In this week's Single Shot, host Bryce Lord weighs in on the Great Resignation and its meaning for the nonprofit sector.
In this week's Single Shot, host Bryce Lord weighs in on the Great Resignation and its meaning for the nonprofit sector.
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This is Bryce Lord. Welcome to Nonprofit Espresso. This week, we are going to dive into another Nonprofit Espresso Single Shot.
After last week's episode, in a conversation with Beth Ridley of Ridley Consultants, talking about diversity, equity and inclusion, it got me thinking about the nonprofit workforce, as it's been playing out over the last couple of years. We hear a lot about the great resignation that's been going on in both the for profit and nonprofit sectors. As people are looking to refocus and repurpose their lives.
And so I started looking around at different articles, different reports, different studies, that have been conducted over the last couple of years since probably 2018 and 2019 to get some historical context. And then looking at the last two years as we've been dealing with lockdown and virtual workforce and all of these things that we've all come to know and love.
And I found some things that were not unexpected. But then I found some things that were very unexpected.
And I want to spend some time talking about that with you today
The Back Story of the Great Resignation
So before we dig into some of this, let's talk a little bit about the whole backstory behind this idea of the Great Resignation. So, a couple of weeks ago at the beginning of May, the U.S. Labor Department released its regular monthly report on what they call "labor participation".
The "quit rate" is the number of people who quit their jobs every month. It reached an all time high in March. 4.5 million people quit their jobs. They weren't laid off or furloughed or fired. They just voluntarily walked away from their jobs. Now the labor department has been monitoring this particular piece of information for years. It turns out that the quit rate has been increasing every year for the last 20 years, except for one year. And that was the year of following the great recession and it hit a low of 1.5 million quitters in 2009. But since then it's been building back up and pretty quickly. Now, this is not nonprofit specific. It is nationwide, the entire workforce- for-profit, nonprofit, public sector, whatever the case may be.
I want to take a little bit of time and compare two different studies that I found. One was conducted by nonprofit HR. It's a national talent management consulting firm and it looks specifically at the social sector. Every year it conducts a nonprofit talent retention survey.
We're also going to look at a study by the Work Institute, which is a similar firm that looks at the entire workforce as we set the stage for looking specifically at the nonprofit sector. The NonprofitHR studies from 2019 to 20, found that both voluntary and involuntary turnover decreased between 2019 and 2020. They were seeing more people staying at their jobs either by their own choice or, perhaps they have been, let go, whatever the case may be, those numbers were dropping.
Now they'll be conducting another survey here this summer to see where things have gone over the last two years. But it's interesting to note that before all of this COVID 19 related fun started, the sector was seeing a decrease in turnover.
11.5% of the people that were surveyed that had left their job either voluntarily or involuntary, said that they would seek a job outside of the nonprofit sector. In other words, 88.5% said that they would seek work with another nonprofit.
Less than 6% of everybody that was surveyed, stated that it was because of the pay. Compared to a more general finding by the Work Institute, which found that 9% cited pay-related issues.
About 2% would not choose to go nonprofit because of a lack of career opportunities. Whereas the Work Institute study, looking at all employment categories, found a 22% rate that cited lack of career opportunities as their reason. 1% of those surveyed by nonprofit HR said that they would not seek another job in a nonprofit because they're not quote unquote well-run.
So consider that, according to yet a third study, a full 75% of employees in the U.S. don't plan to stay at their jobs for more than five years. Period. The Bureau of Labor Statistics has found that less than 25% say they actually plan to remain at their current place of employment for six or more years. That's less than a quarter of the workforce that says they actually plan on staying where they are for more than six years. That's a full 75% that say they plan on moving on in five years or less.
Why Employees Leave
There are two main types of turnover and they can both be very expensive. We have involuntary turnover.
Involuntary on the part of the staff member. You've had to let them go for one reason or another. It could be because of a budget issue. But usually involuntary turnover is a result of performance problems. Termination for performance related issues is stable at 58%. Showing that most nonprofit sector terminations are performance related.
The other kind of employee turnover is voluntary turnover. And this is what we're talking more specifically about. This is when employees choose to leave. They walk away from their job and quit.
And this is what most organizations are going to think about when they start to analyze their low retention rates. Every nonprofit operates differently. And everyone has different reasons for leaving their job. But the highest reason for nonprofit voluntary turnover is a lack of opportunity for growth. Almost 60% of people who quit their jobs give the reason that there's no upward mobility. Compensation and benefits comes in close behind that, followed by an overall dissatisfaction with the organization or the organizational culture.
There are a couple of other things that we can think about to discover why employees are increasingly less satisfied, and this is not nonprofit sector specific. The Pew Institute recently released a study. And again, this is not a nonprofit specific study, this past March looking at why workers quit their jobs. The top two reasons were pay was low, and no opportunities for advancement. And again, this is for profit and nonprofit. Two thirds of the workers that they polled stated both of those reasons. Clearly a lot of workers feel they can find better opportunities somewhere else.
Similarly, earlier this year, the MIT Sloan Management Review released a study that looked at 34 million online employee profiles to identify people who left jobs in 2021. They found voluntary turnover, quitting, was the highest, and then pretty much evenly distributed among everything else.
As to why these people quit, money was 16th in the list of reasons given. The very top reason? Corporate culture. The analysis found that these leading elements contributing to a toxic culture, included failure to promote diversity, equity and inclusion practices within the organization.
The workers felt disrespected and they witnessed a lot of what they considered unethical behavior. Kind of interesting in light of last week's episode as we think through all of this.
With the pandemic we've also had a big shift in the workplace environment. From a lot of people working at home, working in a more virtual workplace, not connecting with their coworkers and employees nearly as often in a face-to-face environment. And this, as a result, created much weaker attachment to work friendships and to the overall workplace environment.
This new work from anywhere culture weakens the devotion to our work friends and in turn that weakens our attachment to our employers. So that's just another thing to consider in this whole mix of why people are choosing to leave their jobs.
And so while all of this research is sound, it's all good stuff. And all of these explanations are totally plausible, they still miss something a little more significant. And I think the big takeaway is that people are taking control of their lives back from these outside forces, whether it's your parental or family expectations, societal pressures, even employer demands.
But what's important here to remember is that this hasn't happened overnight. It's been growing for decades. And as we talked about the quit rate in the Bureau of Labor Statistics data, This has been going on for at least 20 years.
And so while overall job resignations are real, this idea of a great resignation, which suggests that these resignations are a result of the pandemic? I'm not sure how true that stands from what I've seen here. If anything, what we're seeing is that the trend toward finding work that's more meaningful and more suited to individual needs is what's really happening here. People aren't just leaving their jobs for no reason. They're looking for something more meaningful.
How will your organization make a difference?
But how can we leverage all of this then to build and retain the most capable and dedicated workforce possible? Flexibility is going to be number one, especially for women. Women comprise three quarters of the nonprofit workforce. And so with the pandemic hopefully starting to subside a bit, there are going to be a lot more working moms and nonprofit leaders that are going to be looking for opportunities for more flexibility in their work schedule.
Things that can support both their careers and their families. And maintaining a work-life balance is going to become crucial to ensuring that employees will stay and grow with your organization.
Also remote work opens the door to larger, much more diverse talent pool with this work from anywhere approach.
Replacing disengaged employees is expensive. It could potentially cost one and a half to two times that employee's annual salary just to get somebody else in that position.
It's no surprise that nonprofit staff are overworked. They're, they're busy and quite frankly, they're often under appreciated.
But you can take steps to strengthen those relationships and ensure that your employees, your coworkers feel seen, feel valued, and feel celebrated. Let's just be human to one another. Ask people questions about what's important to them. And then listen. Have empathy. And then deliver on what you hear. It's been a rough couple of years and we've all had to face a number of mental health struggles. A lot of different challenges. Juggling a lot of different balls that we were never used to. Now more than ever it's important to show up and be as empathetic and compassionate as you possibly can be. And I would say that if we can find this connection, That morale and employee loyalty will just continue to grow.
And finally, the nonprofit sector has always been designed to change. Now more than ever, we're allowed to embrace change and innovation.
A lot of people are still thinking about what work means. And they're looking for something to fill their lives in a way that they hadn't experienced before. We have to continue to evolve our policies and practices of how to stay relevant to all employees and embrace this opportunity. And in what one article I read called in a very insightful way, turning the "Great Resignation", into a "Great Attraction". And then be able to make that much more significant an impact.
What's going to make the difference that will enable a nonprofit to stand out in this crazy job market, will be to figure out how to align your organization's values and impact with your employees to allow them to help you reinforce your mission.
Thank you for joining me for this week's episode of Nonprofit Espresso. I'm Bryce Lord, please join me next week when my guest will be Bill Busch, Executive Director of the Milwaukee Children's Choir.
Until then be well.
And enjoy your week.