How Compensation Growth Strategies Can Help Sustain Your Organization

Studies in 2016 by both SHRM and Nonprofit HR showed that nonprofit workers resigned from their jobs at the same rate as for-profit workers — both at 19%. This myth-busting truth surprised a lot of nonprofit leaders at the time. And now with the pandemic, it’s continuing on a larger scale. The Great Resignation has created an intense employee-employer job shuffle, where lower-paid workers are quitting their jobs for the financial rewards of corporate careers. Meanwhile, higher-paid workers are leaving those jobs in search of more meaningful work.

Nonprofits Feel More Turnover Pain

There are reasons why it seems like nonprofits lose more employees. The truth is nonprofits often feel the pain of employee loss more than corporations — even when the same number of employees are leaving — simply because they tend to lose institutional knowledge that was never properly recorded due to a lack of infrastructure. Who in your organization knows critical donor information? Is it accurately recorded for posterity? Protecting your nonprofit from this type of loss could mean investing in a better program that helps to keep accurate records. Or it could require investing in more companywide training—empowering your staff to use your records system competently.

If you believe such expenses are unnecessary, do you know how your organization bounces back after someone leaves? How difficult is it to adapt everyone’s workload to cover for the last person who left? Was that person a paid employee or a volunteer? What does the organization lose in time, effort and funds to rebuild what was lost?

Remember, as you work to sustain your organization through turnover, it is important to focus some energy on building a resilient and flexible infrastructure that won’t suffer if a key employee leaves.

If you have already strengthened your infrastructure as much as possible and still need to stabilize your workforce, you can easily calculate your actual turnover rate to determine the urgency of your compensation status. If you do have high turnover, especially since the pandemic, it’s time to consider how you might improve engagement with adjusted compensation strategies.

Great Resignation Results

Nonprofits face advantages and challenges in regard to both groups of resigning workers:

• Your nonprofit will benefit by engaging and retaining your current workforce (who already value your mission), but you must offer compensation that realistically addresses their personal financial needs.
• At the same time, your organization will gain some valuable advantages if you can attract and recruit corporate workers with your inspiring mission and compassionate culture, but you will only be able to retain them with credible compensation that provides for their needs.

Your compensation plan can support employee engagement and retention while setting a tone of respect and appreciation. Just follow these two tenets:

• Payment in fair exchange for their time, focus and hard work.
• Expressing gratitude for the benefits that your organization has realized as a result.

Both of these concepts support the adequate pay and rewarding culture that will sustain your nonprofit with an engaged workforce.

Compensation Growth Defined

The term “compensation growth” often leads to two action plans. First, if needed, increase your nonprofit’s pay scale, allowing salaries to reflect current best-practices. Second, meet with each employee upon hiring and then annually to develop a clear compensation plan that allows for reasonable cost-of-living increases and merit raises. Help them trust in a future with your organization. Handling the first action plan will allow you to implement the second. So, where does all that increased compensation come from?

A Valuable Distinction

Total rewards compensation involves thinking beyond the dollar signs on an employee’s paycheck. A more comprehensive approach takes two basic forms: Direct compensation includes the employee’s salary, commissions, bonuses, allowances, and overtime pay. Indirect compensation includes benefits such as health insurance, retirement funding, use of a company phone, discounts to public events, and invitations to internal events such as company picnics. Indirect compensation’s beauty is that it can rise to the size of your imagination without costing a lot.

Find opportunities in your company culture. For example, remote or hybrid schedules will likely remain popular for years. If possible, adopt scheduling flexibility and give employees more say in determining when and where they work. AARP recently reported that the Great Resignation has included many seniors who no longer wish to work full-time schedules. Simultaneously, others need more hours to make up for financial losses from the Great Recession. The trick is to work with them to meet their needs.

There are plenty of other indirect options, such as improved training availability and clear leadership paths. Mentoring and coaching for all employees can keep your staff engaged — even those who are chosen as mentors will value the experience and the trust you place in them. 

Mental Health: 2022’s Best Benefit

Mental health services are critically important in 2022. Socioeconomic and political upheavals accompanied by pandemic and war have left many workers experiencing anxiety and depression. If your nonprofit provides services that help — and you build a culture geared for better overall health — your engagement should rise significantly, and employer brand will shine in the marketplace. Consider these options:

• Offer coverage for mental health care.
• Offer Walk and Talk sessions with a paid therapist or coach.
• Offer paid time off for mental health days.
• Provide enjoyable activities that boost socialization and wellbeing.
• Support a walk-a-thon to promote mental health and destigmatize problems.
• Provide discounts for massages, weekend getaways, local museums and more.
• Balance workloads and reduce stress related to unreasonable deadlines and overwork.

Sometimes Money Does the Talking

No matter what, they’ll need to earn a decent living. Ease their personal budgetary concerns by properly managing your organization’s budget. If traditional income streams have dried up, these options might help:

• Increase your funding through sales. Work with one of several online outlets to create a line of branded products. If you have a website, you can set up an online store. Be sure to develop that with a professional. Promote your products on social media.
• Increase your funding through donors. There are myriad ways to increase funding these days, such as online crowdfunding apps like GoFundMe, Mightycause, FundRazr and Fundly. Research several to pick the best one for you. Items you sell could also be useful as rewards for crowdfunding donors. A branded mug, for example, would be a great gift for those who donate $35 to your cause.

You’ll benefit from a clear business and marketing plan with specific designated use for collected funds. Be honest with donors about your organization’s need for compensation growth. When you compensate them properly, your workforce will help you reach impressive goals that build your brand, draw more donors, and sustain your nonprofit organization.

This blog post was written by Beth Black, consulting writer and editor to UST. Visit PracticalPoet.com to view Beth’s online portfolio and learn more about her editorial services.