Employee Turnover in Nonprofit Human Services: Literature Review

Introduction

This literature review serves a dual purpose within the current study. On the one hand, it collects relevant information from the specialized literature and centralizes it in a single, integrated, and unified chapter. The information gathered is relevant and useful not only for the current study but also for other research endeavors. In other words, this section retrieves the most important findings in the literature related to employment in the not-for-profit sector and constitutes a new, integrated theoretical approach to the topic.

On the other hand, the section represents the starting point for the completion of the current study. The review of available literature creates a context in which both the researcher and the reader become familiar with the topic of employment within the not-for-profit sector. This feature of the literature review generates a twofold benefit: first, it establishes the setting within which the study is conducted; and second, it creates additional knowledge of the field and thereby helps answer the initially posed research questions.

Given this secondary benefit, it is necessary at this stage to map the components of the section onto the research questions. With the stated objective of supporting the search for answers and responding to the challenges raised by the problem statement, this literature review includes the following topics:

a) The need for skilled staff members in the nonprofit sector; b) education and the belief in organizational core values and mission; c) education and the decision to remain with or leave the agency; d) education and levels of employee satisfaction; e) education and the ultimate decision to leave or remain with the firm; f) elements that lead nonprofit employees to seek employment in the for-profit sector; and g) the impacts of high employee turnover in the nonprofit sector.

The Nonprofit Sector Defined

In order to answer these questions, it is necessary to develop a gradual approach to the topic. The first step is to offer definitions and context that lead to a broader understanding of the term nonprofit entity. Additionally, emphasis is placed on the elements that attract people to work in not-for-profit agencies and the rationale behind those decisions.

Barry Keating and Maryann O. Keating (2008) argue that the traditional firm is created to sell goods and services in order to generate revenues and profits. Despite the fact that such entities are the most common within modern society, the authors argue that other types of organizations also exist. They divide these entities into four categories: private for-profit firms, private not-for-profit firms, private quasi-public organizations, and public governmental agencies.

Private for-profit firms include all categories of entities, from small family businesses to large multinational corporations. These agents operate with the goal of selling products and services and thereby generating profits. Private not-for-profit entities focus on creating social benefits; they sell their own products and services to generate revenues to sustain their operations, but they also rely on donations and other contributions.

Private quasi-public organizations are generally represented by utility companies, which act as monopolies but are regulated by the state. Public governmental agencies are created and operated by governments, funded from taxes collected from the population, and serve the public through services such as education and medical care.

In the current study, the terms not-for-profit sector and not-for-profit agency are used to describe both categories of private not-for-profit agencies as well as public governmental agencies. Howard H. Brown and Donald L. Ruhl (2003) note that not-for-profit organizations are most commonly found in the fields of arts, culture, religion, health, education, human services, and environmental services. The authors of Breakthrough Management for Not-for-Profit Organizations: Beyond Survival in the 21st Century also offer a generic definition of the concept:

"A NFP (not-for-profit) is not a for-profit that can return profits to its owners/shareholders and not a governmental agency that operates on tax dollars to do its work for the public. A not-for-profit organization is a private corporation, self-governed by volunteers, that must invest any 'profits' in the service of the public it has been 'approved' to serve" (Brown and Ruhl, 2003).

Aside from offering a definition, the authors also present a comprehensive list of features that characterize not-for-profit organizations. These include: striving to improve human condition; generating public trust as part of the mission; treating the mission as the operational bottom line; maintaining strong attachment to organizational vision; focusing on service provision; emphasizing openness, cooperation, sharing, democracy, and participation; demonstrating an increased sense of obligation toward public wellbeing; treating donors as important stakeholders; operating under restricted resources compared to for-profit organizations; relying on alliances and partnerships; sometimes depending on the for-profit sector; depending heavily on volunteers; potentially being led by a paid chief executive officer reporting to a board; managing complexities arising from volunteer involvement; and maintaining an enhanced focus on the individual in work design and motivational strategy (Brown and Ruhl, 2003).

The need for highly skilled and trained staff members is crucial in all sectors and organizations, but it is especially pronounced within service-providing companies, where the firm offers no material product and organizational success depends directly on the skills and abilities of staff. Skilled employees ensure a high quality of interaction between the firm and its customers, which in turn generates customer satisfaction and organizational success. This realization further implies that organizations must not only monitor staff interactions but also stimulate employees' professional and personal development (Boyd, 2003).

The Need for Skilled Staff Members

Agencies in the not-for-profit sector reveal an even greater need for highly skilled and trained staff members. This is generally because employees must support the firm in reaching its objective, which is linked to social wellbeing and is therefore more complex. Additionally, employees must complete their tasks within significant resource constraints, which further demands high skill levels, adaptability, and other competencies.

Warren Ruppel (2005) notes that the need for highly skilled staff members in the not-for-profit sector is tied to the requirement that these members comply with a wide array of responsibilities, including: transparency, objectivity, support for the organizational mission, ensuring effective communication, continually improving performance levels, and supporting organizational efficiency and best practices (Ruppel, 2005).

This section examines the elements that draw individuals to the not-for-profit sector and the reasons why individuals choose to work in the field. One notable view belongs to Kirkland (2007), who argues that the main reason people seek jobs in the not-for-profit sector is the desire to gain experience. Individuals will often accept entry-level positions at lower pay in order to obtain professional formation. Eventually, when a better opportunity arises, the individual will embrace it and leave for a better-paid for-profit position.

This feature — that nonprofits support professional formation — is a common reason that leads candidates to seek and accept employment in the sector. The fact that training is offered at all levels of the organization and to both employees and volunteers further increases the likelihood that individuals will accept these positions.

Sources of Attraction to the Nonprofit Sector

"Nonprofit organizations owe it to their staff members to train them and develop their careers. [...] The advancement of a nonprofit's mission requires staff training (that includes volunteers) at all levels and in all skills. Human resource development is the only way to sustained viable programming. That makes training an intrinsic component of strategic management, the very best means to changing the skills, knowledge and attitude of staff" (Chehade and Jassemm, 2010).

Employees in the not-for-profit sector often accept lower salaries in exchange for non-financial benefits such as training opportunities, flexibility, and autonomy. This acceptance of lower pay is frequently coupled with genuine belief in the organization's cause:

"Not-for-profits [...] usually offer non-economic rewards, such as flexibility and independence. The lower salary accepted by the not-for-profit employees is a 'donation' of time — given because of the employees' commitment to the cause" (Newlands and Hooper, 2009).

The importance of shared vision and mission is also supported by the Wellesley Center for Work and Service (2010), whose editors argue that a crucial element drawing individuals to not-for-profit agencies is a shared commitment to making the world better. According to this source, employees are also attracted by benefits such as more vacation time or the ability to participate in various programs at no cost:

"Not-for-profit staff members share a commitment to the mission of the organization with their colleagues. While not-for-profits typically pay less than for-profit organizations, often they offer more benefits such as increased vacation time, the opportunity to attend programs at no cost, or a more casual working environment. Frequently, and particularly in small not-for-profits, staff members are asked to perform a variety of tasks" (Wellesley Center for Work and Service, 2010).

An important counterpoint is raised by Pamela J. Wilcox (2006), who argues that while stress and low pay matter, an even more significant driver of turnover is inadequate organizational culture:

"A huge reason for the high turnover of nonprofit staff is a work culture that is at best discouraging to creative, talented professionals and at worst actually toxic to worker productivity. This same culture often extends to volunteers. Nonproductive committees, unclear volunteer roles and weak volunteer boards stimulate the same kind of turnover of bright, talented volunteers. All in all, the nonprofit work culture often serves as a catalyst for the exodus of the best and brightest from the ranks of the organization" (Wilcox, 2006).

To summarize the most important sources of attraction toward the not-for-profit sector, the following are relevant: the ability to conduct meaningful and socially important work that does not focus on profits; the ability to directly witness the impact of one's work; increased levels of flexibility; a more casual working environment with more sincere collegial relationships; higher levels of responsibility that allow employees to demonstrate their worth; a highly integrated organizational culture centered on shared core values; and increased benefits, including more vacation time, health insurance for the employee and their families, and retirement plans (Joiner and Busse, 2010).

Despite the established fact that not-for-profit firms pay less than for-profit firms, recent studies have indicated sustained growth of the not-for-profit field. Between 1990 and 1995, employment in the not-for-profit sector in the United States, Germany, France, the United Kingdom, Belgium, Japan, and Israel increased by 24 percent (Anheier, 2003). This growth in turn increases the sector's ability to pay higher wages, further stimulating decisions to seek employment within it.