New NFP HR benchmarks: Organisations are spending more but reducing turnover. How do you measure up?

New NFP HR benchmarks: organisations are spending more but reducing turnover. How do you measure up?

  • Are your organisation’s performance management and training up to scratch?
  • How does your staff turnover stack up against like-minded organisations?
  • Are you spending too much (or too little) on recruitment?

A new benchmarking report from Nous Group has found that NFP organisations have increased their HR spend over the last three years, and have been rewarded with decreased turnover, and an increase in the number of staff staying more than 12 months.

The data from the study could provide you with the information you need to review your HR practices and improve your recruitment, training and development and even help you to save money.

The report “Benchmarking with Benefits” provides a high level overview of the results of a three year benchmarking project undertaken by management consultants Nous Group in partnership with Victorian peak bodies including Victorian Council of Social Services (VCOSS), Centre for Excellence in Child and Family Welfare and government body the Office for the Community Sector.

The report focuses specifically on the often-overlooked “back-of-house” services that play a vital role in the smooth operation of not-for-profit organisations, but are often seen as an administrative burden by many organisations.

However, Nous Group is keen to point out the importance of HR functions in NFP organisations;

“Many, if not all, of the NFP organisations that participated in this benchmarking study deliver challenging services to a vulnerable cohort of clients. This includes working in direct client care, shift work and supporting clients with complex and difficult life issues. Given these circumstances, Human Resources (HR) is a particularly important function.”

We look at four key areas of the benchmarking report so you can see how your organisation measures up.

1. What are turnover rates like?

Retaining staff in the NFP sector can be a difficult task and turnover rates have always been higher in the community sector than in the private sector.

But, there’s some good news! Turnover rates for participating organisations decreased slightly from 17% to 16% over a three-year period.

Though this is still behind turnover in the private sector, which is about 13% according to a recent report from AHRI.

However, despite a slight decrease in overall staff turnover, the percentage of staff staying in their organisation for less than 12 months has grown from 5.5% to 10% over the same period.

Nous Group suggests that this may be due to workers leaving organisations “when the proportional attention to non-recruitment HR services is low”.

2. How satisfied are staff with their organisation’s HR practices?

Nous Group benchmarked staff satisfaction with HR services using a seven-point scale.

Both staff and management satisfaction decreased marginally over a three-year period with staff satisfaction decreasing from 5.7 to 5.4 and management satisfaction decreasing from 5.7 to 5.5.

However, according to the report, many organisations are making a concerted effort to improve staff engagement by focusing on their training and performance management.

There was an increase in both expenditure and participation in training across the board including:

  • An increase in staff participating fully in their performance review from 40% to 55%
  • A huge increase in the number of workers provided with discretionary training from 39% to 68%!

Nous reported that organisations making a concerted effort to improve staff satisfaction were already seeing the benefits;

“Targeted efforts in performance management and training reap significant returns, including improved participation and performance, an enhanced culture and reduced turnover.”

3. How much time and money are organisations spending on recruitment?

Not-for-profit organisations spend about a quarter of their HR budgets on recruitment.

Also:

  • The median time to fill a vacant position is 6.5 weeks
  • The percentage of effort that HR staff put into recruitment on average is 40%
  • The average cost of recruiting is $611 per person up from $456 in year 1 of the benchmarking.

Not surprisingly – but importantly! – the study found that organisations that had higher quality recruitment practices saw lower numbers of staff leaving in the first twelve months.

But feel free to take your time with your organisation’s recruiting – the report found that “average time to fill vacant positions does not appear to have a strong correlation to retention of new staff.”

4. How much are organisations spending on HR?

The report indicates that organisations have increased their investment in HR over the three-year period with organisations investing $2472 in HR per FTE – an increase of 37% from $1,800 over three years.

  • Recruitment and selection accounts for 24.3% of organisation HR budgets
  • Performance management and training accounts for 42%
  • Total cost spend on OH&S by organisations was $2118
  • The percentage of payroll spent on workplace relations is 0.34%

Despite the increased spend on HR overall, the report points out that “One organisation has reduced [recruitment] advertising costs by 75%” over the three years of the study.

How did they do that?

“Through transitioning from paper to online advertising with peak bodies and NFP sector specific online [job] boards.”

Given that we run a great, NFP sector-specific job-search site, we reckon that’s great news too!

If you’re interested in delving deeper into the report you can download a full copy here.

How does your organisation measure up? Don’t reveal anything confidential, but if you’d like to say how your organisation’s numbers compare, we’d love to hear in the comments below:

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