Picture this: You’re a mid-size nonprofit with a tight budget. You’re doing your best to engage your employees and compensate them for the value they bring to your organization, but many leave after working with you for only a short amount of time. All of your efforts to retain your employees feel like attempting to hold water in a sieve.

So, what do you do?

While a strong retention strategy encompasses more than just pay and benefits, you may want to start by re-evaluating your compensation philosophy and approach with the help of an experienced compensation consultant.

You may have worked with a consultant before to design a fundraising campaign or tackle tech issues. But compensation consultants can specifically help you design and implement a robust compensation strategy to not only attract the best employees but also keep them around for the long term. Plus, they’ll understand your unique needs as a nonprofit employer—including how necessary it is to keep an eye on your bottom line.

To help you learn more about working with a compensation consultant and determine whether your organization currently needs their services, we’ve rounded up some frequently asked questions and their answers. Let’s dive in!

FAQ #1: Why does my approach to compensation matter?

It’s obvious that compensation directly affects your ability to retain your employees—when they feel that they’re fairly compensated for all they contribute to your organization, they’re more likely to continue working for you.

But the right compensation strategy brings a wealth of other benefits to your organization as well. NXUnite’s guide to employee retention explains that a high retention rate allows your organization to reduce costs from the hiring and training processes, hang on to employees who are especially skilled and effective at what they do, and boost morale.

And, when your organization experiences the stability that a high retention rate brings, you’ll be in a better position to work toward long-term goals that advance your mission, such as growing your team, building out a new program, or even launching a large-scale campaign.

FAQ #2: What does a compensation consultant do?

Every compensation consultant will have a slightly different philosophy about their work. For a more holistic approach to compensation that will help you satisfy your employees and keep your organization’s needs top of mind, look for a consultant who specializes in total rewards.

A total rewards approach to compensation involves both direct forms of compensation (salary, bonuses, overtime, etc.) and indirect forms of compensation (health insurance, retirement benefits, paid time off, professional development opportunities, etc.). At the heart of a total rewards approach is the idea of balance—balancing your mission, long-term goals, and budget with your employees’ needs.

Beyond having a guiding philosophy like total rewards, compensation consultants will typically offer the following services:

  • Development and implementation of your organization’s compensation philosophy and policies
  • External market analysis
  • Incentive or variable compensation strategy development
  • Executive compensation strategy development
  • Pay communication guidance

Some consultants also may offer other HR-related services, such as assistance in improving your performance management system or creating an employee recognition program. Even if you don’t currently need these other services, maintaining a relationship with your compensation consultant can mean you have someone to turn to if the need arises down the road.

FAQ #3: How do I know if my organization needs compensation consulting services?

At this point, you may be thinking that compensation consulting sounds like it could be useful for your nonprofit. But how can you know for sure that investing in consulting is a good move for your organization right now?

Let’s take a closer look at some indicators that your organization could benefit from compensation consulting services:

  • A high turnover rate. Generally, your turnover rate should stay around or below 10%, so if your own rate is above this percentage, it may be time to work on improving your compensation strategy.
  • The results of an HR audit. thorough HR audit can highlight your organization’s policy gaps and inefficiencies in many areas, including your compensation approach.
  • New pay transparency laws taking effect in your area. According to Astron Solutions, pay transparency laws are designed to compel employers to openly share compensation information with job seekers and current employees, and these laws are becoming more common. If you’re preparing to comply with a new local law or just getting ready for the future, a compensation consultant can help.
  • Employee feedback about your compensation strategy. Your employees may provide feedback that raises concerns about potential turnover, sparking conversations about improving your compensation strategy.
  • A goal for strategic and sustainable organizational growth. Your nonprofit could also just be looking for a way to reach its larger organizational goals and seeking the stability that comes with employee retention before diving into larger projects.

It’s best to hire a compensation consultant well before you face any recruitment, retention, or financial issues, as they can help you build out a strategy that safeguards against future risk. However, you also may hire a consultant to assist with issues you’re dealing with in real time or when you’re gearing up for significant growth.

FAQ #4: How do I hire a compensation consultant?

When your organization is ready to invest in compensation consulting services, you need to seek out a consultant who will be a true partner to your organization. Follow these hiring steps to find the right fit:

  • Review your organization’s needs. Identify why you need to work with a compensation consultant and what you need their help with. This is also a good time to think about your goals for working with a consultant—what do you want your organization to get out of the engagement?
  • Discuss with your nonprofit’s leaders. Work with your organization’s executive director and board of directors to get everyone on the same page about working with a consultant. This helps ensure that you don’t experience pushback from any leaders as you get deeper into the hiring process.
  • Outline guidelines for the engagement. Determine the budget you have to work with, the target start date for the engagement, and the general timeframe for the engagement. Use these guidelines to quickly narrow down your potential candidates as you begin your research.
  • Research potential candidates. Start looking around for potential compensation consultants to partner with. Conduct internet searches, ask colleagues in the nonprofit sector for recommendations, or rely on well-researched roundups of top compensation consultants to identify potential partners.
  • Draft a request for proposal (RFP). Your RFP should communicate your organization’s needs and goals for working with a compensation consultant. Also, include the guidelines outlined at the beginning of the hiring process and expected outcomes for the engagement.
  • Compare the candidates and reach out to them. Create a shortlist of potential partners based on your research. Begin reaching out to them and submitting your RFP with an expectation to receive completed proposals back in a few weeks.
  • Review completed proposals and choose your consultant. Compare each consultant’s approach and plan for helping your organization. You also should meet with your top candidates. When you’ve found someone with a great proposal and who will fit in with your working culture, sign a contract and get to work!

As you begin your engagement with a compensation consultant, remember that while you should keep an open mind when trying new approaches and strategies, you know your organization best and should ensure any plans and policies fit with your larger mission and goals.

Compensation consulting can make a big difference to nonprofit organizations looking to grow their capacity to serve their beneficiaries and connect with donors and volunteers. This is because when your employees are satisfied with their compensation and jobs, their ability to move the needle on your mission will increase. Use these FAQs to determine if working with a compensation consultant is right for you and to get started with the hiring process!