A look at 2023 trends
At S&W, we have seen many of our nonprofit clients struggle to adapt their hiring, retention, and succession planning practices in light of rapid social, economic, and workforce shifts in recent years. Organizations without strategic foresight and clear policies often face challenges when disruptions hit. Through our strategic planning, we advise clients on developing flexible plans and implementing key policies around diversity and inclusion, social media, and succession pipelines. With intentional strategies and modernized policies, organizations are better prepared to weather changes while staying focused on their mission and community impact. The following are observations and trends that we’ve seen from our strategic planning projects in 2023.
Hiring and Retention
Due to the challenges posed by inflation and high living costs, nonprofits are increasing their budgets and adjusting their compensation practices. According to a survey from PayScale, “nonprofit organizations provided employees and executives with average salary increases of 3.0% to 3.3% in 2022” (PayScale). This data is consistent with trends reported by The NonProfit Times and NonProfit HR as well.
Although increasing salaries to reflect the economic changes is a great start, budget differs for every organization and providing other incentives can help with hiring and retaining employees. Our strategic planning work with nonprofit clients has shown that effective planning is a key tool for establishing strong hiring practices. We have seen our clients take different approaches when encountering retention challenges such as highlighting comprehensive employee benefits, offering mentoring/professional development opportunities, and providing remote/hybrid work schedule flexibility.
Ultimately, the Board and leadership at every nonprofit organization should have honest discussions around compensation while considering the current state of the economy. Developing a compensation plan can guide nonprofits in making proactive rather than reactive decisions and benefit the organization’s leadership, employees, and stakeholders.
Overall, strategic planning serves as a beacon, illuminating creative approaches for nonprofits to attract and retain talent while advancing their mission impact. With the right strategic framework, organizations can innovate in hiring and retention practices, positioning themselves for long-term success.
Succession Planning
A succession plan can stabilize an organization’s operational structure when the executive leader steps down. Forbes stated that “nonprofits looking to the future must also consider succession planning.” However, only 27% of nonprofits have a documented succession plan for when an executive director or CEO leaves. Discussions around succession planning have increased since the pandemic; but most nonprofits still need help deciding where to begin.
A well-documented succession plan is crucial for an organization’s stability and continuity, especially in times of transition. As with hiring and retention, succession planning is a proactive strategy and should not be developed at the moment of departure. So, how do you utilize succession planning to strengthen your current culture and direction? Certain tools of retention will help manage succession plans such as building a culture of preparedness and responsiveness and leading the culture toward lowering barriers and creating a learning organization.
Effective succession planning can go beyond closed Board discussions. Investing in staff and having open conversations about qualifications, skills, and career interests is an excellent steppingstone for preparing a solid succession plan. An easy way to do this is to invite other leadership staff members to community events to open the door to being more involved with the work and have conversations with other stakeholders such as funders. This is an excellent way to ensure continuity of donor relationships and stewardship, particularly during times of leadership change. “Planning will mitigate risks of losing key players such as donors as there is time built into developing relationships, as well as disruption to workflow and donor identification, cultivation, solicitation, and stewardship.” (Sarah Harris, Succession Planning for Success, Bridge Conference 2023, August 3, 2023).
With all this in mind, it is vital that the Board has a full understanding of how the nonprofit works, including detailed information about the programs and services, finances, staffing, and more in order to continue the momentum, connections, and relationships of the organization if an executive director or CEO decides to step down. This understanding can be built through Board training and opportunities for members to visit the organization to interact with staff, witness the action and rekindle the passion and reason for joining the organization.
Remaining Adaptable
To remain relevant in the continuously changing nonprofit world, organizations must proactively adapt and strengthen key operational areas including hiring, retention, and succession planning. By investing in staff and having open conversations about succession, organizations can build stability and sustainability. This provides assurance to funders and communities that the valuable work will continue through natural transitions.
Overall, intentional strategies within those key operational areas enable nonprofits to evolve, helping to maintain quality services, even as the landscape shifts. With strategic foresight, nonprofits can realign operations to meet new challenges while remaining focused on impact.
With a deeper understanding of the observations and trends derived from our strategic planning projects in 2023, we’re excited to share our insights for the upcoming year. Check out our follow-up article, 2024 Vision: Navigating Challenges, Maximizing Opportunities, where we delve into our predictions for what nonprofits can expect to face in 2024.
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References
Council, Forbes Nonprofit. (2019, February 27). Council post: What will nonprofits look like in 2025? Nine experts weigh in. Forbes. Retrieved May 4, 2023, from https://www.forbes.com/sites/forbesnonprofitcouncil/2019/02/27/what-will-nonprofits-look-like-in-2025-nine-experts-weigh-in/?sh=4acca52e3822
Nonprofit HR. (2022, December 22). Retrieved May 4, 2023, from https://www.nonprofithr.com/a-guide-to-the-2022-2023-compensation-landscape/
Price, Nick. “CEO/Board: Succession Planning for Nonprofit Organizations.” BoardEffect, 4 Jan. 2019, https://www.boardeffect.com/blog/executive-directorceo-succession-planning-for-nonprofit-organizations/.
https://www.payscale.com/content/report/payscale-2022-2023-salary-budget-survey-report.pdf
The NonProfit Times. (n.d.). Retrieved May 4, 2023, from https://thenonprofittimes.com/hr/new-npt-salary-benefits-report-shows-6-salary-hikes-for-those-staying/
Harris, Sarah. Director of Advancement at the Sisters of the Holy Names of Jesus and Mary. “Succession Planning for Success: Taking the Steps Now to be Prepared for the Future.” Bridge Conference 2023, August 3, 2023.
