Vital to our society, the success of nonprofit organizations (NPOs) often hinges on the effective management of human capital. Yet, while a significant body of research exists on human capital management in nonprofits, there lack studies adopting a comparative perspective and exploring management practices that can afford nonprofits an advantage in motivating and retaining human capital over for-profit organizations (FPOs), with which NPOs are increasingly competing for employees, particularly considering that FPOs are more frequently venturing into areas traditionally dominated by NPOs. In this study, we investigate the types of employee incentives that can differentially impact voluntary turnover in NPOs and FPOs, thereby potentially providing NPOs an advantage in motivating and retaining human capital. Specifically, adopting a firm-specific incentive perspective, we propose that employee incentives that demonstrate people orientation (i.e., employee benefits, employee participation, and employee training) can more effectively curb voluntary turnover in NPOs compared to their for-profit counterparts. Using a multi-level and longitudinal dataset from Statistics Canada (N = 11,555 organization-year observations from 2,867 organizations), we found support for our hypotheses. Our research sheds light on potential avenues for NPOs to achieve competitive advantage over NPOs with respect to retaining employees by aligning management practices with their organization contexts and employee values.
