How can your organization attract, retain, and motivate the talent necessary to carry out its mission? 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. With unemployment hovering around 3.5%, nonprofits 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. That’s why it’s important to devise a holistic compensation strategy that goes beyond salary. Your plan should represent your organization’s values, inspire employees, and contribute to a strong company culture. Let’s explore the fundamentals of a comprehensive compensation approach and how to craft your own.

What are the goals of a strategic compensation plan?

There are many factors that influence the creation of a compensation plan, but generally, the ultimate goals are to:

  • Align your compensation strategy with your organization’s culture and values
  • Attract and retain staff with the skills and experience necessary to fulfill your mission and maintain effective operations
  • Maintain internal equity and market competitiveness
  • Motivate staff to be highly engaged and productive
  • Ensure pay practices comply with federal, state, and local laws and regulations

That said, each plan will vary based on the organization’s size, budget, and employee community.

How do we launch our strategic compensation plan?

A well-written and transparent compensation strategy can create a more equitable culture by helping managers maintain compliance with all regulatory requirements and demystifying decision-making related to employee compensation. However, it can be difficult to plan out improvements when you don’t have a baseline understanding of your current compensation strategy. Start assessing your current approach by answering the following questions:

  • How are your job descriptions? Job descriptions form the bedrock of an effective compensation program. Good job descriptions identify key facets of the job, and the expected outcomes, that establish expectations for job performance.
  • What are our competitors doing? Recruiting talent is all about standing out from competing nonprofits. For each position, research the benefits your competitors are offering for similar roles and how you can surpass them.
  • What do our employees think? Employee feedback is crucial for making benefits-related decisions. After all, they’re the ones who will be reaping the rewards, and understanding what they want can give you ideas for policy changes that will resonate with them.

Remember that your research shouldn’t stop with nonprofit organizations. For many positions, organizations compete with the larger labor market, making it 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 nonprofit organizations, you may fail to be an attractive employer to a broader base of candidates.

How can we level up our compensation strategy?

Your employees expect and deserve more than just a paycheck for a job well done. Besides a competitive salary, consider adding these perks to your compensation package:

1) Paid Time Off

Offering generous paid time off (PTO) is a crucial component of compensation. PTO not only ensures that employees have adequate time to rest and recharge, but it also demonstrates the organization’s commitment to their employees’ work-life balance.

By providing ample vacation days, sick leave, and personal time, nonprofits can boost employee morale, reduce burnout, and increase overall job satisfaction. This approach helps attract top talent who value a healthy balance between their professional and personal lives, ultimately leading to better retention rates.

2) Health and Wellness Benefits

Providing comprehensive healthcare coverage can set you apart from your competitors. In addition to physical healthcare, consider offering mental wellness and fitness benefits, such as a gym membership stipend or mental health coverage.

These benefits show employees that their well-being is a priority, which can enhance job satisfaction and loyalty. Plus, healthy lifestyle incentives reduce absenteeism and healthcare costs in the long run, creating a healthier, more motivated team.

3) Performance Bonuses and Upward Mobility

Your employees want to grow in their roles. Show your appreciation for their hard work by offering performance-based raises and upward mobility opportunities.

Clear promotion pathways and regular performance reviews help employees see a future with your nonprofit, reducing turnover and fostering a dedicated, high-performing workforce.

4) Retirement Plan Contributions

Match 401(k) contributions at a competitive rate to demonstrate your care for your team members’ futures. This benefit not only attracts talent who are thinking long-term but also encourages current employees to remain with the organization.

Providing retirement plan contributions fosters loyalty and reduces the need for costly recruitment and training of new staff.

5) Flexible Work Structure

Remote work has become increasingly popular. In fact, 81% of employees want flexibility in their work environment. To meet these expectations, offer options such as:

  • Remote work
  • Flexible hours
  • Compressed workweeks

By supporting a flexible work environment, your nonprofit can attract a broader talent pool, reduce employees’ stress levels, and improve retention.

6) Professional Development

Show your employees that you’re invested in their professional growth by offering development opportunities, such as:

  • Industry conferences
  • Training programs and workshops
  • Educational resources
  • The ability to pursue a master’s degree

This investment not only benefits employees but also strengthens your nonprofit by building a more capable and knowledgeable team. Encouraging professional growth shows employees that your organization values their contributions and is willing to invest in their future, leading to higher retention rates and increased job satisfaction.

7) Employee Recognition

Employee appreciation efforts can do wonders for your recruitment and retention. Regularly acknowledging and celebrating employees’ achievements and contributions fosters a positive work environment and boosts morale.

Recognition can take many forms, such as:

  • Formal awards like “Employee of the Month”
  • Employee gifts for the holidays, birthdays, and other special occasions
  • Digital greeting cards, like the examples below, which enable managers to call out exceptional employees for specific accomplishments

Three employee recognition eCards that emphasize organizational values

Celebrate accomplishments on Employee Appreciation Day and every day with these ideas! By making employee recognition a priority, nonprofits can create a culture of appreciation and respect, which increases engagement, motivation, and loyalty.

Just make sure you’re prepared with the right tools to acknowledge employees. For example, you might use an employee gifting platform that allows employees to select custom rewards or greeting card software like eCardWidget to send digital shoutouts.

Wrapping Up

Remember that your nonprofit will likely change over time, and your compensation strategy should too. Ensure that you consistently collect feedback from your employees and follow new trends so you can create a future-proof compensation plan that keeps on giving!

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.

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