The FAMCare Blog

Employee turnover is becoming a major problem for nonprofits. A 2021 survey by the National Council of Nonprofits of over 1,000 nonprofit organizations found that 42% of responding organizations had job openings for 20% of their positions. Almost half of those responding had more than 30% of their positions vacant.

Causes of Nonprofit Employee Turnover

A separate survey found that the top three reasons for voluntary employee turnover in nonprofit organizations were:

1. Dissatisfaction with organizational leadership and culture.
2. Lack of opportunity for career growth.
3. Better compensation and benefits elsewhere.

Nonprofits have struggled with numbers 2 and 3 for years. Leadership has always felt that "it goes with the territory. It's the nature of the industry." They have traditionally responded by carefully recruiting candidates that are attracted to nonprofit work by their belief in the mission of the nonprofit. Altruistic employees who are eager to contribute to the humanistic goals of the nonprofit are not primarily motivated by money or career advancement.

Identity Crisis

However, as nonprofits gained scale and raised enormous amounts of money business executives were recruited to run these more financially complex organizations. These executives, of course, introduced business thinking and practices in the name of efficiency, leading nonprofit workers to be viewed as cost centers to be kept in check, (the lower the wage bill, the better) rather than partners in service to the nonprofit's mission. The business executives normalized organizational charts, a hierarchical chain of command, top-down decision making, expectations of obedience, and loss of worker autonomy. In retrospect, it is easy to see how these divergent points-of-view morphed into a full-blown identity crisis and why no one saw it coming. Dissatisfaction with organizational leadership and culture became the number 1 reason for the resulting costly employee turnover (recruiting, selecting, and onboarding new people costs about 18% of an employees’ annual salary. Lost institutional knowledge is another substantial, intangible cost).

The Authoritarian Model

The altruistic employee has been the backbone of the nonprofit sector since the outset. The "business-like" approach to nonprofit management certainly has its place in the highly complex world of nonprofit fundraising and organizational management. The question is, does a "business-like" approach to modern nonprofit management necessarily have to be in accordance with the old authoritarian model? A growing body of research points to the ill effects of authoritarian and autocratic management practices, including higher job stress, increased fear and anger in employees, lower levels of worker satisfaction, and the creation of a toxic workplace culture through a cascade effect; when executives manage in an authoritarian style, lower-level managers mimic these behaviors. It is this authoritarian model that is causing the high turnover rate in nonprofit employees.

The Humanistic Model

Would a different business management approach to nonprofits attract and retain the traditional nonprofit mission motivated employee?

Back in the 19th century, Mary Parker Follet formulated managerial principles that put people first. She espoused that groups succeed when they facilitate collaboration, enable people to define their own roles, and give people substantial autonomy over their work. Her management approach rooted in principles of dignity, care, mutual respect, and partnership rather than control and domination came to be known as humanistic management. A humanistic approach begins with the belief that people are inherently worthy, rather than assessing worth based on instrumental performance valuations. Such an approach puts people first and treats profit as a means, not an end, and always in service to individual and collective well-being and environmental stewardship. This approach conceives of power as “with” instead of “over,” emphasizing compromise as a more effective means to conflict resolution than domination.

Zero Turnover

High-powered business management need not be authoritarian. In fact, the humanistic approach has been adopted by many modern high-tech companies with great success. A more modern humanitarian approach to business management is most appropriate in nonprofits and is the first step to implementing a coveted zero turnover policy. If your employee turnover rate is too high, it's time to take a look at your management model.

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