How can an organization create a compensation plan that will allow it to attract, retain, and motivate the talent necessary to carry out its mission? Employee compensation is a significant portion of any business’s operating expense, but an effectively constructed compensation strategy can do just that.
Many organizations may not realize the value of a good compensation plan or the impact it can have on performance. It’s not uncommon to think of compensation simply as a line-item expense and not as a strategic opportunity. With unemployment hovering around 4%, not-for-profit organizations need to think creatively about developing a compensation strategy that can attract and retain key staff.
What motivates staff? Money is important, but it’s not everything. “Many employees leave their job for reasons unconnected to pay. It could be for better benefits, flexible hours, a better career path, or a more conducive work environment. By understanding what drives employees, HR can create a holistic compensation strategy that attracts great talent and encourages retention in a cost-effective manner”, says Larry Beers, Director of Consulting with JER HR Group.
The compensation plan should be defined by a compensation strategy which represents your organization’s values and can communicate to employees what’s important and how compensation is determined.
There are many factors that influence the design of a compensation plan, but the ultimate goal is to:
Compensation plans should be formally documented, and not just for legal compliance or liability issues. A well-written and transparent compensation strategy can assist in creating a more equitable culture by helping managers maintain compliance with all regulatory requirements, and demystify decision-making related to employee compensation.
Where do you start?
For many positions, organizations compete with the larger labor market and it is necessary to look at for-profit market data in addition to non-profit data to capture the appropriate mix of skills. If you compare yourself only to other not-for-profit organizations, you may fail to be an attractive employer to a broader base of candidates.
About JER HR Group
JER HR Group is a leading full-service human resource firm helping great companies, large and small, to be their best. We help not-for-profit and other organizations recruit, retain and develop one of their most valuable resources—people. Services include compensation consulting; leadership & team development; behavioral, skill and gap assessments; recruiting & talent management strategies; regulatory guidance & policy development, e-training and HR technology.