Any organization, profit or non-profit, depends greatly on the productive and dedicated work of its diverse employees, who in most cases are responsible for either corporate success or failure. In order to make the employees the most effective, efficient, and productive, companies spend millions of dollars on their training, education and enhancements. Such highly productive employees do bring more benefits to the organization than less trained and less capable employees, yet they also start to require higher salaries and greater working conditions. If the company can satisfy such demands it retains its best workforce, otherwise, these employees leave the company in search of better places of employment. When the employee turnover rates are high, companies become inefficient, as corporate resources get wasted on training the employees who leave the company anyways, without allowing the company to effectively capitalize on their knowledge and experiences. High employee turnover rate is not the main problem yet rather is one of the symptoms of an underlying organizational problem that lies primarily in the domain of employee motivation, compensation and organizational corporate culture. The research paper explores the employee turnover rates in the non-profit sector of the economy.
First, prior to getting into the very figures and statistics on the employee turnover rates in the non-profit sector, it is necessary to speak a few words about the specifics of the non-profit sector in order to understand the general employment trends. Non-profit organizations are those companies that direct all its profit into the development of the organization, rather than distributing it among the shareholders, as it is the case in business organizations. The non-for-profit companies can make profit and do not necessarily have to be in the red to quality as non-for-profit, yet the main goal of such organizations is not to generate money or financial resources, but rather to achieve specific goals in terms of actions or the “good deeds” that most non-profit organizations try to do. In this case, the companies concentrate not on improving the profit margin, revenues or net income as business companies do, but rather, depending on the specific nature of the non-profit organization, they focus on spreading certain information, helping the poor, informing the voters, collecting garbage or recycling materials. In the absence of precise dollar figures, non-profit organizations are generally less efficient than for-profit companies, and although they may benefit the community and the society more than business organizations, unfortunately, they are doomed to have lower salary levels and smaller employee compensation packages (Masaoka, 2007). In addition, business companies usually do not have any limits on how high the employees can be compensated as long as these employees generate even more profits to the organization. In the non-profit sector, when an employee reaches a certain high level of competence and skill, they, as rational beings, may be prompted to leave for another company that can afford to pay higher salary or offer more lucrative compensation package. It is for this reason, one can assume that non-profit companies generally have higher employee turnover rates, especially among the high-skilled employees, who in the search of better conditions and higher pay, leave the non-profit sector, thus keeping the employee turnover rates relatively high (Ruiz, 2005). Reported Reasons for High Turnover
When analyzing the reasons why the employee turnover rates are so high, it is necessary to look at Brown (2010) who pointed out the figures for the year 2010 in the USA. Out of 100% employee termination, 18% were a result of layoffs (indicator of the economic crisis) and another 18% of terminations were a result of disciplinary action against the employees and 8% because of other organizational issues. Personal reasons accounted for...
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Masaoka, J. (2007). The Nonprofit 's Guide to Human Resources: Managing Your Employees & Volunteers. Barrons Books, pp. 197-202.
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