Human capital inflow in nonprofits: Entry‐level employees’ sector shift

• Published date: 01 June 2018
• Date: 01 June 2018
• DOI: http://doi.org/10.1002/nml.21303
• Author: Jiwon Suh

RESEARCH ARTICLE

Human capital inflow in nonprofits: Entry-level

employees’sector shift

Jiwon Suh

Public and Nonprofit Management, University of

Texas at Dallas, Richardson, Texas

Correspondence

Jiwon Suh, Public and Nonprofit Management,

University of Texas at Dallas, 800 West Campbell

Road GR31, Richardson, TX 75080-3021.

Email: jiwon.suh@utdallas.edu

Although recruitment and retention of qualified

employees are some of the biggest challenges in the non-

profit sector, nonprofit organizations must maintain

human capital inflow due to its significant impacts on

organizational success. Through person-organization

value fit, this paper explores the factors that influence

labor shifts from the public or for-profit sector into the

nonprofit sector in the South Korean context. Specifi-

cally, the effects on the likelihood of employees switch-

ing to the nonprofit sector from the perspective of eight

job satisfaction measures and three education–job match

measures are investigated. Two groups of employees

(those whose career started in the for-profit sector and

those starting in the public sector) are compared. Results

indicate that there is substantial variation between the two

groups. In particular, intrinsic job satisfaction has

completely different effects on those working in the for-

profit sector than on those working in the public sector

regarding their likelihood of having experienced an inter-

sectoral shift into nonprofits. The more public employees

are satisfied with intrinsic job rewards, especially job rep-

utation, the more likely they are to move to nonprofits.

These results suggest that when employees in the public

sector are satisfied with intrinsic rewards they tend to pur-

sue greater intrinsic satisfaction in the nonprofit sector.

This paper also reports that education–job match is only

significant for those whose first job was in the for-profit

sector.

KEYWORDS

education–job match, job satisfaction, motivation,

sector shift, sector switch

Received: 15 May 2017 Revised: 8 January 2018 Accepted: 9 January 2018

DOI: 10.1002/nml.21303

Nonprofit Management and Leadership. 2018;28:471–489.wileyonlinelibrary.com/journal/nml © 2018 Wiley Periodicals, Inc. 471

1|INTRODUCTION

Sector switching is no longer an unusual phenomenon across the public, nonprofit, and for-profit sectors

(Light, 1999; Piatak, 2017; Su & Bozeman, 2009). Light (1999) observed that switching sector of

employment reflects “a clear-eyed view of the job market and lack of loyalty from employers in any sec-

tor”(p. 92). Along with external determinants of sector switching such as economic condition,

researchers have long noted that employees change their working sectors for a variety of motives

(Hansen, 2014; Light, 1999; Piatak, 2017). For example, Light (1999) summarized nine motives for sec-

tor switching: opportunity for personal growth, opportunity to do challenging work, type of work, oppor-

tunity for advancement, opportunity to impact national or local issues, public respect, salary, benefits,

and job security. Recently, Hansen (2014) examined various motives for sector switching that are related

to extrinsic rewards and organizational characteristics as well as public service motivation (PSM).

Although myriad studies have examined employees’turnover, studies of sector shifters, particu-

larly the research on those who switch their sectors to the nonprofit sector, are uncommon. Most

studies focus on either shifts between the for-profit and public sectors (Bozeman & Ponomariov,

2009; Frederiksen & Hansen, 2017; Hansen, 2014) or nonprofit employees’outflow to other sectors

(Johnson & Ng, 2016; Kang, Huh, Cho, & Auh, 2015). To fill this gap, this paper focuses on sector

shifters moving from the public or for-profit sectors to the nonprofit sector.

In particular, we focus on extrinsic and intrinsic job satisfaction as factors influencing the deci-

sion of whether to switch sectors because they are strongly related to each other (Light, 1999). Sec-

tor switching is a more salient action than simply changing a job within a sector due to “perceived

sector competence and desire for work in a sector”(Tschirhart, Reed, Freeman, & Anker, 2008,

p. 683). Hence, this study’s approach helps deepen our understanding of different employee charac-

teristics across the three sectors. Although nonprofit and public sector employees are more likely to

be motivated by intrinsic rewards than extrinsic ones, we know only little about the different moti-

vations between these employees (Lee & Wilkins, 2011; Mirvis & Hackett, 1983).

In addition, a majority of employee turnover research focuses on the stated intention of

employees to leave rather than the actual incidence of turnover (Bright, 2008; Johnson & Ng, 2016;

Liu, Liu, & Hu, 2010; Moynihan & Pandey, 2008). This paper addresses this shortcoming by using

actual turnover data to examine factors that influence the likelihood of switching from the for-profit

or public sector to the nonprofit sector. Lastly, this paper uses data from South Korea (hereafter

Korea). The nonprofit sector has grown rapidly in recent decades, creating new job opportunities in

Korea (Kang et al., 2015; H. W. Kim et al., 2008). In this sense, this study is noteworthy by apply-

ing the theoretical frame used for western countries to the Korean context.

Based on dissimilarities observed across sectors, this paper explores the factors that influence

the likelihood of employees switching to the nonprofit sector. Eight facets of job satisfaction and

their effects are examined. The eight facets are categorized as either extrinsic or intrinsic reward.

Also, the effects of education–job match are examined. In particular, this study compares the impact

of these factors on two groups: FTN (for-profit to nonprofit), those whose career started in the for-

profit sector; and PTN (public to nonprofit), those whose career started in the public sector.

To this end, our study attempts to answer the following research questions: (a) What factors lead

employees to switch to the nonprofit sector? (b) How do identified factors differ in effect between

the two delineated groups? This study finds that extrinsic and intrinsic types of job satisfaction have

different impacts depending on what sector an employee started his/her career in. In particular, we

find that the effects of intrinsic job satisfaction on each group have inverse signs. Furthermore, we

also find that education–job match has a significant effect on the likelihood of switching to the non-

profit sector only for those in FTN group. The remainder of this study is organized as follows. First,

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