Nonprofits Are Hiring, Study Says, but Business Co-opts a Recruiting Edge

Hiring by charities remains strong, according to a new study of nonprofit employment practices, but most groups lack recruitment strategies, hampering their ability to draw top-flight talent in a tight labor market.

The Nonprofit Employment Practices Survey, published annually by consulting firm Nonprofit HR, found that 50 percent of nonprofits plan to hire in 2017, down from 57 percent in 2016. Among for-profit companies, 40 percent said they would hire in 2017, up four percentage points from the year before.

Seven percent of nonprofits reported that they planned to eliminate positions in 2017, down slightly from the year before, when 8 percent of groups aimed to cut jobs.

The unemployment rate in the United States currently stands at 4.3 percent, according to the U.S. Bureau of Labor Statistics, a level some economists are describing as “full employment.”

Lisa Brown Alexander, chief executive of Nonprofit HR, said that not only is for-profit hiring making up ground on nonprofit hiring but for-profit companies “have become more aggressive about promoting whatever social purpose or cause they may have” as a recruiting technique. It used to be that nonprofits had the monopoly on attracting people because of their mission, she said.

“They are tapping into the traditional nonprofit talent pool,” she said of for-profit companies.

Working at a Disadvantage

Nonprofits are at a disadvantage in hiring in a number of ways, Ms. Alexander said. Many groups do not have recruiting budgets. They have little flexibility to negotiate higher salaries with candidates in a tight labor market.

And nonprofits are less likely to communicate to prospective employees what their organization is like to work for, a practice known as “employer branding.” It’s something for-profit companies, including Amazon, Google, and the finance website Motley Fool, have done with aplomb, she says.

“The tighter the labor gets, the more you have to do as an employer to get that labor,” she says.

In the newly published survey, just one third of nonprofits reported that they have a formal recruitment strategy, down from 37 percent in 2016 and 46 percent in 2015. When it comes to employee retention strategies, 81 percent of nonprofits said they did not have one. A little more than a quarter reported plans to develop one in 2017.

Nonprofits, Ms. Alexander said, must do a better job of prioritizing and investing in talent.

“By virtue of the fact that unemployment is so low, if you want a job, you can essentially get one,” she said. “Folks are working. So the nonprofit world is no different from the for-profit world in that it is competing for talent with a smaller pool of people.”

One thing they should pay attention to is organizational branding and their reputations as employers. Nonprofit job seekers are increasingly turning to online forums like Glassdoor, a jobs site, to glean insight about which organizations are good to work for.

“Branding, which we know nonprofits are not doing to any great extent, is becoming increasingly important,” she said.

Nonprofits should also pay special attention to what Ms. Alexander calls the candidate experience, or how the prospective employee experiences the organization from the first point of contact onward. That includes everything from how long it takes for people to receive responses when they email or call to how they are welcomed and treated when they come to an office for an interview.

Much like going to a restaurant and finding a roach in your food and writing about it on Yelp, job candidates who have a bad experience with a nonprofit will spread the word, she says.

“The economy has warmed up, corporations are hiring, and the [nonprofit] sector can’t rely on just its good will anymore,” Ms. Alexander said. “It is not enough. That is the big takeaway.”