If you want a heart-warming movie to watch this summer, I highly recommend “The 33,” which is a real-life account of the mining disaster in Chile in 2010. Stories above and below ground intertwine to make the movie compelling and relatable. Ultimately, all 33 miners were saved after 69 days underground in difficult conditions. They went down miners and came up brothers after sharing this ordeal together.
While rarely as harrowing as the conditions these miners endured, our work in the nonprofit world is often conducted in less-than-ideal conditions, many of which are outside of our control. Yet, people join the social sector because they have a heart for the work and believe that they will strike gold once in a while and make a real difference.
In the early days of coal mining, miners would take canaries into mine tunnels with them. If dangerous gases, such as carbon monoxide, were present, the gas would kill the canary, warning the miners to exit the tunnel. This practice gave rise to the saying, “canary in the coal mine.”
Lately, I have noticed that our metaphorical canary is looking rather ill. We have more people entering the nonprofit sector, but exiting just as quickly. Some turnover is healthy, which we will discuss later. However, based on our combined years in the industry, my good friend, John Troy of WorkMonger, and I believe that our collective turnover rate as an industry is reaching dangerous levels and wanted to co-write some pieces to address it. We are not attracting and retaining the talent to deliver on the social change we need to make, which could lead to suffocating results. This deficit is particularly challenging for the social sector where, as we have documented, the single biggest driver of the social sector’s success is talent.
The cause of these rapid departures is two-fold. First, our collective turnover rate is increasing steadily every year. The Chronicle of Philanthropy recently reported that nonprofits experienced 19 percent turnover in 2014. This is compared to an industry average of 15 percent. The rate was even higher in smaller nonprofits with annual operating budgets of less than $2 million – 25 percent. It also varied by issue area. Arts and culture organizations had the highest turnover rate – 35 percent. Because of this, 37 percent of nonprofits organizations reported turnover as a serious problem for their organization.
Second, turnover is becoming more prevalent based on societal trends. We know that millennials will have more employers than their parents. For example, according to the U.S. Department of Labor, the median tenure of baby boomers is 10 years, while it is only three years for millennials.
Although we can certainly hire replacements to fill open positions, we should still be concerned. Every departure results in at least temporarily diminished capacity and productivity. The organization also incurs expenses to rehire and retrain each position. One report suggests that this cost could be as much as $30,000 depending on the position when all hard and soft costs are analyzed. If you want to calculate your costs, we recommend the following worksheet.
To address this pressing issue, we are calling on the social sector to add turnover rates to their organizational dashboard and spend intentional effort to analyze and correct issues. We also suggest digging deeper and examining underlying rates – desirable and undesirable turnover. It is not always about how many, but sometimes about who leaves your organization. Desirable turnover is healthy – it is impossible to hire perfectly. You will occasionally make a bad hire, and it is important to take action when this happens. Not only does it free up a spot for a better performer, it can also help create a performance-oriented culture that is more supportive, challenging and engaging for the rest of the team. Alternately, undesirable turnover is not as healthy – it happens when people you would have kept if given the opportunity leave the organization. It includes reasons that are avoidable (e.g., better pay, cultural fit, leadership issues) and unavoidable (e.g. retirement, moving). These are the kinds of turnover you want to target, systematically avoid and mitigate. We have put together a visual to help you calculate your annual turnover rates.
At a healthy level, each of the rates should be from 5-10 percent. In our next blog, we will address what to do to manage these rates and keep them in this healthy range. If we can collectively find, develop and retain talent in our organizations and collectively as a sector, we will have the resources to do the hard work and strike gold, creating breakthrough results for those we serve. We’d love for you to share your thoughts on nonprofit turnover and steps your organization is taking to help target and reduce undesirable turnover.