. Like other organizations, Goodwill® has seen its investments in employees pay for themselves and drive mission success. Leadership development should be inclusive of both lateral and upward growth opportunities: lattices and ladders are the watch-words of the day. Employers that invest in their employees’ professional development are also investing in the long-term sustainability and success of their organizations. GlobalGiving is one of many nonprofits that has seen the investment in its employees pay off. By deliberately budgeting professional development funds for each employee, GlobalGiving saw its donation volume grow four times, with only incremental growth in staff and budget.
Retention strategies shouldn’t stop at growth opportunities; market-driven compensation and benefits also play a key role. The social sector has long been challenged to strike a balance between meeting the market value to attract the best talent and funding mission as expected by funders and communities. In 2013, Dan Pallotta, activist and fundraiser, delivered a compelling and controversial Ted Talk titled The way we think about charity is dead wrong. The Nonprofit Hub simplified his talk with a great analogy — the Pie Growers and the Pie Givers. Pie Growers believe in using nonprofit money to directly grow their nonprofits. Pie Givers believe in focusing on maximizing impact for their causes right now by giving away more of the funding. As a Pie Grower, I am in favor of the nonprofit sector investing in talent while investing in the community. As we have seen with GlobalGiving, and time and time again across other organizations, investing in talent pays for itself and allows organizations to sustain mission impact for the long run.
Once an organization is prepared to invest in talent, funding and perceptions of these programs must line up. In a 2015 Bridgespan study, half of the nonprofit senior leaders surveyed reported “overhead for talent management capacity” as the most valuable funding their organization could receive. In contrast, these same leaders reported that they received the most funding to attend conference/networking events. There is a disconnect between the talent management funding a nonprofit receives and the funding it needs. This is due in part to the perception around the work of nonprofits by grantors and the public. Campaigns like “The Overhead Myth,” sponsored by GuideStar, BBB Wise Giving Alliance, and Charity Navigator, are working to combat these misconceptions and pursue a better solution.
Social enterprises and nonprofits cannot afford to operate without talent retention strategies. The social sector is a complex network of impactful organizations that require talented individuals to lead them. Leadership development opportunities and competitive, market-driven compensation play a crucial part in attracting and retaining the best candidates for these jobs.