The nonprofit sector is very labor intensive with salaries and benefits almost always being the largest budget item.  It is through people that our missions are fulfilled and therefore employees must be viewed as a critical resource.  The Compensation and Benefits survey produced by the Center for Nonprofit Management is a valuable resource in understanding the competitive picture. 

However, salary comparisons don't tell the whole story. Boards and management organizations also need to determine for themselves their compensation philosophy - what do they value in relation to their employees.  Factors that are frequently included in a compensation philosophy in addition to external competitiveness are: internal equity, experience and credentials, as well as performance.  Organizations may choose to only include some of these items, rank them or assign each factor a percentage weight.  These choices will have an impact on an organization's recruitment and retention effectiveness. 

In working with boards on these issues, The Oertel Group will often hear that "we pay what we can afford."  Acknowledging that resources can be constrained and there are challenges to raising additional funds, boards need to understand the implications of paying at the low end of the competitive picture.  The most common consequence is high turnover which has a set of additional costs including: the costs of not providing full service because key positions are open; the costs of recruitment; the costs of training a new employee,; and the costs to morale of staff who are having to cover for the open position. 

By setting a compensation philosophy, board members and management can set strategic goals regarding what they want to pay and then develop a resource development plan to secure sufficient resources for its implementation.  It is easier to incorporate salary adjustments into government grants/contracts if an organization has a strategic compensation plan; having at least some of the increased salaries be covered by government contracts makes the amount needed to be raised by other sources considerably less.  

The Oertel Group can assist your organization with setting a compensation philosophy and related organizational development work of organizational structure, job descriptions, performance measures, performance review systems, and supervision practices.

If you are interested in any of the planning services, please contact us at 323-257-1125 or via email.