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 offering a competitive salary, consider adding these other perks to your compensation package:
- Paid time off. Your employees need time to rest and relax away from work, so offer them a good amount of paid time off. This can reduce burnout and improve retention rates.
- Health and wellness benefits. Providing comprehensive healthcare coverage is a game-changing way to get ahead of your competitors. Besides physical healthcare, consider offering mental wellness and fitness benefits, such as a gym membership stipend or mental health coverage.
- Performance bonuses and upward mobility. Your employees want to know that they’re growing in their role. Show your appreciation for their hard work by offering performance-based raises and upward mobility into management roles.
- Retirement plan contributions. Demonstrate your care for your team members’ futures by matching 401(k) contributions at a competitive ratio.
- Flexible work structure. Remote work has become increasingly popular, and some employees even expect a virtual component to their role. In fact, 81% of employees surveyed in a study want flexibility in their work environment. Offer the chance for your employees to work comfortably from home by incorporating remote elements into your benefits package.
- Professional development. Show your employees that you’re invested in their professional growth by offering development opportunities, such as paying for them to attend conferences or pursue a master’s degree.
- Employee recognition and awards. Putting some of your budget towards employee appreciation efforts can do wonders for your recruitment and retention. Consider giving employees awards such as “Employee of the Month” to congratulate them on a job well done. Also, don’t forget to award the winner with a gift to motivate your team to perform highly.
While these ideas are an additional expense, they can pay themselves off by recruiting great talent, setting your nonprofit apart from even the most competitive for-profit organizations in the space.
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.