HR Blog (1 Jun): Nonprofit Sector Facing Unique Challenges According to HR Barometer Report

Posted on
31 May 2022
by Sarah Fagan, Adare Human Resource Management

Adare Human Resource Management, the HR partner of The Wheel, published its HR Barometer Report at the end of April. The report analyses issues impacting the Irish employment landscape highlighting trends and providing insights to support and inform decision-making. 

While the nonprofit sector is one of a number of sectors that contributed to the report, it does highlight some specific challenges the sector faces this year...

As with organisations across all sectors, ‘Retention’ and ‘Employee engagement’ are the top HR priorities for the nonprofit sector this year. However, ‘Talent acquisition’ has been ranked much higher with over four in ten (44%) nonprofit organisations highlighting it as a key focus compared with just over a quarter (27%) of all organisations.

The challenges relating to retaining employees and hiring new people is further emphasised when we examined employee turnover. We have seen employee turnover more than double nationally in the last year to 18% from 8% in 2020. This is expected to increase further this year to 18.2% this year, which is nearly one in five employees leaving their jobs, causing considerable disruption and imposing additional costs associated with recruitment. However, the report shows that the nonprofit sector is being impacted much more with an average employee turnover in 2021 of 25% and expected turnover of 28% this year. 

This significant movement is largely driven by increased salaries, which is the number one reason for employees moving roles according to employers. It’s not surprising then to find that just over half (54%) of all employers have or will increase salaries this year with an average jump of 5.3% as they battle to hold onto their people.

The nonprofit sector is broadly in line with the percentage of employers increasing salaries but there are some key differences.

The average salary increase for nonprofit organisations is half the national average at just 2.6%. And, the number of those who are still undecided about increasing salaries within the sector is considerably higher than the national average (44% compared with 21%).

There’s no doubt Covid-19 has had a detrimental impact on the financial flexibility that is clearly being demonstrated by employers in ‘corporate’ sectors. It is therefore crucial that organisations in the nonprofit sector take a more holistic approach by developing retention strategies that invest in people, focus on organisational culture and enhance the employee experience.

A holistic approach to retention strategies incorporates total reward that is both financially sustainable and invests in your employees in all areas in order to positively impact the employee experience.

The very foundation of this starts with your values as an organisation and the pursuit of your vision and mission. Having, embedding and enhancing your cultural initiatives which filter through the employee experience and lifecycle will assist with employee engagement. Incorporating those values from your organisational strategy to your HR strategy will ensure that employees align to the organisation through their experience.

The ripple effect caused by your culture emanating from your performance management framework through to your learning and development agenda will ensure you maintain that cultural alignment and employee engagement in the employer value proposition.

Total reward is not just about the financial benefits as it also incorporates the intrinsic value brought through your organisational culture. It recognises and shares successes of employees, it balances paid benefits with those of a non-financial value and most importantly considers the employee experience as an asset that requires the right investment.

The steps and initiatives taken by nonprofit organisations to support employee retention, as highlighted in the HR Barometer Report, reinforce this approach. There is a higher percentage of employers in the sector investing in learning and development, employee engagement initiatives, enhanced work-life balance initiatives and focusing on organisational culture.

While the market is currently seeing increasing salaries, a retention strategy that strikes a balance between financial benefits and the employee experience gives employers a competitive edge. Given the financial limitations as highlighted by our report, nonprofit organisations need to think creatively by focusing on their strengths and values, recognising the contribution of their employees and implementing initiatives to further strengthen their culture.