Not-for-profits face special hurdles in maintaining full employment, a challenge organizations of all types are facing amid the pandemic-inspired labor market difficulties that have become known as the Great Resignation.
As other organizations often have raised pay in efforts to keep their current employees and attract new hires, 45% of not-for-profits reported a decrease in funding as a result of COVID-19 in a recent BDO benchmarking survey. More than one-third (36%) said they'd had hiring freezes, furloughs, or layoffs, and 17% said they had decreased employee compensation.
Meanwhile, in December 2021 there still were about 3 million fewer workers in the U.S. labor force than there had been in January 2020, according to Bureau of Labor Statistics data.
"We're seeing so many people step aside out of the workforce or just shift their priorities," said Jennifer Hoffman, CPA, audit leader for Not-for-Profit & Higher Education at Grant Thornton who chairs the AICPA Not-for-Profit Expert Panel and is a member of the AICPA Not-for-Profit Section Advisory Council. "Not-for-profits at times can be hit hardest because they tend to run with leaner staff, and so losing one can have a more significant impact than at the corporate counterpart who can divide and conquer the work."
As not-for-profits often have scant resources and funding challenges, they often have to be creative in their efforts to keep their people and find new ones. Often, their biggest advantage in retention and recruiting is their mission.
With many workers reexamining their lives and priorities amid the pandemic upheaval, not-for-profits can appeal to people's desire to make the world a better place rather than making a top-level salary.
"You can make a difference," said Pete Ugo, CPA, a partner at Crowe LLP who leads the firm's national Not-for-Profit and Higher Education group and is a member of the AICPA Not-for-Profit Expert Panel. "You can help support our mission and the people that we serve. I think that's a nonmonetary way that a nonprofit can appeal to [current and prospective] employees."
A comprehensive plan
When accounting professionals get hired for a new job, they often get an opportunity to make a difference right away. That was the case with Carolyn Mollen, CPA, CGMA, after she was hired to be vice president of finance and administration and treasurer for Resources for the Future.
Hired in December 2019, just a few months before the pandemic gripped the United States, Mollen had to replace an HR director immediately, and the person she hired left in August 2021. Another HR staff member left last fall. As Mollen oversees HR, she has faced pandemic-related staffing challenges and acted to address them in a swift, thorough manner.
Mollen and Resources for the Future have taken a broad look at all their policies and procedures in an effort to maximize the reasons people would stay and to recruit new people when it is necessary. They started by asking staff members what they needed to feel engaged, connected, and part of the mission.
Leaders of Resources for the Future, which seeks to improve environmental, energy, and natural resource decisions through research and policy engagement, quickly understood that they needed to change their policies to make the organization more open to remote work. Many other not-for-profit leaders have come to the same conclusion.
But there was more. Staff members wanted a career path.
"They care about our mission, but they don't know what it looks like to stay and feel like growth has to happen by leaving," said Mollen, a member of the AICPA Not-for-Profit Section Advisory Council. "Particularly in a market where inflation is rising and often the best way that employees can get pay raises is by going into a new organization."
Mollen acknowledges that her organization was fortunate from a revenue perspective because interest from funders in its environmental mission has increased along with global concerns over climate change. So there was an opportunity to give people career opportunities as well as raises.
The organization's people-focused moves included:
- Performing a compensation study comparing the organization's pay to the external marketplace. The study resulted in significant pay increases for some staff members.
- Publishing salary scales to help people understand what it means to be at different levels of the organization and make sure people are being paid fairly.
- Developing a competency model and a new performance evaluation process that includes quarterly conversations focused on competency growth to support staff members in areas of interest that they have identified.
- Adding Juneteenth as an annual paid holiday and giving the staff extra time off between Christmas in 2021 and the new year as recognition of the hard work performed during the pandemic.
- Considering other benefits, such as incorporating tuition or student loan assistance into the benefits package (no decision has been made yet). Adult orthodontia and infertility coverage were added to insurance coverages in 2022, and life insurance coverage and retirement benefits were added for staff who previously were ineligible.
Mollen said the size of Resources for the Future (70 full-time employees) means there aren't always internal promotions available. That's why the focus on developing competencies is so important.
"There can be limited opportunity for growth internally, depending on position" she said. "How can we coach our employees? We believe these competencies are important, whether you're at Resources for the Future or whether you're at another organization. Even if we can't help you grow here, we want to help you grow."
All organizations, not just not-for-profits, are trying a number of innovative strategies to keep their people happy and engaged. Hoffman said Grant Thornton is offering to pay for tutoring for school-age children to help stressed-out parents.
Some organizations are performing "stay interviews" with employees to gauge their satisfaction and ask what the employer can do to improve the work experience.
"By understanding that, it provides insight into how to best spend your resources because we know they are finite," Hoffman said.
Cheryl R. Olson, CPA, CGMA, a director with Clark Nuber PS, said insisting that employees use their vacation time is critical in a high-stress time when many are facing pressures at home and are taking on extra responsibilities at work. This can be even more prevalent at short-staffed not-for-profits.
"It's important for managers to require people to take that mental break because people don't know they're getting burned out until they're burned out," said Olson, a member of the AICPA Not-for-Profit Section Advisory Council.
The technology solution
The scarcity of skilled labor has caused not-for-profits to look for technology that can increase the efficiency of the people they have.
Enterprise resource planning (ERP) systems, automated purchasing and accounts payable technology, and even artificial intelligence-aided customer service call support can help not-for-profits get things done. Olson said a technology installation should have one project champion who is responsible for a successful implementation that includes a timeline and a project plan.
"You need to stay on top of timeline and have milestones to meet that plan," she said, "and if you ever get to a point where one of these milestones is falling behind, that's when you need to stop and say, 'OK, is the timeline wrong? Do we need more resources?' But you adjust at that point. You don't just wait until the end of the project."
After all, an organization with constrained resources doesn't want to end up paying more in implementation consulting fees than for the system itself. Olson also said training is important in the installation phase and on an ongoing basis.
"Understand what the organization needs, and spend the time to train and retrain and then revisit," she said. "Did this accomplish what we had expected it was supposed to accomplish?"
Staff turnover and virtual work arrangements can create more potential for fraud by eliminating internal controls that have been in place.
Board members — and especially CPAs who often serve on boards — are ideally suited to make sure management is able to maintain internal controls.
"We still need to have segregation of duties, and the risks are potentially different now," Ugo said. "Things were being passed around and manually signed off on in the office. Now they may happen over email. You've got to think about how the risks are different and what controls you need to have in place to protect your organization."
Board members also can work to make sure management's investment decisions match organizational priorities. Some employee-friendly policies might even require spending some reserves, and board oversight is critical in those cases.
Despite best efforts at retention, many organizations are going to need to replace people at some point.
When that happens, they will encounter an incredibly competitive recruiting environment. The strategies not-for-profits are using to stand out include:
- Reaching out to volunteers: These are some of the people most connected to your mission. They might be eager to join the staff as an employee, or they might be able to recommend somebody who is a good fit. Higher education employers may wish to also tap into their alumni networks.
- Canvassing the board: Board members often have connections that can be helpful in recruiting and also can share job postings. "They'll be able to communicate not just about the job, but also how great the organization is, back to the candidate," Hoffman said.
- Finding opportunities for recent retirees: Ugo has heard recently from a few people who retired at a young age and now realize that they still want to work. "They want something to do that offers flexibility and helps them have that good feeling of supporting an organization and a good mission," he said. These can be ideal employees for a not-for-profit.
- Moving quickly: If someone is applying for your position, they may be looking at others, too. Not-for-profits often want to be extremely detailed with multiple interviews to make sure they choose the right person, but speed is essential. "Think of how to streamline the interviews a bit to have them happen in the same visit instead of multiple interviews spanning a longer period," Ugo said.
- Paying competitively, if possible: Not-for-profits have a reputation for being able to pay less than their for-profit peers, but Hoffman said employers in this sector often can afford to pay market salaries. "The majority of not-for-profits I work with, they pay fairly and competitively," she said.
Communication is critical
When many opportunities exist for employees to go elsewhere, it's more important than ever for employers to understand staff concerns and communicate clearly with them.
Resources for the Future has polled employees in regular, anonymous staff surveys that help management understand how people are feeling. They ask people if they feel connected to their team and supervisor; if they know what they're supposed to be working on; and if they have the support and tools that they need.
The organization also makes sure there are other ways for employees to communicate through focus groups, especially on specific projects such as the compensation reevaluation, the competency model, and flexible working policy development.
"Developing those feedback loops is really important so that staff feel bought in and you're making the right decisions," Mollen said.
Communication also can be much less formal. When meeting with her team, Olson asks them to choose from one of four emojis to let her know how they are feeling.
The emojis help them describe themselves on a range that varies from excellent to completely overwhelmed.
"Depending where the team is," Olson said, "then you can help and say, 'OK, what do you need? Is this personal or professional? Do you need some rebalancing of work?' "
Not-for-profits that meet those needs have a chance to succeed at a time when it's difficult for any organization to stay fully staffed.
— To comment on this article or to suggest an idea for another article, contact Ken Tysiac at Kenneth.Tysiac@aicpa-cima.com.