Digital skills, digital people: The NFP challenge

  • Now joined by New Zealand, this year’s 3rd PwC Annual Not-for-profit CEO survey shows digital gains for some Not-for-profits (NFPs) and increasing challenges for others.

  • As cost pressures and the war on talent create challenges, NFPs who have progressed in their digital journey are seeing benefits.

  • Upskilling is a key pillar in a competitive employee value proposition (EVP) and 77% of NFPs say they have provided training to help the workforce adapt to new technology over the last year.

This year’s 3rd Annual Not-for-profit CEO Survey explores two themes faced by the NFP sectors in Australia and New Zealand: skills shortages and delivering in a digital world. 

With unemployment in both countries at record lows and fresh talent not readily available from overseas, there is a fundamental mismatch between open roles and the skilled jobseekers needed to fill them. 

As cost pressures on wages and inflation take effect, keeping people who may need to take higher paying jobs outside the sector is a real concern. 

Skills and people

Upskilling remains a top priority for NFPs and over the past three years eighty percent of CEOs have found that digital training programs deliver stronger organisational culture and employee engagement. Additionally, the majority (58 percent) say it is proving an effective talent acquisition and retention tool. This is significant, as 75 percent of NFP CEOs believe that the skills shortage is impacting their organisation.

Seventy-seven percent of NFPs have provided upskilling and training to help the workforce adapt to new technology, a finding consistent over the last three years. What has become evident, however, is that small NFPs (with annual revenue under AU$500,000) are significantly disadvantaged in this area compared to larger organisations with annual revenue over AU$3 million. More than half of respondents from small NFPs reported that no skills or training were provided over the last twelve months, compared to 88 percent of their larger counterparts who did provide training.

The main reason for the lack of training? The resources required to develop upskilling programs, including budget, people, time and knowledge. This is problematic as not only does this put smaller NFPs at risk of a starvation cycle (unrealistic expectations of running costs leading to under-reporting costs to funders) but it puts them at a disadvantage when it comes to attracting and keeping talent. Learning and development forms a core pillar of an organisation’s employee value proposition (EVP) – the tangible and intangible benefits that prospective employees use to choose one company over another in their search for the best place to work. 

NFPs have made progress to develop the rest of their EVP suite, with 42 percent making moderate or significant progress. However, around a fifth say they have made no progress or are not considering developing an EVP, and 39 percent have only just started.

Digital delivery

Digital transformation continues to shape the NFP sector. Just over two-thirds of NFPs say their organisation or services are changing due to digitisation. Over three-quarters are changing how they do things and increasing the coverage of their service delivery in line with donor and supporter expectations. Indeed, 71 percent of NFP CEOs say their funding models are being materially altered by digitisation, including in the diversification and sustainability of funding sources.

NFPs are also using automation to increase efficiency of their operations, leading to greater impact and outreach. This can be seen in the use of automated reporting processes for compliance reporting, visualisation tools for analysis and digital platforms for marketing and outreach. These opportunities can lead to significant productivity gains by making better use of limited resources – freeing people from transactional work for higher value tasks. 

Surprisingly, the number of NFP CEOs who don’t think automation puts jobs at risk has risen from last year, to 59 percent. The number that agree that automation is putting jobs at risk has dropped from 12 percent to nine. PwC’s Hopes & Fears 2022 report, which surveyed employees on their attitudes and expectations around work, points to there being a potential gap between leaders and workers in this regard – 30 percent of workers surveyed were concerned that their role might be replaced by technology in the next three years. The importance of upskilling in digital technology should therefore not be underestimated, and time and support provided for employees to do so.

Cyber concern

Naturally, no contemporary survey focussed on organisational digital transformation can ignore cybersecurity. According to PwC’s 2022 Global Digital Trust Insights report, more than 60 percent of organisations expect a surge in reportable cyber incidents this year. 

Alarmingly, cybersecurity training ranked low in the key skills NFP leaders believe employees need to prepare for the impact of technology in their role. In stark contrast, PwC’s 25th Australian CEO Survey found that 100 percent of CEOs are concerned about cybersecurity. Combined with the rising threat level of cyber incidents, and the fact that NFPs are likely to store and use personally identifiable information, there is potentially significant exposure risk. 

With just under a third of NFP leadershing saying they are not considering, or have made no progress to establish a cybersecurity and data privacy uplift program, there is a significant gap to close to secure the sector. Leaders need to develop a deeper understanding of their responsibilities towards data privacy and protection. Additionally, this gap poses a particular challenge to receiving or applying for government grants where minimum data protection and privacy protocols are required. Encouragingly, 48 percent of respondents are making significant or moderate progress towards cybersecurity and privacy uplift programs.

A time for change

The digital era presents enormous opportunities for the not-for-profit sector, but with them comes the need for an understanding of challenges and how to overcome them. 

The last three years has seen NFPs take a more nuanced approach to upskilling, avoiding the one-size-fits all approach to blanket L&D. Role-based upskilling, targetted to those who need specific training for their work, provides a nuanced way to progress but needs to be balanced over time to ensure democratic access to all.  

To attract and retain staff and develop a resilient workforce, digital upskilling needs to be a key part of NFP EVPs going forward.

For further insights into how the NFP sector can address widespread skills shortages and delivery in a digital world, download the PwC 3rd Annual NFP CEO Survey report.

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