Author: Heather Eastman
Over the last two years, we've experienced a remarkable shift in the labor market that has wreaked havoc on traditional approaches to attracting and retaining talent.
With limited budgets, nonprofits are often asked to do more with less, making it nearly impossible to compete with the higher wages and escalating perks the for-profit sector offers as enticements. Fortunately, nonprofits have the advantage of a compelling story and the impactful work they do — but mission alone can only influence attraction and retention to a point.
Understanding and strategically addressing the interconnected and nuanced forces at play in our current job market can provide mission-driven organizations with advantages for competing in a tight and fickle market.
A massive generational shift in the workforce is underway. Specifically, it's projected that by 2025, 75% of our workforce will be comprised of millennials and Gen Z, compared to 47% in 2019.1 With this substantial demographic shift, employee expectations change. Values shift. Priorities are re-ordered. As a result, innovation and adaptation are key to competing for talent and operational continuity.
As we navigate this generational shift, it's important to note that we are living through an exceptional time in history, with five generations working side-by-side in our workforce. This extraordinary environment creates a mix of diverse views, wants and needs.
Developing a deep understanding of your workforce is critical to supporting an inclusive and productive culture, as well as to informing a strategy for recruitment, engagement and retention.
With an eye toward innovation and evolution, here are three strategies for recruiting, engaging and retaining employees that we recommend our clients consider to differentiate themselves amidst a sea of employers.
Strategy #1 — Find common ground in a multi-generation workforce
Historically, we've looked at generations in the workplace with a focus on the differences between the generations and have viewed the unique characteristics of each generational cohort as a challenge to be solved.
Going forward, however, I suggest that more is to be gained by focusing on shared characteristics and values rather than trying to navigate the web of differences. Building on shared values and traits across generations can be an incredibly effective way to drive value, build momentum for your employer value proposition and to develop engagement.
A few weeks ago, I was discussing the generational shift with a client who shared that he is always happy to listen to and implement GenZs' and millennials' ideas when he can, because every such suggestion he's acted on has been well received and appreciated by all employees.
A 2018 report by Gallup2 illustrates this point well. When asked what employees look for in their employer, despite a 43 year span in ages of employees surveyed, the top two items across all workforce generations were:
- The organization cares about employees' wellbeing
- The organization's leadership is ethical
This information provides a clear directive to organizations to ensure laser focus on consistently communicating and demonstrating commitment and concern for employee wellbeing and being cognizant of the wide-reaching impact of their leadership behaviors on employee experience and engagement no matter the generational makeup of their organization. When organizations get caught up in studying the differences in their employee population they can easily overlook incredible opportunities to capitalize and build momentum around shared values and priorities.
Strategy #2 — Ensure equity with transparent compensation and career-pathing
In Minneapolis where I'm based, all the predictive research indicates that not only will our workforce be 3/4 GenZs and millennials within a few years, but through 2050 all of our labor force growth will come from people of color: specifically Black, Hispanic and Asian workers3. Not only are we not expected to see any growth from the white population, but an actual decline in the white labor force is forecasted. Minneapolis is not an exception, but rather a snapshot of a greater nationwide change in workforce demographics.
Pay equity and transparency is already an important topic, and its importance will only continue to grow, not only to effectively attract and retain employees, but to proactively mitigate litigation and ensure reputational integrity.
Demonstrating an equitable work environment and being clear about how employees can expect their careers to advance — which we established is a priority for GenZs and millennials — will be imperative for employers to embrace, and the sooner the better. The days of expecting compensation information to be kept secret are over. Transparency in compensation is a new expectation, driven by both the importance for equity and parity and by increasing legislative changes throughout the country. Being on the leading edge of this change will be a key differentiator for highly competitive organizations.
The following map4 shows from the U.S Department of Labor shows which states have equal pay and pay transparency protections, which protect equal pay only and which have neither protection. (Data as of 2019.)
Strategy #3 — Create a graceful, kind exit process and nurture alumni relationships
With The Great Resignation garnering headlines and media attention over the last 18 months, employers have seen not only a significant shift in their demographics but felt a significant change in their turnover percentages.
While the rise in turnover has been painful and expensive to navigate, a new, equally interesting and more optimistic trend is starting to emerge. In March of 2022. a study of more than 2,500 recent job quitters published by job search site The Muse5 found that a whopping 72% of those who left their jobs in 2020 and 2021 experienced either "surprise or regret" that the new position or new company for turned out to be "very different" from what they were led to believe. Further, nearly half of these workers said they would happily take their old job back if they believed that was an option.
Historically, when employees announced their intention to leave, it was seen as an affront to the organization. Departing employees were — and are — unceremoniously allowed to leave, often with a "don't let the door hit you on the way out" attitude.
Given the current fierce competition for talent, we are recommending that our clients flip this antiquated behavior on its head. Instead, thank employees for their contributions, celebrate the time they spent with the organization and let them know the door is always open for their return (for those that you would want to return). Nurturing a positive relationship with departing employees will result in a greater likelihood of them referring talent to your organization as well ensuring a welcoming return if that's something they would want to explore. Creating an alumni network of departing employees allows you to proactively stay in touch, sending quarterly or annual updates on the work the company is doing and showcasing current job openings.
In summary, as a nonprofit, you're already uniquely positioned to appeal to talent through your mission. This positive differentiator separates you from the for-profit market. But with often-limited budgets, nonprofits must find innovative ways to compete outside of compensation and benefits. Understanding the generational and demographic shifts underway and thoughtfully working to proactively shift to new ways of thinking are cost effective strategies to help you establish your organization as a leading employer of choice, allowing you a unique advantage in securing a talented and committed workforce to bring your mission to life.
Gallagher's Human Resources and Compensation Consulting practice has expertise in compensation, engagement, leadership development, executive search and surveys. We work closely with each of our nonprofit clients to develop solutions that fit their organizations goals and needs.