How do we determine compensation and benefit packages?
Your organization’s approach to compensation will affect your ability to attract, retain and motivate qualified and enthusiastic employees. So how do you determine how to set appropriate yet attractive salaries and give increases and benefits? Here are some ideas to get you started:
Set salaries that fit.
In Southern California, the Center for Nonprofit Management (CNM) publishes an annual compensation and benefits survey for nonprofit employers located in Southern and Central California. To purchase a copy, visit the CNM website (www.cnmsocal.org/salarysurvey).
Next, you’ll want to look at your organization in relation to others in your service area. Check competitors and partner associations. Look at individual roles in your organization and compare market pay scales for each position.
Search job sites for job titles that match, and look for salary information. Reach out to professional associations for salary studies or trend reports. Or, try one of the many salary calculators available online.
Then, look at how positions fit within your organization. Determine value based on the skills and experience necessary to perform the job, as well as output and how integral the position is to your organization’s success.
To help ensure fair decision-making when evaluating and compensating potential and current employees, establish a salary range for each position. You’ll want a minimum and a maximum salary, with the midpoint being your target for fully effective performance.
How to determine a salary range? Try dividing the salary minimum by a factor and then adding the result to the minimum. For example, a 50 percent salary range based on a minimum of $24,000 can be calculated by dividing by 2 ($12,000) and adding that to the minimum ($24,000 + $12,000 = $36,000). Here, $24,000 is the minimum, $30,000 is the midpoint and $36,000 is the maximum.
Consider offering other benefits, particularly when budgets are tight.
It’s well known that salaries in the nonprofit sector are lower than those in the corporate sector. And nonprofit job seekers often choose the work for reasons that go beyond compensation. This makes benefit packages a big factor in recruiting and retaining nonprofit employees.
Since employers are not required to provide benefits, plans will vary widely depending on an organization’s size, field of service and budget constraints. If offered, benefits can include paid vacation; holidays; sick time; training opportunities; health, dental, life, and disability insurance; and retirement benefits. In addition, you may want to build in other attractive benefits, such as flexible working hours or the ability to work from home, gym memberships, or even an office lunch program.
If you do decide to offer benefits, you must abide by state and federal laws that regulate them. Therefore, you’ll want to clearly define who is eligible for benefits and when, the types and amounts of benefits available, and the circumstances under which benefits may be lost or forfeited. Also be sure to document your right to modify or terminate benefit features as needed.
Set guidelines for compensation increases.
When do increases happen? Will increases be available for promotion or transfer? Tie salary increases to performance and set regular performance reviews, and you set fair standards for all.