5 ways nonprofits can win at talent management in 2023

There’s no getting around it: The last couple of years have been challenging for human resources teams in the social impact sector — particularly recruiting and retaining talent.

Since 2020, nonprofits have seen “decreases in revenue, decreases in funding, decreases in opportunities to host fundraisers, which for many organizations is a revenue lifeline,” said Lisa Brown Alexander, president and CEO of Nonprofit HR, a consulting firm supporting the talent management needs of social impact organizations. “We saw some contraction in where nonprofit organizations are financially. We also saw, on the reverse side of that, organizations seeing more demand for services, which led them to need to hire more people.”

The impact of those realities is clear from Nonprofit HR’s annual Talent Management Priorities Survey of leaders in social impact organizations, Alexander said.

HR leaders identified talent acquisition, performance management and talent-focused technology as their top three priorities this coming year. “That’s different than what we heard in 2022,” she said. “What we heard in 2022 was a focus on culture, learning and development, and performance management.”

The priority shift to a focus on finding and keeping employees makes sense, adds Rebecca Dixon, executive director of the National Employment Law Project, an advocacy organization focused on racial and economic justice for Black and immigrant workers.

~70%

Percentage of their annual budget that nonprofits devote, on average, to labor. Therefore, “that labor expense really needs to be shored up and sustainable,” notes Nonprofit HR CEO Lisa Brown Alexander.

SOURCE: Nonprofit HR

“In the last year or so, it tightened a lot because of the great resignation or great realignment — or whatever you want to call it — in the labor market, where people are leaving jobs and going to other jobs,” Dixon said. “In our sector, that means there’s competition for the best talent and also how you want to retain your talent as well.”

We asked Alexander and Dixon to offer pointers on what nonprofit leaders and HR teams can do in the months ahead to help with talent management despite the challenges. Here are five tactics they suggested.

Talent 1: Focus on strategies to keep great talent

While recruiting and hiring new talent are often top of mind for HR teams, both Alexander and Dixon recommended giving retention equal time in 2023.

Nonprofits must retain the talent that they have, Alexander said. “Experienced talent is hard to come by, so employee retention is critical.”

Plus, Dixon noted, it can have a downstream effect in an organization and lead to turnover. “If your organization is not doing the things that are important, like fostering leadership and development; making sure you have a positive, inclusive culture; you’re not paying attention to your lifecycle for recruiting, hiring, onboarding — all of those things, what does equity look like and all of those things — then we know that it’s usually the most marginalized workers that suffer,” she said.

Tactic 2: Keep pace with your competitors

A crucial element to both retention and recruiting is understanding your particular social impact niche’s pay and benefits landscape, Alexander said.

It’s incumbent on the HR staff to check in with how the organization pays people and to ensure pay is competitive. “Because the nonprofit next door is paying attention and can lure your talent away with a richer, more generous benefit offering,” she said.

Alexander also advises nonprofit leaders to make their “employer brand” a priority. “Think about your employer brand and how you show up as an employer,” she said. “Monitor your reputation online. That can make or break whether or not someone will decide to join you. Continue to invest in the culture.”

Yes, mission matters and attracts employees to social impact organizations, but a toxic work environment makes it hard to land and keep the best talent, she said.

Tactic 3: Invest in technology, particularly tech that supports your staff

Even NELP, which had moved to a hybrid environment well before the outbreak of the COVID-19 pandemic, found itself having to make adjustments for communications and collaboration, Dixon said. That said, it did have the technology in place for most of its staff to work remotely.

But that is not common across the social impact sector as a whole, Alexander said. “Our experience is that the majority of organizations were not as prepared as NELP was, with both technology and the cultural shift from in person brick-and-mortar to a remote environment — and then just getting managers accustomed to working with people and managing performance from a distance,” she said.

While NELP has tried to listen and respond to people’s flexibility needs, Dixon said, “there has been something lost from us being completely remote and not being able to have those informal conversations in the elevator or at the at the coffee maker.”

Nonprofits need to both invest in technology to make remote work and collaboration seamless but also focus on how staffs can build trust when people physically are together less, she said. “It’s really that balancing act that we’re trying to find and put our finger on what’s the right balance.”

As nonprofits continue to focus on their hybrid technology environments, they’re also investing in digitizing HR systems and processes, Alexander said. “Fifty-five percent of organizations that responded to this year’s survey are making it a priority to implement a human resources information system, that’s essentially taking the paper files that they have and making them available remotely,” she said.

Tactic 4: Be competitive in pay and benefits

Today’s benefits packages reflect what’s happening in the broad work world, Alexander said. The expectation of employees when it comes to benefits continues to evolve and change, sped up by recent world events.

“We know that organizations have really had to dial into things like wellness, flexibility, deeper investments in technology and what they provide people to be able to work effectively from home,” she said. “Those are all considerations that employers and leaders need to be thinking about.”

Dixon agreed and suggested also focusing on employees’ career paths to make sure that people have meaningful opportunities. That approach, along with providing development programs and reflective supervision, has lessened turnover at NELP and “helped insulate us in this tight labor market,” she said.

Tactic 5: Integrate diversity, equity and inclusion into your organization’s talent management

As with benefits, employees’ expectations on diversity, equity and inclusion continue to evolve within social impact organizations too, Alexander said.

In the “2023 Nonprofit Talent Management Priorities Survey,” attracting and hiring diverse talent — across all demographics, including but not limited to race, age, gender, identity or differing abilities — was the main talent acquisition priority. Two-thirds, or 66%, of HR leaders ranked it on their Top 3 list.

That said, organizations are at different points on their DEI journeys, Alexander noted.

Dixon added that because of that, “it’s very critical to be clear with folks about what you are trying to provide. If you are focused on diversity, equity and inclusion, what does that mean concretely? Let folks know what that means, and just be honest with candidates about your status and where you are in your journey.”

Learn more about the 2023 Talent Management Priorities Survey during this Nonprofit HR webinar.