The current labor shortage and economic turbulence have been particularly hard on nonprofit organizations. Built on the passion of its employees, the entire sector is now facing mass burnout. The nonprofit leaders we interviewed described staffing challenges, retention issues, and concerns about flagging employee morale. And to top things off, many nonprofits only have one employee responsible for confronting these serious HR issues.
HR tech may be the solution. With the right tools in place, HR professionals can provide vital support to their overstretched workforce while keeping costs down. Getting the tooling right is half the battle — but when you do, you have a greater chance at reducing attrition, fostering employee growth, and reinvigorating your employees’ commitment in your organization.
The Challenges Facing Nonprofit HR Professionals
The fall-out of COVID-19, coupled with ongoing economic uncertainty, has created a perfect storm for nonprofit organizations, especially when it comes to human resource management. Today’s nonprofit HR professionals are facing significant challenges:
1. Turnover is 7% higher than the industry average.
The nonprofit sector is experiencing turnover rates of 19%, according to a 2022 report by the Society for Human Resources. This is significantly higher than the industry average of 12%, and adds an additional HR cost to an already stretched budget.
Meanwhile, a 2020 survey by Nonprofit HR found that 45% of employees were planning to find new roles by 2025, with 23% planning to leave the sector entirely.
2. Staff shortages are having a ripple effect on communities.
Sustained high turnover in this sector is also having a knock-on impact on organizations’ ability to effectively meet their talent goals. According to 2020 research by Nonprofit HR, 65% of nonprofits are struggling to meet their top talent management priorities because they don’t have the resources to dedicate to staffing their HR teams.
Reena Smith, Director of Human Resources at Unlimited Possibilities, a charity that supports children and families with disabilities, noted that this endemic shortage is having a direct impact on the communities served by nonprofits, too.
“The labor shortage is affecting all industries across the nation, with the nonprofit sector being hit especially hard,” Reena said. “As some nonprofits are being forced to close due to these shortages, the effects ripple throughout the community and people lose access to valuable resources like food, shelter, and mental and physical healthcare services.”
3. Employee burnout is rising.
One of the principal causes of these high turnover rates is burnout. As many as 60% of nonprofit leaders report feeling “used up” at the end of the workday, according to research by leadership consulting firm DDI.
4. Nonprofit organizations struggle to maximize employee performance.
These levels of burnout are unsurprising, given the extremely challenging working environment facing many of those in the nonprofit sector. Nonprofits rely on highly passionate, mission-driven employees to perform their best — without the promise of career growth, financial gains, or significant time off. Salaries are low and demands are high.
Amy Fass, executive director of Shoes that Fit, a nonprofit that tackles childhood poverty, commented: “Nonprofits have had a history of underpaying employees since they have the ‘satisfaction’ of working for a cause. That creates unrealistic expectations that the job will be ‘more’ than a job for the employee, and leaves the organization under-budgeted for its actual needs.”
Meanwhile, many nonprofits will struggle to meet worker expectations in other areas, such as the option to work remotely, explained Smith:
“COVID created a new kind of work ethic with remote and hybrid options, and both are nearly impossible for our organization. We have four different business models, all of which are reflective of service and being present in the building or out in the field.”
9 Ways HR Tech Can Optimize Nonprofits’ People Strategy
While these talent challenges are likely to continue for nonprofits, , there are solutions available that can help. With the right tooling in place, nonprofit leaders and HR professionals can create low-touch structures to reduce their biggest HR bottlenecks, enabling them to support their employees, promote career growth and job satisfaction, reduce the risk of burnout, and create a positive working environment.
1. Create career tracks to offer opportunities for growth.
According to our Career Progression survey, lack of opportunities for career advancement is a top reason as to why employees quit — especially for younger workers. And while nonprofits may not be able to increase employee salaries with the same regularity as the for-profit sector, you can still promote professional growth with career tracks that give employees a sense of how their role and skills will shape up in the future.
Setting up career tracks and job architecture is easy with the right HR tools in place. For instance, with Lattice Grow, you can:
- Use done-for-you templates to set up straightforward career tracks that will help employees understand how they can grow professionally as their skills develop.
- Tie learning to performance with competency matrices, so employees can see how they can reach the next level through professional development.
- Easily communicate career paths to your team, so they know exactly where they are professionally — and where they’re heading.
Check out our simple, step-by-step workbook on how to set up career tracks — with or without our software.
2. Reduce burnout rates with regular one-to-ones and surveys.
Frequent, constructive one-to-ones can help employees discuss and overcome roadblocks, address work overload, and ask for help — all of which are key to avoiding burnout. However, in nonprofits, busy managers may not always find it easy to schedule and track these check-ins. Implementing the right tooling can make this process much easier by managing the end-to-end manual processes:
- Automate 1:1 scheduling and sending out reminders.
- Store notes and feedback in one place for easy access.
- Promote continuous feedback by creating a platform and structure to make it quick and easy.
3. Harness automations to reduce workload for HR.
Data shows that nonprofit human resources departments are chronically under-resourced and overworked. But with essential HR tasks ranging from scheduling candidate interviews to managing onboarding and inputting employee data, the HR team can quickly find their time swallowed by a never-ending slew of manual tasks. Leveraging HR tech’s automation power can be a huge help here:
- Schedule meetings and reminders.
- Send out employee surveys and polls.
- Automate the onboarding process for new employees.
- Reduce repetitive manual tasks, like vacation tracking.
- Set up integrations with other software tools, such as your project management system.
Streamlining your people processes won’t just help reduce your HR team’s overwhelm — it will also free up their time to support and motivate the rest of the workforce, and act as a strategic partner to the organization.
4. Use analytics to cut down on turnover.
When top talent is at risk, HR analytics tools are a major advantage for small teams. By tracking metrics including attrition, engagement, and performance, you can identify problem areas and performance issues. This enables you to focus your efforts where they’ll have the most impact, and proactively work to prevent regrettable turnover. Using the right data analytics software means you can create continuous, scalable workflows, so that you can:
- Quickly scan customized data visualizations to identify high and low performers.
- Track behavioral and performance trends and take proactive steps where needed.
- Monitor results from employee engagement surveys with minimal time and effort.
- Support your managers by giving them the information they need to best support their teams.
- Evaluate your People initiatives and double-down on those that have the biggest impact, maximizing your ROI.
Not sure which HR management metrics you should be tracking? Here’s a handy HR metrics cheat sheet.
5. Communicate organizational goals to show employees how they fit into the mission.
As Fass points out, “Employees often take jobs in nonprofits because of the organization's missions. To keep employees engaged and make them feel valued, they need to understand how their job fits into the larger mission of the organization, what the organization's goals are, and why. They need to know that they are an essential part of the cause.”
Keeping employees motivated and pulling in the same direction depends on setting goals that help them feel connected to your organization and your overarching strategic goals. Goal-tracking software can help organizations manage this process more effectively:
- Ensure alignment across your whole organization by making your strategic objectives crystal clear.
- Integrate your objectives into day-to-day moments like 1:1s, status updates, and even performance check-ins.
- Let managers track goal status and progress in real-time, to identify where to focus their efforts.
6. Build a collaborative environment with employee feedback tools.
When it comes to nonprofit HR, Smith says that it’s especially important to “instill a positive work environment where everyone feels seen and heard.” If you hope to motivate nonprofit employees, you need to make sure that they feel like part of a shared mission.
To promote this feeling of organizational co-creation and psychological safety, use HR tools to provide ample opportunities for employees to share their feedback, make suggestions and highlight concerns. For example:
- Encourage employees to share feedback and address concerns during manager 1:1s.
- Establish a 360-degree performance review structure to promote a sense of equality.
- Conduct regular employee surveys and polls, and then communicate how you will address the resulting employee feedback.
- Keep employees up to date on company goals and achievements with weekly updates.
- Monitor employee sentiment and reduce the risk of burnout with quick pulse polls.
7. Align employee learning to organizational goals.
Nonprofits face a unique set of challenges when it comes to employee learning, explains Sam Tabak, a board member at Jewish nonprofit Rabbi Meir Baal Haness Charities. Nonprofits must hire employees who have both the commitment to the cause and the necessary technical skills to run the organization efficiently.
“This balancing act can be tricky,” Tabak said. “Hiring employees solely motivated by the mission can lead to a lack of necessary technical skills. Conversely, hiring employees based purely on skills might compromise the passion needed to fulfill the mission.”
In addition to refining the hiring process, Tabak said nonprofit HR teams will need to offer professional development training that addresses growth in both technical expertise and commitment to the organizational mission.
Creating a meaningful L&D program that promotes employee growth at every stage hinges on giving employees the ownership and personalization needed for them to perform at their best. But without the right technology in place, this process can be hard to manage. Employees find it hard to know what their development plan looks like, while managers may struggle to oversee how their team members are progressing.
When you’ve got the right HR tool in place, you can help reduce this workload, while fostering a motivating environment for growth:
- Set up individual development plans for every employee, to make your expectations clear and allow them to take ownership over their own growth.
- Give managers the tools to supervise and support their team’s learning and act as career coaches.
- Tie performance management into learning objectives, to motivate employees to level up their technical skills.
- Encourage employees to improve both their technical abilities and their strategic contributions to the mission.
8. Use compensation benchmarking to pay an equitable wage.
Salaries aren’t top priority for most nonprofit employees, but they are always a factor, said Fass: “Ensuring fair wages is challenging but essential for healthy nonprofits to grow.”
Of course, figuring out what constitutes a “fair wage” isn’t always easy. You have to take into account multiple criteria, including the role, the employee’s level of experience, their location, and much more, which makes building a compensation strategy difficult—especially when you’re operating on a very tight budget.
Compensation management software can help to inform, build, and manage a fair employee pay strategy. With a tool like Lattice Compensation, you can access industry-leading benchmark data powered by Mercer to understand how your organization’s pay ranges compare to those in other sectors. This won’t only make your employees feel more fairly treated — it can also help you to attract and retain top performers who are looking for a mission-driven role.
9. Gain greater flexibility with customizable software tools.
When you’re tied to manual HR processes, it becomes very hard to adapt to changing HR needs or organizational priorities. Smith said how important it has been for her nonprofit HR team to modify their approach in light of recent events:
“Since the pandemic, we’ve made it a priority to maintain trust among our employees and embrace change when necessary. In this way, we have effectively inspired team members to be passionate ambassadors of our organization and advocates for the families that we serve on a daily basis.”
HR software solutions give you far more flexibility as your nonprofit evolves over time. For instance, you can:
- Easily change your performance review cadence, depending on your current workload or organizational priorities
- Enable or disable specific tools and features to make sure you don’t overwhelm employees with too much information at once
- Communicate changing organizational priorities quickly and effectively by automatically integrating your new goals and objectives into weekly 1:1s
Nonprofits Can Do More With HR Tools
When it comes to spending money on technology, it can be hard for nonprofits to justify the investment on tooling to support their employee and people processes. However, HR technology can let your nonprofit HR team do more with less. With an upfront investment in the right tools, nonprofit HR professionals can offer their hard-working colleagues greater support, reduce turnover, improve employee performance, and save both time and money. Saving the world is already hard enough — don’t make it harder than it needs to be!
Read more about how other organizations have cut their costs and administrative bottlenecks, or set up a free demo to find out how your nonprofit could see a 195% ROI on our HR tech solutions, cut annual employee review time in half, and reduce attrition by nearly 40% with Lattice.