A critical issue in the nonprofit sector is staff turnover, often referred to as the nonprofit turnover treadmill. 

According to a survey by Landles-Cobb, Kramer, and Smith Milway (2015), the second most cited reason for staff turnover, behind low compensation, was lack of leadership development and growth opportunity. Experts say a lack of opportunities for young and ambitious workers to advance creates frustration and disillusionment with their career prospects. This problem is compounded by nonprofits’ lack of investment in manager training, leaving nonprofit organizations unprepared for the inevitable succession of leadership (Koenig, 2016). This low promotion rate did not vary by nonprofit size. Larger nonprofit organizations, which have more opportunities to promote from within, are not doing so. This lack of investment in the organization’s future leadership exacerbates the turnover treadmill at a time when nonprofits need experienced leaders more than ever (Landles-Cobb, Kramer, Smith Milway, 2015). 

Selden and Sowa (2015) found turnover in nonprofits to present a significant cost, a reduction in performance, and a threat to their long-term sustainability. When nonprofits fail to invest in their staff, one demonstrable negative impact is high voluntary turnover. Even when employees feel a strong connection to the mission, staff may not stay with that nonprofit if they feel their organization does not invest in their development as a nonprofit professional. Transaction costs of finding a new employee, particularly at the executive level, can be as high as half the annual salary of the position. In addition, turnover causes distraction as board members and senior leaders turn their attention towards recruiting and onboarding, resulting in critical productivity loss (Landles-Cobb, Kramer, Smith Milway, 2015). 

The good news is that research shows that a lack of leadership development opportunities can be addressed cost-effectively, regardless of size, by developing leaders already on the payroll. It starts with a commitment by nonprofit CEOs, but also requires the skill and will of senior leaders, board members, and funders to build processes for leadership development within organizations (Landles-Cobb, Kramer, Smith Milway, 2015).

To do this effectively, the CEO and executive team need to define future leadership requirements, identify potential internal candidates, provide appropriate stretch assignments, offer mentorship, provide formal trainings, and assess performance to help grow their abilities. Organizations can start small, perhaps focusing on a few emerging leaders, and build structured leadership development systems over time. Resources available to help nonprofit organizations with this function include Bridgespan's Nonprofit Leadership Development Toolkit, and Achieve Mission's Nonprofit Human Capital Management Resource Center. Board members’ responsibilities for leadership development include committing time and attention to making sure the right resources are allocated to leadership and staff development within the organization. They should hold the CEO accountable for prioritizing leadership development and should work directly with the CEO to ensure they are getting the support needed to thrive in their role. Funders can help by understanding that effective leadership is a critical requirement for achieving the programmatic outcomes they desire from their investments. Investments should be laser-focused on the root causes of turnover (Landles-Cobb, Kramer, Smith Milway, 2015). 

Although many nonprofits lack the resources needed to create comprehensive in-house leadership programs, training can be woven into daily work (Koenig, 2016). Through a session on organizational effectiveness at Bank of America’s Neighborhood Excellence Initiative, Kramer (2010) identified 52 on-the-job leadership development opportunities nonprofits can employ at no cost to the organization. The opportunities were divided amongst six categories which include team leadership and management, communications, external relations, fundraising, finance and business economics, and project management. Many excellent leadership development opportunities were cited, including: 

• Opportunities to lead monthly staff meetings
• Assigning management responsibilities for volunteers, interns, or junior staff
• Accompanying executives on outreach opportunities
• Participating in drafting portions of grant proposals
• Joining meetings with funders
• Taking responsibility for coaching a group of volunteers in an annual or capital campaign
• Developing budgets for grants or departments
• Planning and facilitating fundraising events. 

Studies in the academic and corporate world find the most effective approach stems from a combination of learning through doing, learning through coaching, and learning through formal training. The Center for Creative Leadership advocates for the 70/20/10 Model for Learning and Development, which asserts that adults learn 70% through on-the-job stretch opportunities, 20% through coaching and mentoring, and 10% through training programs. Most of this learning takes place within the organization. It does not require expensive external trainings, but it does require time to build a talent development system (Landles-Cobb, Kramer, Smith Milway, 2015).

In conclusion, the leadership development deficit has exacerbated the revolving door of talent and hampers the sector’s ability to address the concern of leadership succession. Organizations, regardless of size, should address leadership development in a cost effective manner through on-the-job stretch opportunities, as well as coaching and mentoring efforts. This is an immediate solution to curbing the turnover treadmill that affects a majority of nonprofits. (Landles-Cobb, Kramer, Smith Milway, 2015). When turnover is addressed appropriately by leaders and managers, nonprofits will have greater opportunities to meet their mission by reducing organizational expenses, increasing performance, and reducing a significant threat to long-term sustainability (Selden, Sowa, 2015).

Sources:

Koenig, B. R. (2016, April 19). Lack of Training for Young Nonprofit Workers Means Too Few Potential Leaders. Retrieved October 8, 2016, from https://www.philanthropy.com/article/Lack-of-Training-for-Young/236164

Koenig, B. R. (2016, September 08). A Guide to Resources on Leadership Training. Retrieved October 8, 2016, from https://www.philanthropy.com/article/A-Guide-to-Resources-on/237725

Kramer, K. (2010, October). 52 Free Development Opportunities for Nonprofit Staff. Retrieved October 26, 2016, from https://www.bridgespan.org/insights/library/leadership-development/52-fr...

Landles-Cobb, L., Kramer, K., & Smith Milway, K. (2015, October 22). The Nonprofit Leadership Development Deficit (SSIR). Retrieved September 10, 2016, from http://ssir.org/articles/entry/the_nonprofit_leadership_development_deficit

Selden, S. C., & Sowa, J. E. (2015). Voluntary Turnover in Nonprofit Human Service Organizations: The Impact of High Performance Work Practices. Human Service Organizations Management, Leadership & Governance, 39(3), 182-207. doi:10.1080/23303131.2015.1031416

Eric Spicer is currently the Senior Director of Development for Health at ASU. In this role, Eric provides leadership to the development team responsible for securing philanthropic investments for a broad portfolio of health related initiatives at ASU including the College of Nursing & Health Innovation, the College of Health Solutions, and the ASU Biodesign Institute.

Eric has sixteen years of development experience in the Phoenix nonprofit sector. He began his career with the Celebrity Fight Night Foundation raising support for the Muhammad Ali Parkinson Center at the Barrow Neurological Institute. Before joining ASU, Eric was the Director of Development for Ronald McDonald House Charities of Phoenix where families traveling to Phoenix with children needing medical treatment could find a home away from home.

Eric earned his Certified Fundraising Executive designation in 2014 and his Masters of Nonprofit Leadership and Management degree at ASU in 2016. In addition, Eric has been an active volunteer in the Phoenix community, primarily working with organizations that provide support services to children in the Arizona foster care system.

• How can nonprofit organizations measure community engagement?
• Telling the story in a new way: Should arts leaders use impact evaluation?