Recruiting and retaining quality employees is one of the many challenges facing nonprofits operating in New York State. Although this has always been tough, the challenge has increased significantly in the past few years, due to several factors, including but not limited to those discussed below.

New York State Demographics

According to the Citizens Budget Commission (CBC), from 2010 to 2017, New York State’s population grew 2.3 percent, which is less than half of the national growth rate of 5.3 percent. The majority of this increase was seen in New York City, the Hudson Valley, Long Island, and the Capital Region, while the rest of the state has experienced a decline in population.

Decrease in Unemployment

New York State’s unemployment rate has steadily declined since the 8.5 percent high in 2012 to the current rate of 4.0 percent. Additionally, in 2018, the number of job openings outnumbered the number unemployed individuals. This is not due to a lack of skills of those unemployed, but rather a lack of individuals who are actively looking for new jobs. 

Increases in Minimum Wage

During the last two years, the minimum wage has increased, on average, by 25 percent across New York State and is scheduled to continue to increase annually until the entire state reaches the $15 per hour minimum wage (which New York City has already reached). Furthermore, fast food workers have been singled out to reach the $15 per hour minimum wage by July 2021. The increase in minimum wage has not only resulted in a financial burden on tax-exempts, but has also impacted recruiting efforts as individuals are more likely to get a job at a fast food chain that pays more and is physically less demanding than some jobs in the tax-exempt sector.

The three areas mentioned above have had a significant impact on the ability of tax-exempts to attract and retain quality employees at all levels and has created a staffing crisis. Unfortunately, based on the current trends, it does not appear that this staffing crisis is going to improve in the near future. So, what can tax-exempts do to be competitive?

Recruitment

Since the number of people looking for jobs is smaller than the number of available jobs, tax-exempts must be strategic in their recruitment initiatives. They must be willing to think outside the box. They can’t be afraid to be different and must be willing to be creative when it comes to recruiting employees.

Consider employees outside the traditional full-time, 40-hour week workforce. Two examples of “outside-the-box” employees are college students and retired baby boomers.  Student loan debt has more than doubled in the past decade, and, as a result, some students are questioning if college is worth the future burden, while other college students are looking for part-time jobs to minimize their debt. If tax-exempts can be flexible and willing to work around school schedules, this is a new source of potential employees. Tax-exempts need to look at their own operations and facilities and determine if there are other opportunities to meet the needs of this new potential workforce, such as providing housing or fitness center access.   

On the other end of the spectrum, more than 10,000 Baby Boomers a day are turning 65 and are reaching retirement in worse financial shape than previous generations. Insufficient savings and the rising costs of health care have resulted in Baby Boomers delaying retirement or re-entering the workforce when they run out of money or want to keep busy. Again, a willingness to think differently and be flexible is the key to unlocking this potential new source of employees. 

Tax-exempts need to identify who their target market is and tailor compensation and benefit packages based on what target employees care about. For example, a college student who is still on their parents’ health insurance plan is going to care more about compensation and less about health insurance. However, a retiree who is reentering the workforce might care more about health insurance and other benefits rather than compensation. The days of a one-size-fits-all new hire package are gone. Tax-exempts need to develop employment packages that appeal to the needs of the individuals they are recruiting.

Retention

Now that you have hired the right employees, what can you do to keep them? Just as you had to figure out what was important to the employees you were targeting in your recruitment process, it is also critical that you understand what drives your current employees.

Millennials make up the largest segment of employees in the workforce and, according to the U.S. Bureau of Labor Statistics, they are expected to make up more than 75 percent of the workforce by 2030. Millennials will change jobs several times and are willing to take pay cuts in exchange for better career development and flexible work arrangements. One positive for tax-exempts is that Millennials tend to care more about the social impact of their work than their job title  or the size of their paycheck.  Tax exempts need to take time to understand how what motivates Millennials might be different from what motivates other generations.

The importance of training and mentoring programs cannot be overstated. Employers have to make sure their employees have all the tools they need to do their jobs effectively and efficiently. Implementation of a robust and comprehensive training and mentoring program not only increases efficiencies, reduces risks, and decreases turnover, it also has the ability to increase job satisfaction, improve employee morale, and increase motivation.

When employees feel that their work is valued and that they themselves are valued, they are motivated to maintain, or improve, their level of performance. Praise and recognition are essential to maintaining a quality workforce. Tax-exempts need to create an  appreciation program that recognizes their employees and stresses or highlights the positive impact that the tax-exempt is having on the community.

The key to recruiting and retaining qualified employees is the willingness to be flexible.  Whether this means flexible work arrangements, flexible work hours, or creating a culture of flexibility, encouraging flexibility in the workplace reduces stress, increases productivity, and improves employee morale.

Being flexible and willing to think outside the box will not only improve your current workforce; it also gives you the opportunity to become the employer of choice, which will go a long way in managing the staffing crisis.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.


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