NFP leaders feel pinch as skills shortage hits third sector - PwC’s 3rd Annual Not-for-profit CEO Survey

• 75% of NFP CEOs indicated feeling the adverse impacts of widespread skills shortages
• 42% are making moderate or significant progress around developing a compelling EVP
• Smaller NFPs remain significantly disadvantaged in the digital inclusion stakes
• Over three quarters (76%) have progressed upskilling with mix of soft and digital skills
• 67% see their organisations or the services they provide changing due to digitisation
• Nearly 50% are making progress on establishing a cybersecurity and privacy uplift program

Unemployment in Australia and New Zealand is sitting at record lows with limited fresh talent in the short term, despite promising indicators from the Jobs and Skills Summit. This fundamental mismatch in available jobs and the skills of jobseekers to fill them is also affecting the Not-for-profit (NFP) sector - 75% of NFP CEOs have said they are feeling the adverse impacts of widespread skills shortages, according to PwC’s 3rd Annual Not-for-profit CEO Survey.

This year’s report explores insights from Australia’s and New Zealand’s NFP CEO’s for the first time. It delves into the impact of the skills shortages and the opportunity that upskilling presents as part of the employee value proposition, as well as delivery in a digital world including automation and cybersecurity, drawing on survey results from the perspective of NFP CEOs from small to large organisations across cause areas.

Building on purpose, mission and values-driven alignment which is innate to the NFP sector, 42% of NFPs are making moderate or significant progress around developing a compelling employee value proposition (EVP), up 8% from 2021. While this is progress, there is room for improvement with 19% of NFP CEO’s reporting that their organisation is making no progress or not considering developing an EVP and 39% only just starting to make progress.

Jane Edwards, Social Impact Director at PwC Australia said, “The NFP sector isn't immune to the growing skills shortage pressures and the movement of talent. Macroeconomic factors have put the squeeze on household budgets, potentially forcing staff to move into higher paid industries out of necessity rather than choice. NFP CEOs can consider different mechanisms to address this including strengthening their organisation’s EVP, with a focus on role-based, career path upskilling and training, or outsourcing non core activities to external providers.

Upskilling as part of EVP

Over the past three years, NFP CEOs have identified that digital upskilling programs continue to deliver stronger organisational culture and employee engagement (80%). The majority of NFP leaders surveyed (58%) also cited upskilling as an effective talent acquisition and retention tool. In the past 12 months, 77% of NFPs provided employees with upskilling and training to help their workforce adapt to the impact of new technology, a result which has remained consistent over three years.

However, a comparison between small NFPs with annual revenue under AUD $500,000 and large NFPs with annual revenue greater than AUD $3 million reveals that smaller NFPs remain significantly disadvantaged in the digital inclusion stakes. More than half of respondents from small NFPs reported that no skills and training were provided to employees to help them adjust to the impacts of technology in the past year (compared to 88% of respondents from large NFPs who reported that staff did receive training).

“An EVP encapsulates everything an organisation uses to attract and retain talent. It’s the balance of tangible and intangible benefits, representing why someone would choose to work at one organisation over another. EVP is also an area where smaller NFPs can sometimes level the playing field by offering more senior roles that can be difficult to access in larger organisations with a broader scope of responsibilities, personal development and growth,” said Ms Edwards.

This year’s survey also shows NFPs are extracting more value out of upskilling investments by striking a balance between human centred (soft) skills and technical and digital skills. Over three quarters (76%) of NFPs have made progress in establishing an upskilling program that mixes human centred (soft), technical and digital skills. Problem solving, adaptability and resilience stood out as the soft skills which NFP CEOs believe their employees need most.

Overall, the majority of NFP CEOs said upskilling programs continue to deliver organisational growth and productivity gains. This net benefit has remained consistently high over the last three years. This year, most NFP CEOs (77%) said upskilling delivers higher workforce productivity, 72% cited it as a growth accelerant, and 63% said it drives innovation.

Delivery in a digital world

Again this year, a large number of NFP CEOs (59%) did not think automation was putting many people’s jobs at risk in the sector - up three points (56%) from last year. Only 9% of CEOs agreed that automation was putting jobs at risk, dropping from 12% in 2021.

The skills that NFP CEOs believe their employees need to be prepared for the impact of technology remained consistent, with training in new software and programs, data analysis/analytics, teamwork and collaboration topping the list.

A high percentage (67%) of NFPs see their organisations or the services they provide fundamentally changing due to digitisation. Overall, 77% said they are shifting their operations to address beneficiary or supporter needs in the digital age, while 71% of NFP CEOs said the nature of their organisation’s funding model/s are being materially altered by digitisation, including diversification and sustainability of funding sources.

Ms Edwards said, “Digitisation continues to have a transformative effect on the NFP sector, impacting how people do their jobs, how outreach is administered, and the potential for diversification in funding models. NFPs are embedding automation to increase the efficiency of operations, enabling greater outreach and impact. Automation presents the opportunity to release resources from low value transactional activities to high value, skilled tasks which are supported by the right approach to upskilling.”

Cybersecurity training and privacy compliance once again ranked low in the key skills identified by NFP leaders that employees require to prepare for the impact of technology on their roles. However, 48% of respondents are making significant or moderate progress on establishing a cybersecurity and privacy uplift program, while 30% of NFPs are not considering or have made no progress on establishing a cybersecurity and privacy uplift program.

“This is a concerning indicator given the rising threat level and risk to business continuity. In some cases this gap can pose a particular challenge where NFPs receiving or applying for government grants have minimum data protection and privacy protocols,” said Ms Edwards.

“Once you collect, store and use personally identifiable information, the risks an organisation is exposed to increases. For NFPs, a deeper understanding of responsibilities to protect and limit the use of this information is crucial.”

To view PwC’s 3rd Annual Not-for-profit CEO Survey: Upskilling and delivering in a digital world, click here.