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Managing Voluntary and Involuntary Turnover

Author: Try L. Muller

Date: September 13, 2009

Introduction

Turnover is not as much of a problem for nonprofit organizations as it is for most private

sector companies. The Opportunity Knocks 2008 Nonprofit Retention and Vacancy

Report showed that the turnover rate in private sector firms was 45%; over double that

of the 21% rate boasted by nonprofits. Piedmont Housing Alliance is no exception to

this trend as their average turnover rate for the past ten years is just under 10%. Even

though PHA’s entire staff only consists of twenty people, the number of employees that

leave annually would have an even greater effect on this rate. So, it is impressive that

not even two employees leave the organization annually. Furthermore, managing

voluntary and involuntary turnover is unique for PHA because of the effect turnover has

on the government funding the organization receives.

The Handbook

The organization clearly articulates the company’s policies in the employee handbook.

The employee handbook gives very explicit guidance in the form of policies, policy

enforcement, and it is explicit on employee separation policies. This is key in managing

turnover— especially involuntary— because the actions that management will take are

justified, in writing, by the regulations listed in the handbook. Employees have no

excuse for not understanding actions taken as the handbook explicitly describes the

enforcement measure and guidelines that govern the organization.

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Another important aspect of the employee handbook is that it reinforces the mission

statement in detail. When new employees are hired they are required to read the

employee handbook within the first week of orientation. The purpose for this is to

mentally align the employee’s thoughts, actions, and attitude with the overall outlook of

the organization. PHA wants every employee to understand that their role should be

performed in accordance with the principles and values that makeup the organization.

Employee Discretion

PHA is penalized for any employment vacancy listed on its application for funding.

Needless to say, the organization is very reluctant to enforce any voluntary or

involuntary turnover procedures that may reflect badly on the organization. Under

voluntary turnover procedures, the employee is supposed to provide his or her manager

with a two weeks notice and a resignation letter stating the date of separation.

Subsequently, the employee benefits become inactive a month after the separation

date. Unlike many employers, employees at PHA are encouraged to work through their

final two weeks before separation. The organization is a firm believer in employee

relations and public relations. The Board of Directors does not want to give the

individual any reason to degrade the organization if it at all avoidable. The employee is

very important to PHA and actually has a lot of discretion within the organization due to

more liberal policies.

Liberal Termination

The employee handbook is explicit in describing which policies and regulations have a

“0” tolerance policy— which happens to be every policy except termination based on

insubordination. PHA treats insubordination very delicately— sometimes too

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delicately— because they always want to salvage the relationship with the employee

and they do not want management’s actions to misrepresent the organization to the

public should the separation be a negative situation. The termination procedure for

insubordination is a three step process:

1. The employee meets with the leadership team member in that department to discuss

issues. A written action plan will be put in place and the employee goes on an

immediate, “0” tolerance 30-day probation period.

2. On the second infraction— or there is a violation during the probation period— the

employee is immediately suspended for one work week [with pay] and vacation

hours are deducted to account for the five days on suspension.

3. If management feels the need to address the employee’s insubordination a third time

then the employee is let go immediately after a meeting with the Executive Director

and the leadership team member.

Even though this policy is in place, PHA is naturally a very liberal work environment.

There have been times when employees have vocalized their dissatisfaction with their

job on a daily basis. In one situation, the employee was simply moved to another job

opening within the organization to quell the situation. This expressed tolerance could

eventually backfire on the organizational leaders if unappeased employees continue to

be allowed to disrupt the work environment.

Effective Managers

Good managers are able to identify issues amongst its employees and the need for

change. Turnover is not the way that managers at PHA want to facilitate change.

However, should this be the case, management should use the undesirable qualities of

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some of its current and former employees to identify potential candidates who they feel

would fit better with the organization’s identity.

Offering some more career development activities and maybe some non-monetary

benefits would also help the overall attitude of the employees and is something that

managers can put in the action plans for those employees demonstrating

insubordination. It is very important for management to make adjustments and

understand the cost and benefit of turnover. There are ways to capitalize on both

voluntary and involuntary turnover as well as various steps that can be taken to help

prevent high turnover rates.