By Alexis De Sela
Your Development Director just handed you her resignation. It takes you completely off-guard. You thought this was “the one” who would stay because she was 14 months into her tenure. You had no idea she was looking at other opportunities or that she was unhappy in any way, and this will be the third Director of Development to leave in the past five years. This revolving door potentially costs the organization $360,000*
It has been my experience that many organizations don’t realize what it costs them to lose staff, especially key staff in Development. After all, these are the professionals primarily responsible for bringing in the funding needed to advance your mission, and to help it become and remain sustainable. While costs associated with turnover and replacement are high, indirect costs can be even more expensive, damaging, and lasting to your organization’s reputation.
The Society for Human Resource Management (SHRM) estimates turnover costs to be between 100% to 300% of base salary. The Center for American Progress estimates the following costs for turnover:
•16% of base salary for high-turnover, low paying jobs (earnings less than $30,000)
•20% of base salary for mid-range positions making under $75,000
•Up to 213% for highly educated, executive positions, and those with special skills
According to the Chronicle of Philanthropy, Penelope Burk’s research estimates direct and indirect costs to find a replacement fundraiser is $127,650.
According to Deloitte and SHRM, turnover costs include:
•Replacement Costs (recruitment, selection and hiring) – If you recruit in-house, you will bear the full cost of recruitment, including time and cost for placing ads, receipting and scanning résumés, initial screenings, in-person interviews, reference and background checks, relocation costs, etc. If you decide to use a firm, the cost can range from $8,000 to 25% of the position’s salary. There may also be costs associated with hiring a temporary employee or consultant to fill the gap.
•Onboarding costs – These include training time and cost for the new employee, and management time to ensure the new employee is assimilating successfully into the organization.
•Loss of productivity – It may take 1-2 years for someone to reach full productivity. This involves learning the database, policies and procedures, navigating organizational culture, and developing relationships with key stakeholders (within and without the organization). The loss of productivity can be insidious if the employee disengages before they decide to leave, and certainly while they are actively seeking employment elsewhere.
•Loss of engagement – Turnover affects the rest of the workforce; when others see high turnover, they tend to disengage and lose productivity.
•Increase in errors and decrease in customer service – When employees have to cope with the additional workload after a colleague leaves, quality suffers and, ultimately, mission delivery suffers, affecting the clients we serve.
•Training costs – Over the course of 2 to 3 years, an organization invests in employee training and development, at a cost that hovers between 20% to 30% of salary.
•Loss of institutional knowledge – This is especially difficult when longer tenured employees leave. In the absence of well-crafted documentation or procedures, many organizations scramble to understand why things were done a certain way. In the Development Office, institutional knowledge as well as understanding of your organization’s donors and funders may be hard to replace.
•Cultural impact – High turnover may cause funders, stakeholders, and community leaders to wonder what is happening at the organization.
Analyzing and understanding the impact of turnover will help organizations adopt retention strategies to minimize voluntary turnover. These retention strategies should be discussed regularly at the Executive staff and Board levels because they directly affect an organization’s sustainability.
Over the course of my 27-year career in Human Capital Management, I have gained a deep understanding of what causes employees to leave, and I have implemented successful strategies to increase retention. These strategies saved an organization where I worked more than $1 million in a single year. Here are some of these successful strategies to increase retention in your organization in general and within your Development department specifically:
+Ensure an optimal organizational fit when hiring a new employee, especially a Director of Development or CDO. The Executive Director and Board will be spending a great deal of time together and it will be essential to have a good working relationship; fit is critical.
+Provide a phased onboarding process. Allow new employees to learn and feel comfortable in their new environment.
+Provide an updated job description that describes the job accurately.
+Set realistic goals and achieve mutual agreement on those goals. If you don’t set goals or they are unrealistic, disengagement will begin quickly.
+Hold regular 1:1 meetings to discuss goal achievement progress and any issues that may be impeding progress.
+Conduct a 90-day performance review and always do a yearly review. Allow the employee to review your performance as a leader.
+Praise in public and address issues in private.
+Give staff the tools they need to be successful.
+Provide flexibility when possible. Sometimes working remotely can be a win-win situation.
Development professionals should think about the reasons you have sought new job opportunities. I suspect your boss had almost everything to do with your decision, and that many or all of the components of optimal fit listed above were absent.
If you have the privilege of leading people, do what you can to avoid making the same mistakes that lead to your decision to leave. Turnover is costly and, as tight as resources are in the nonprofit community, it is incumbent on us as managers, executives, and board chairs, to understand these costs and to embrace employee retention as a key organizational sustainability strategy.
Lee+ Associates provides consultation in Human Capital Management and can help your organization with Leadership Coaching, retention strategies, improving employee morale and productivity, and building top-performing teams.
* $80,000 per year X 150% of base salary = $120,000 X 3 staff = $360,000