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PBM 101: Top retention challenges facing nonprofits — and how to address them

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PBM 101: Top retention challenges facing nonprofits — and how to address them

In this Principle Based Management 101 series, we’re unpacking mental models, ideas, and tools you can use to level up your work.

This article was originally published by Stand Together Foundation.

Stand Together Foundation recently hosted a virtual series of discussions for Catalysts to explore challenges and opportunities related to retention. We began by asking the group a series of questions, starting with, "What aspects of retention are you struggling with?" 

Based on their responses, participants were put in breakout groups and developed collaborative problem statements to define their biggest obstacles. After coming together to explore each response in more detail, they returned to their breakout groups to discuss some of the mental models and strategies they were using to overcome each challenge. 

Here are the results of their conversation:


1: How to offer competitive compensation

Many nonprofit leaders are worried about how to compete with for-profit organizations and fellow nonprofit organizations for talent. Lack of sufficient funding, rampant inflation, and a tight labor market all compound to make it difficult to pay employees according to their value.

2: How to keep team members engaged and aligned

As nonprofits grow, their leaders often watch individual "micro cultures" develop on smaller teams and departments. They've also found it difficult to get team members to connect their work to the organizational vision, rather than focusing on individual performance. Both of these challenges—and others—are compounded as organizations scale to multiple locations.

3: How to incorporate incentives as proactive elements of organizational culture

Managers at nonprofit organizations are struggling to design incentives that motivate positive behavior without cultivating a sense of entitlement—or pushing people away from their organization in search of greener pastures. Part of their concern is effectively distinguishing between baseline job expectations and incentives for high value performance. Leaders also wrestle with how to ensure that incentives are distributed equitably, particularly on small teams composed of individuals with different roles and responsibilities.


1: Treat compensation as part of the mission

Compensation is foundational to an organization's strategy, because attracting the right staff is what makes it possible to accomplish their mission. Some nonprofit leaders have found that reframing compensation as a critical function helps them more effectively align internal and external resources to stay competitive. Others have decided to integrate compensation as part of the organizational mission itself, saying "We want to be able to provide a livable wage to our staff. It's important that we're able to do that."

2: Prioritize culture in high-pressure scenarios

Many Catalysts find that their organizational culture either thrives or falls apart in mission-critical situations. But when the pressure is on, and everyone's working hard, it's more critical than ever to model the right beliefs and behaviors. If done well, these high-pressure experiences can improve overall engagement and alignment, because employees can see clear evidence of what the organization stands for.

3: Leverage culture as an incentive

Some nonprofit leaders have started to treat their culture (when well-defined and lived out) as a part of their overall incentive structure. In some organizations, they value creative entrepreneurialism, and ensure that every employee is empowered to take risks and contribute beyond their official job description. Similarly, other teams are learning to promote autonomy: "Do whatever it is that you believe will best advance our vision." By taking this approach, they're finding that team members are more motivated to perform at a high level, in alignment with their own abilities.

Learn more about Principle Based Management and how it can help you transform your results.

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