Money Talks or Millennials Walk

• Author: Eddy S. Ng,Jasmine McGinnis Johnson
• Published date: 01 September 2016
• Date: 01 September 2016
• DOI: http://doi.org/10.1177/0734371X15587980

587980ROPXXX10.1177/0734371X15587980Review of Public Personnel AdministrationMcGinnis Johnson and Ng
research-article2015
Article
Review of Public Personnel Administration
2016, Vol. 36(3) 283 –305
Money Talks or Millennials
© The Author(s) 2015
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DOI: 10.1177/0734371X15587980
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Compensation on Nonprofit
Millennial Workers
Sector-Switching Intentions
Jasmine McGinnis Johnson1 and Eddy S. Ng2
Abstract
The nonprofit sector has become increasingly reliant on paid professional staff and
now faces competition from the private and public sectors, which often pay higher to
attract and retain workers. Although Millennials are attracted to nonprofit work, there
are concerns that they will not remain committed to the nonprofit workforce due to
low pay. We analyzed data from the 2011 Young Nonprofit Professionals Network
Survey to examine the relationship between pay, perceptions of equitable pay, and
sector-switching intentions among Millennial nonprofit workers. Although two thirds
of the respondents indicate sector-switching intentions, we found no evidence that
Millennial nonprofit workers, who are purported to value extrinsic and materialistic
rewards, expressed sector-switching intentions on account of pay. However, pay
influences the sector-switching intentions of Millennial nonprofit managers and those
with advanced education. Our results suggest that the nonprofit sector may be facing
challenges in attracting and retaining Millennial managers because of low pay.
Keywords
millennials, nonprofit workforce, compensation, sector switching
1The George Washington University, DC, USA
2Dalhousie University, Halifax, Nova Scotia, Canada
Corresponding Author:
Jasmine McGinnis Johnson, The George Washington University, 805 21st St. NW, Suite 601E,
Washington, DC 20052, USA.
Email: jmcginnis@gwu.edu

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Review of Public Personnel Administration 36(3)
Introduction
One of the key challenges facing the nonprofit sector is the attraction and retention of
talent (Ban, Drahnak-Faller, & Towers, 2003; Clerkin & Coggburn, 2012; Guo,
Brown, Ashcroft, Yoshioka, & Dong, 2011; Kim & Lee, 2007). As a sector, nonprofit
employers have to compete with private and public sector employers for managerial
and professional staff (Kim & Lee, 2007; Ng, Gossett, & Winter, 2016). This chal-
lenge is also compounded by the impending retirement of baby boomers in large num-
bers (Cornelius & Corvington, 2012; Society for Human Resource Management,
2013; Van Bavel & Reher, 2013). Although the Millennial generation (those born after
1980) is entering the workforce, a number of commentators have noted that Millennials
emphasize different values and attitudes, and make different career decisions than
previous generations (Lyons, Ng, & Schweitzer, 2014; McGinnis, 2011; Smola &
Sutton, 2002; Twenge, Campbell, & Freeman, 2012). Millennials are also purported to
be looking for meaningful and fulfilling work more than other generations (e.g., Ng,
Schweitzer, & Lyons, 2010), and the public and nonprofit sectors are positioned to
offer interesting work through their public service missions (Ng & Gossett, 2013;
Rampell, 2011). However, despite the value Millennials place on meaningful work,
they also indicate a high degree of preference for materialistic rewards (Twenge &
Kasser, 2013), raising concerns for nonprofit employers as they generally pay less than
the private and public sectors (Faulk, Edwards, Lewis, & McGinnis, 2013; Katz &
Krueger, 2012; Leete, 2006; McGinnis, 2011; Ruhm & Borkoski, 2003).
Millennials have also been found to report a greater number of job and organization
changes than Gen Xers (b. 1966-1980) and Baby Boomers (b. 1946-1965; Lyons,
Schweitzer, & Ng, 2015; Lyons, Schweitzer, Ng, & Kuron, 2012), suggesting that they
may be prone to switch sectors if they are dissatisfied with aspects of work. Indeed,
management literature suggests that pay is a facet of job satisfaction which affects
turnover and although Millennials may first be attracted to nonprofit work, a lack of
pay may cause them to reconsider their sectoral choice (Jamison, 2003). In this regard,
the prospect of attracting and retaining Millennial workers would be a cause for con-
cern for nonprofit employers. The purpose of this article is to explore the link between
sector switching and pay levels among Millennial nonprofit workers. Specifically, we
investigate whether Millennial workers are likely to stay with the nonprofit sector
when they perceive their pay as equitable with peers. We also extend our investigation
to determine whether Millennials, particularly those in managerial roles, are likely to
switch sectors when confronted with competitive pay scenarios.
To date, only a small number of studies have examined the incidence of sector
switching, and even less research is focused on switching away from the nonprofit
sector, where the competition for talent is most acute given low pay conditions. Su and
Bozeman (2009) reported that individuals switch from the private into the public sec-
tor as a result of corporate reorganization (e.g., downsizing or outsourcing). They also
found that managers were more likely than non-managers to switch sectors, and indi-
viduals switch into the nonprofit sector only to take advantage of advancement oppor-
tunities. In another study conducted in Denmark, Hansen (2014) found that individuals

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285
switch away from the public into the private sector primarily for higher pay. Tschirhart,
Reed, Freeman, and Anker (2008) reported that graduates were more likely to switch
sectors when they display a strong protean career orientation, that is, a desire for
interesting and meaningful work, personal growth, and developing new skills. Given
that Millennial workers have strong protean career tendencies, and a record of frequent
job and employer changes (Lyons et al., 2012b) a compelling case can be made to
study the role of pay in nonprofit sector switching, particularly among this younger
generation of workers.
Nonprofit Employment
The nonprofit sector has become increasingly reliant on paid professional employees
(vis-à-vis volunteer workers) in response to stakeholder accountability, organizational
isomorphism, and resource acquisition (e.g., need for professional fundraisers; Chum,
Mook, Handy, Schugurensky, & Quarter, 2013; Park & Word, 2012; Ridder, Piening,
& Baluch, 2012; Suarez, 2009). Historically, the nonprofit sector has promoted its
public service oriented mission to attract employees (Ben-Ner, Ren, & Paulson, 2011;
Houston, 2006; Leete, 2000; Mann, 2006; Rose, 2013). This appeal is often necessary
because nonprofit work often pays less in comparison with employment in the private
and public sectors (Faulk et al., 2013; McGinnis, 2011; Preston & Sacks, 2010).
Scholars describe nonprofit workers as differently motivated from their private sec-
tor counterparts, as they place more emphasis on the intrinsic aspects of work (Light,
2002, 2003; Narcy, 2011; Serra, Serneels, & Barr, 2011). In that sense, nonprofit work-
ers donate their labor and accept lower wages in exchange for the intrinsic satisfactions
they receive for assisting with the achievement of their organizations’ mission-oriented
goals (Hansmann, 1980; Park & Word, 2012; Preston, 1989). Even in industries where
nonprofits offer similar services to public and private sector organizations, such as edu-
cation, law, and health care, employees are attracted to the potential of serving others
through nonprofit missions (Faulk et al., 2013; Preston, 1989; Weisbrod, 1983).
The “donative labor” hypothesis has been used to explain why job satisfaction is
high among nonprofit workers, despite receiving low wages. Research in nonprofit
supports the labor donation hypothesis and the perception that nonprofit workers value
intrinsic rewards over extrinsic rewards. For example, Borzaga and Tortia (2006)
found that pay does not have a statistically significant relationship with job satisfac-
tion for nonprofit workers. Likewise, Lanfranchi and Narcy (2006) reported that non-
profit workers find greater utility in intrinsic rewards over and above their salaries.
Mirvis and Hackett’s (1983) research also supports this finding as nonprofit workers
“feel a sense of accomplishment and to feel better about themselves when they do their
jobs well” (p. 9). Furthermore, a number of studies also reported that when nonprofit
organizations offer employees extrinsic rewards, it crowds out the intrinsic motiva-
tions of employees and volunteers (Chen, 2013; Lanfranchi & Narcy, 2006; Lanfranchi,
Narcy, & Larguem, 2010; Lee & Whitford, 2008). These studies demonstrate that non-
profit workers value intrinsic motivations so much so that compensating them with
extrinsic rewards decreases their work output.

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Review of Public Personnel Administration 36(3)
However, literature has emerged indicating that for nonprofit employees, mission
attachment does not have a positive impact on a workers organizational commitment,
particularly because nonprofit employees tend to be dissatisfied with low pay (Brown
& Yoshioka, 2003; Chen, 2013; Kim & Lee, 2007). Therefore, it is unclear whether
Millennial nonprofit workers—who indicate a strong preference for materialistic
rewards more than previous generations—would remain in the nonprofit sector if their
expectations for pay are not met.
The...