Staff Attrition: Let's Do the Math

One of the things I enjoy most about my profession is getting to observe and learn from people across the nonprofit sector. Because we are often privy to information shared by board and staff members that might not otherwise surface, our consultants get a front row seat to what is working and what isn’t. And let me tell you, there are some common threads regardless of the size, budget, or mission of an organization.

With that in mind, when I started thinking about what to write for this post, I kept coming back to the people who do the work. All too often, the issues that concern me most are what we hear from staff members:

• “I love the work, but I am burnt out. I’m expected to do the jobs of three people, and this isn’t a healthy situation for me or my family.”

• “I need leadership and direction, and I’m just not getting it.”

• “There is no opportunity for me to grow or advance in my career.”

• “I need health insurance, and this organization says they can’t afford to offer it.”

• “This is what I was meant to do, but I am barely scraping by and sometimes have to reach out to request the same services we offer our clients.”

Again and again, we hear that lack of leadership, workload that exceeds capacity, limited opportunities for professional development, and sub-standard salary and benefits are the drivers for attrition.

Turnover in the nonprofit sector is not new. ExactHire.com cites nonprofit turnover at 19% annually, as compared to an average of 12% in the for-profit sector. A January 2020 Nonprofit HR study stated:

“Almost half of the respondents for a recent Nonprofit HR pulse survey said they will seek new or different employment in the next five years and of this group, 23% said that nonprofits would not be among the types of organizations they intend to pursue.”

And this was pre-pandemic! Since then, we have seen an accelerated exodus fueled by early retirements, illness, secondhand trauma, personal and family priorities, remote opportunities, and geographic mobility.

Nonprofit turnover is a problem that isn’t going away without concerted effort to make change. Yet rarely do we see retention strategies as a priority. Rather than get into all the reasons retention strategies are important, I’m going to focus on the numbers.

Let’s consider the factors that go into calculating the real and intangible costs of replacing an employee:

Recruitment and hiring

Sourcing candidates in today’s market is competitive. Organizations must be willing to invest in advertising and networking the opportunity. Screening and interviewing candidates also take staff time away from other functions, and there are hard costs associated with background checks, drug testing, and relocation, if applicable.

Onboarding and training

Industry resources estimate that the cost of onboarding and training a new employee over 2-3 years is 10-20% of the employee’s salary.

Lost productivity

Dissatisfied employees often show a decrease in productivity, which can adversely affect those around them. You can expect it will take 6 months to a year for a new employee to reach proficiency and achieve the desired level of productivity in their new role.

Impact to client service

Turnover creates a loss of institutional knowledge which can negatively impact the organization’s ability to effectively service its client base. Transition also requires developing new relationships, which can be especially disruptive to clients who may already feel marginalized.

Impact to workplace culture

Employee attrition can “rub off” on other staff members, making them question the reasons behind the departure and evaluate their own situations. Those who remain and are asked to take on additional work while a replacement is being found may also develop feelings of resentment as their workload increases, especially if their compensation doesn’t.

Market-based salary adjustments

Hiring salaries are going up, and it is rare that we see a new hire come in at or below the departing employee’s salary. You can usually count on paying a new employee more than the one they are replacing.

The Nonprofit Center at La Salle University says:

“According to the Center for American Progress, for jobs that pay less than $50,000 a year—sadly, way too many jobs in the nonprofit sector, and 75% of the American workforce—it costs 20% of a position’s annual salary to fill those vacancies. For positions that pay less than $30,000—about 50% of the workforce—it costs “only” 16% of that salary. The Society for Human Resource Management paints a worse picture, saying that the cost of finding and training a replacement hire costs six to nine months of that position’s salary. Others note the cost of replacing a mid-level employee may approach 150% of the position’s salary, while hiring “highly specialized” employees can cost as much as 400% of the position’s annual salary.”

Whether the replacement cost is 16% or 400% of the position’s salary, there is a real bottom-line impact associated with attrition. The Nonprofit Leadership Alliance provides a great tool to calculate the cost of employee turnover specific to your organization.

Let’s get back to why people leave – lack of leadership, workload that exceeds capacity, limited opportunities for professional development, and sub-standard salary and benefits. Considering the information above, isn’t it a smart business decision to invest in existing employees before they are compelled to look elsewhere? I think so. The numbers don’t lie.

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For more information on retention strategies, check out:

2021 Nonprofit Talent Retention Practices Survey (NonprofitHR)

A Great Place to Work (The Nonprofit Center at La Salle University)

Nonprofit burnout statistics: The high cost of high turnover (Givebutter)

The “Great Resignation” and How to Address Nonprofit Staff Turnover (Winkler Group)

Nonprofit Employee Retention (ExactHire)

5 Reasons Why Nonprofit Employees Quit (Wayne Elsey on LinkedIn)

Employee Retention Now a Big Issue: Why the Tide has Turned (Josh Bersin on LinkedIn)