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Compensation: More than a paycheck

Many of us are drawn to work in the nonprofit sector by the missions of our organizations, but our satisfaction and the ways it impacts the rest of our lives are key factors in keeping us motivated and engaged. And one aspect that can contribute to our sense of satisfaction is our total compensation.

As members of hiring teams, we sometimes have the ability to influence our lives inside and outside of work by advocating for competitive compensation packages for our staff (and ourselves!). There are many considerations that can go into designing a total compensation package. Let’s take a look at a few:

 Salary

This is probably the most obvious piece of a total compensation package. But calculating a salary or salary range involves many factors including:

  • Level of responsibility
  • Seniority/years of service
  • Pay-for-performance
  • Geography
  • Merit/knowledge/education
  • Job evaluation
  • Job scarcity for the position

In an ideal scenario, before a number is even considered, a solid job description and appropriate job title are established. Once that is in place, it may be time to determine the market value of a position by taking a look at salary surveys. Though not always free or inexpensive, salary surveys can be a valid tool in helping at least guide you to the range of salaries for various positions.

Don’t forget that salary is not the only factor to keep in mind when considering an employee’s paycheck. Employers also pay social security, Medicare, and unemployment taxes for everyone on their payroll, in addition to the gross salary. Those numbers may not be as evident to staff but do have a bottom line impact for the organization. So salary survey data may seem straightforward, but if you’re crafting a total compensation package, it’s just one tool to help you reach your destination.

Benefits

Benefits are the talk of the town these days and at the top of everyone’s list is health insurance, especially medical insurance.

Assuming that you are able to offer some type of health insurance, what kind of program do you currently have? Employee-contributory or employer-funded, in full or partially? Options for dependents? In the end, you will need to know the cost the organization spends on health benefits per person.

Other paid benefits

Some organizations offer additional benefits like retirement savings programs with organization matches, funds for health/wellness initiatives (like a smoking cessation program), reimbursements for learning/education pursuits (such as grad school or certification programs), contributions to health spending accounts, or transit dollars (that are not employee paid). While most employees won’t exercise every benefit to the maximum, you should have a solid cost estimate for both customary usage and actual liability.

Time

Yes, time is money, and eventually any time away from work can be calculated to some monetary value. But in designing a compensation package, it can often be the work-life value that is the focus in the offering, not the dollar productivity that may be lost.

Consider the number of days that you allow for vacation, personal time, and sick time. What kind of flexibility do you allow for family emergencies, work-from-home situations, or hours outside of 9am-5pm (or whatever your organization’s  typical work hours are)? While increasing time off is not always an equal trade-off for offering a lower salary, it can be a point of negotiation.

Organizational culture

While this may not be a bottom line figure by itself, an organization’s culture can influence compensation-package design via other monetary items. For example, is an organization’s culture very family-esque, with a shared responsibility for everyone to contribute to the well-being of the group? Is there more of an entitlement mentality, where staff feel entitled to certain salaries and/or benefits merely as a function of being employed? Or is there a rooted sense of performance-based pay, such as when meeting or exceeding specified expectations always results in a cash equivalent?

Ideally, your compensation package should reflect the values of your organization as much as possible. And a strong sense of alignment between your organization’s culture and how you choose to reward your employees will likely yield greater job satisfaction.

Constraints

Money is the largest component of compensation, and at most organizations, there’s usually just not as much money as we would like.

And even if you had enough money, you might have other constraints. The duties required for certain positions might not allow for as much or even any time flexibility. Perhaps you have a board chair or an ED with strong ideas about how staff should be compensated. There may also be past practices that are hard to break. Whatever they are, constraints are very real.

The Formula

So if total compensation might look something like this:

salary + benefits + other benefits + time + org culture + constraints = compensation

…Then what happens when the formula does not match reality?

Solutions might run the gamut from adjusting actual salary levels, injecting flexibility when possible, building in incremental raises based on certain conditions, reorganizing responsibilities among existing staff instead of hiring new staff, revising fundraising strategies so that you can compensate more competitively, making a case with your board or executive director about how a practice needs to change or evolve to be more competitive or fair, or even just holding the line where you are despite negotiation attempts.

Whatever you implement, remember that successful packages—those that are legal, reflect equity, are consistent, and are built on a transparent philosophy—usually result in satisfied and productive staff. These individuals can become champions and allies within the organization as well as for the sector as a whole, especially as they feel both their work and personal lives are valued.

By working toward this, you may find that this kind of positive result is…priceless.

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