Trends & Issues
Non-profit compensation — More than just dollars and cents
Assad Mallick
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Assad has completed his Bachelor of Commerce degree from Ryerson University and holds the CHRP designation and is also a Career Edge alumnus. He is currently employed by Rogers Communications as a Compensation Consultant. Assad is also an active member of the HR Council's HR Toolkit Advisory Team, lending his HR experience and expertise to the development and review of content for the HR Council's popular HR Toolkit. |
Last summer, I was looking for a new job that suited my background and career objectives. With my experience so far limited to work in the private sector, I was looking for a change and decided to apply for a position with a small non-profit organization. During the interview, I learned a great deal about the organization and the position — I could see myself working there. Towards the end of the interview, I raised the question of salary, and the interviewer responded with a figure that was nearly 25% lower than my current salary. Although the position interested me, I couldn't afford to take a pay cut — so I reluctantly turned down the offer.
Although I didn't end up taking the position, I spoke in greater detail with the interviewer after the interview process regarding the challenges she faced in trying to fill the position. I've also had a number of conversations with various HR professionals, managers and supervisors on the topic of employee compensation in non-profit organizations and I'd like to share a little of what I've learned.
One of the key HR objectives for any organization, whether private, public or non-profit, is to have a compensation strategy that aligns with the organization's mandate and takes into account its human resources needs and its position in the labour market. Compensation strategies generally fall into one of these three categories:
i) Lead: Organizations that employ this strategy try to offer salaries that are above the market mean to try and attract the most qualified people. This obviously comes at a price, as higher salaries result in a greater expense for the organization.
ii) Match: This strategy involves matching the going market rate, offering salaries that are in line with the market average with the objective of maintaining a healthy equilibrium between managing costs and hiring talented individuals.
iii) Lag: This position is where a great number of non-profit organizations find themselves, whether intentionally or not. In the case of virtually all non-profit organizations, resources available for compensating employees are limited, making it difficult for organizations to offer salaries that match, let alone lead the market.
In addition to funding constraints, the lack of consistent and reliable salary and compensation data for the sector is another hurdle that organizations have to overcome when setting salaries. While I won't attempt to address the issues of the availability of salary data today, I can share a number of ideas that organizations can consider when looking to attract and retain employees.
Money - not always the main motivator
There is a wealth of information available from notable psychologists such as Frederick Herzberg and Abraham Maslow as it relates to motivation. One of the conclusions that they made was that money does not always prove to be the main motivator for employees. While it may help meet basic needs for survival, it will not motivate employees and it will not prove to be a long-term tool to retain employees.
Non-cash items play a crucial part in attracting and retaining employees
There are a number of ways that organizations can offer non-cash benefits to prospective and current employees:
Increased vacation allotment
Offering more vacation time is one of the most cost-effective and appreciated employee benefits. Currently, the majority of private sector organizations offer three weeks of paid vacation per year. It has been noted in a number of publications that the people in Generation Y, those entering the workforce now, are less concerned about how much they make and more concerned about how much time they spend at work. By offering above-average vacation allotments, your organization can attract candidates who are looking for more flexibility, while not incurring any significant expense.
Flexible working arrangements
Offering the option to work from home, even if it's once or twice a week, or flexible work hours can attract individuals that are looking to their employers to provide them with the ability or opportunity to better balance the demands of work and their life outside of work. Furthermore, an arrangement that allows individuals to work from home a few days a week can also help attract individuals that do not live within the organization's immediate vicinity. Organizations can promote the savings in transportation costs or reducing commuting time / week to potential candidates.
Increasing societal awareness of social issues
Now more than ever, social issues such as the environment, conservation, justice and international development are top of mind to many Canadians. This rise in social awareness has thrust a number of non-profit organizations into the spotlight. This is an opportune time for the sector to promote itself as a viable place for prospective employees looking to satisfy their desire to make a difference in the world and to earn a paycheque at the same time.
Four ways a non-profit organization can attract and retain top talent
1) Be realistic - understand what you can afford to pay individuals (salary budget) and the gap that exists between what you offer and what the average salary is as this will help you understand what competitors are offering for a specific position.
2) When developing job postings, highlight the key aspects of the job as well as the benefits you intend to offer (e.g. extra vacation, flexible work arrangements, etc.) so potential candidates can see the whole picture about what it would be like to work for your organization. Remember, you are marketing your organization, so highlight all the key aspects of the job, both extrinsic and intrinsic.
3) When interviewing, be upfront with candidates - one of the worst things you can do is promise something you can't deliver, especially when it comes to salary. Remember to focus on what you can offer and be sure to offer up examples of how current employees take advantage of available benefits.
4) To retain employees, ensure you design the job or their duties in such a manner that it constantly provides them with an opportunity to grow and gain valuable experience. Some examples of designing jobs in an increasingly meaningful manner are:
i) Job rotation: allow employees to move through different jobs or departments to help them understanding what types of jobs they enjoy doing and how each contributes to the fulfilling the organization's mission.
ii) Job enlargement: widen an employee's scope of responsibilities to give them an opportunity for growth and professional development.
iii) Job enrichment: motivate employees by giving them the opportunity to use the full range of their abilities. This includes assigning a range of tasks of varying difficulties and providing regular feedback and encouragement.
Related information, tools and resources:
HR Toolkit - Compensation & Benefits (Login required)
