In this guide, we’ll explore some of the questions nonprofit professionals have about compensation packages:
- What are the benefits of competitive compensation packages?
- What are some employee compensation best practices?
All prospective hires, from entry-level staff members to executive leaders, are looking for a valuable compensation package that shows how much your organization appreciates their contributions. Working with an HR consultant to design (or redesign) your strategy for the better will help you reap the benefits of an attractive compensation package.
What are the benefits of competitive compensation packages?
With the right compensation package, your employees and organization will thrive. Competitive compensation can help your nonprofit better achieve its goals by cultivating a more positive and productive work environment.
As you configure your compensation package, keep in mind that a well-designed compensation package can help you:
- Gain qualified employees. Highly-qualified individuals know their value, and they likely have a good understanding of the standard industry rates for their role. An attractive compensation package that accounts for industry standards can bring these prospective employees to your nonprofit.
- Better your nonprofit’s reputation. Building a solid brand for your nonprofit, both as an employer and a mission-driven organization in your community, starts with offering great compensation and benefits.
- Communicate your values. An excellent compensation package communicates how much your nonprofit values its employees and the work they do. This shows that your nonprofit prioritizes taking care of its employees.
- Increase your employees’ engagement. Competitive compensation drives employee engagement because employees feel valued for what they bring to the table. Engaged employees are more likely to have improved performance and productivity levels.
Your employees’ satisfaction levels have a ripple effect on the rest of your organization’s operations. Prioritize making your employees feel adequately compensated for their work to maximize your nonprofit’s success.
What are some employee compensation best practices?
1. Hire a compensation consultant
Developing an employee compensation strategy is difficult for many nonprofits to tackle on their own. Working with trained professionals can be helpful to ensure employees are adequately compensated. Particularly, working with one of Astron Solutions’ recommended compensation consultants or 501 Commons’ HR consultants can help you strategize your approach to compensation effectively.
By working with a compensation consultant, your nonprofit gains access to expert knowledge in services like:
- Evaluation of current compensation strategies
- Development of new strategies and policies
- Job evaluation plans
- External market analyses
- Creation of incentive programs
It’s a compensation consultant’s job to analyze your existing compensation plan and find ways to improve or add value to it. Creating the most valuable compensation plan possible directly improves employee retention by giving your team incentives to continue working with you. After all, hiring new employees to replace those that move on is much more expensive than maintaining high satisfaction and retention levels with your current employees.
When your employees feel satisfied in their roles, their relationships with not only people inside but also outside of your organization are better. In other words, having happy employees translates to happy supporters, volunteers, and beneficiaries.
2. Compare your nonprofit’s offerings
Prospective employees are familiar with what other nonprofits offer in their compensation packages. To compete with those offerings and attract job candidates, you’ll need to research industry standards to see how your compensation package compares.
To get started, employ a few of these strategies in your research:
- Consider your organization’s budget. Let’s say you’ve done hours of research, reviewed dozens of consulting firms, and finally landed on the perfect one...only to find out the firm is out of your budget. Be sure to check each firm’s rates before exploring their team and capabilities.
- Look for similarities. Aim to find information about compensation for nonprofits with a similar cause, size, location, and job description. For example, let's say you’re researching compensation packages for a human resources role. Look into positions at nonprofits with similar headcounts, locations, and role expectations.
- Reference annual salary reports. Government entities like the Bureau of Labor Statistics provide annual salary reports for nonprofits — these reports are a great starting point for getting an idea of what your compensation package should look like. Additionally, consider other figures and studies like what constitutes a livable wage, including the Putting People First project conducted by 501 Commons and King County.
- Take note of trends. Explore which salaries and benefits are commonly offered in the nonprofit sector by researching what other organizations list in job postings. Prospective employees will likely expect these trends to be reflected in their compensation packages, too.
- Identify your strengths and weaknesses. Once you take stock of your competition, look at your own compensation plan with a critical eye. Begin drafting solutions to any weak areas, and plan to highlight strong or unique offerings in your recruitment efforts.
Try to stay ahead of the curve to separate yourself from the competition. For example, look into benefit options other organizations don’t commonly offer, such as a subscription for a meal kit service or an employee wellness program.
3. Take a total rewards approach
Due to budget restraints, nonprofits often can’t be as competitive as for-profit businesses when it comes to salary. However, your organization can offer a total rewards approach complete with both financial and non-financial benefits. Salary should only be one piece of your compensation package, and adding other benefits gives employees opportunities to achieve their life and career goals.
For example, your employees may need to learn how to use fundraising software to be successful in their roles. Giving your employees paid training helps them learn how to use a tool that will help them perform their job at a higher level, leading to promotions and other rewards in the future.
In addition to paid on-the-job training, you can offer other financial and non-financial benefits such as:
- Direct compensation: Direct compensation is the payment your employees receive for performing their jobs. This part of the compensation package is where things like salary and commission fall.
- Benefits: Benefits are a form of compensation that adds value to your compensation package outside of traditional direct compensation. Some common benefits include health insurance policies and retirement accounts.
- Flexibility: Giving your employees the ability to choose how, when, and where they want to work is a simple but highly sought-after benefit. For example, giving your employees the option to work from home and choose when they start and end their day gives them more control over their work-life balance.
- Performance recognition: Recognizing a job well done makes employees feel seen and valued in the workplace. A common way to implement this benefit into nonprofit compensation plans is to pay out bonuses or give prizes for reaching performance goals.
- Career development: Give your employees the chance to develop their skills by offering continuing education opportunities like microcredentials courses created with Skyepack. These courses train and certify your employees in skills like data analytics so they can expand what they have to offer you.
While it can be hard for nonprofits to find extra room in their budgets to expand the salaries they offer, competitive compensation packages can be so much more than just a salary. As you work to recruit employees to your nonprofit with the help of a compensation consultant, promote the other benefits you offer and the money employees will save on things like insurance plans, just as you would salary.
About the Author: Jennifer C. Loftus, MBA, SPHR, PHRca, GPHR, SHRM-SCP, CCP, CBP, GRP
Jennifer C. Loftus is a Founding Partner of and National Director for Astron Solutions, a compensation consulting firm. Jennifer has 23 years of experience garnered at organizations including the Hay Group, Parsons Brinckerhoff, Eagle Electric Manufacturing Company, and Harcourt General.
Jennifer has held volunteer leadership roles with SHRM, New York City SHRM, and WorldatWork. She serves as a subject matter expert to the SHRM Learning System and as a SHRM instructor. Jennifer is a sought-after speaker for local & national conferences and media outlets.
Jennifer has an MBA in Human Resource Management with highest honors from Pace University and a BS in Accounting summa cum laude from Rutgers University. She holds Adjunct Professor roles with Pace University, Long Island University, and LIM College. In 2014 she received the Gotham Comedy Foundation's Lifetime Ambassador of Laughter Award.