An organization is only as good as its people. To attract and retain the best talent, you must offer not just a good compensation package, but a great one.
Smart nonprofits use a strategic compensation plan as part of their hiring strategy. By benchmarking compensation across multiple industries (not just nonprofits) and considering valuable additions to a compensation package, such as retirement benefits, health insurance, and more, nonprofits can use their compensation package to recruit, retain, and motivate top talent.
What Is a Strategic Compensation Plan?
Most organizations have a compensation plan. This includes salaries aligned to positions, seniority, and job duties, as well as benefits such as PTO, health insurance, and more.
A strategic compensation plan takes this a step further. It considers the entire package as part of a comprehensive strategy for talent acquisition, retention, and motivation. While many factors help attract top talent, a competitive compensation package is an integral part of talent management.
A good strategic compensation plan isn’t just about enticing top talent to join your organization. It’s also an important retention tool, especially when compensation packages align with an organization’s mission, vision, and values.
Make Sure You Have a Clear Baseline
Before starting your strategic compensation plan, ensure you have the basics of a good, compliant compensation plan in place. This includes:
- Job descriptions for every position in your organization—update them, if necessary
- Reporting lines or organization charts to indicate routes for promotion and growth
- Key performance indicators aligned with job descriptions to measure progress
- Salary benchmarking reports to provide the average salary for your region, industry, and positions
- Competitive compensation information, to assess your current plans against competitors
- Employee surveys to give managers insight into job satisfaction and potential compensation gaps
Once you have evaluated these areas, you’re ready to consider how you may improve your current packages to make them part of a competitive hiring strategy.
Compensation Package Consideration
It goes without saying that any compensation package you create must comply with federal and state laws. Discuss any questions you have with non-profit human resources experts or consultants and review policies internally to ensure full compliance with the law.
After baseline compliance and salary, other benefits make up the full compensation package. This is where your nonprofit can use various benefits as part of its hiring strategy. Keep in mind that you’re not competing for the best talent from only other nonprofits in your area; you’re competing against for profits, too. Many nonprofits find that adding the following benefits can attract and retain great staff.
Consider offering the following benefits in addition to salary and required health insurance:
- Paid time off: Consider adding a flexible PTO package to your compensation to make it more competitive. Employees can use the days for vacation, sick leave, personal reasons, or caregiving responsibilities.
- Health and wellness benefits: In addition to basic medical insurance, many organizations include dental, vision, and mental health benefits to their insurance packages for comprehensive wellness.
- Perks: If you can offer perks like discounts on gym memberships or similar opportunities, these may also be “nice to have” additions to a compensation package to set it apart.
- Performance bonuses: Adding a percentage bonus when an employee achieves goals and Key Performance Indicators (KPIs) can be a powerful motivator.
- Promotion opportunities: Employees frequently cite a lack of opportunities as a reason for leaving. Look across your entire organization to identify growth pathways; employees need to see opportunities within it. Otherwise, they will look for them elsewhere.
Mission, Vision, and Benefits Should Align
Lastly, ensure that your benefits package aligns with the organization’s mission and vision. If your organization’s mission is to ensure educational opportunities for all, offering them and reimbursement as part of the compensation package makes sense. It’s these kinds of tie-ins to mission and vision that can make a strategic compensation package really stand out.
Welter Consulting
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.
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