The greatest expense for any nonprofit generally tends to be the cost of its staff. Staff salaries combined with benefits can easily reach 50% to 80% of an organization’s budget. Although the cost of its workforce is the cost of doing business for any organization fulfilling its mission, keeping those costs under control is the key to an organization’s success.
The following are ways that nonprofit managers can avoid added costs and improve management of their workforce as well as their ability to serve their constituents.
1. Hiring the Right Staff
- Organizations that have clear and consistent hiring processes will have more productive interviews and a better chance at hiring the right employees
- Since 30% of resumes contain misleading or inaccurate information, it is important that managers do not hire based on resume information only, with little else
- Offering salaries in the right range for the position is critical to attracting top talent
- Organizations that know how to brand and sell their organizations will compete more effectively in the marketplace
2. Cost of Poor Performance
- Nonprofits that demand high employee performance throughout their organization, build value and quality throughout their organization
- Organizations that reward top performance hold on to their best staff
- Organizations that develop reputations as rewarding places to work are more competitive in attracting top talent
3. Turnover and Vacancies
40% of organizations have 1 to 3 vacancies that last for 4 months
20% of organizations have more than 3 vacancies that last for 6 months or more
- The expectation that leaving a position vacant will save an organization money is misguided. Either work does not get done or is done by higher level staff which costs more. In the long run, an organization spends more money by keeping jobs vacant.
- Every time someone leaves a job and is replaced with someone new, the cost of training is three times the cost of the salary paid.
4. Understanding the Changing Workforce
- Understanding the changes and the differences in a diverse workforce is key to successful team management
- Different expectations require that organizations invest differently in their staff, for example, training & development is key to keeping millennials on board; 91% of millennials stay in one job for less than 3 years
Addressing the issues listed above are critical to good staff management and keeping costs under control over the next decade.