Creative Compensation Ideas for Not-for-Profit

We know the Not for Profit Sector offers unique management challenges.   Some Not-for-Profits have struggled to achieve parity in compensation with the private sector.  Should Not-for-Profit employees be working for “the love of the mission”?  It’s a nice thought, but it simply doesn’t pay the mortgage or put food on the table.  And, in a depressed economy, often with partners and spouses losing their jobs, compensation is problematic for Not-for-Profits.

The challenge just became even more pronounced.  The newly released Compensation Data Not-For-Profit 2009 survey results indicate that compensation budgets have dropped 2.4 percent and worse, pay increase budgets for 2010 are projected to have a decrease of another 2.0 percent.  Clearly, we are losing ground, and there isn’t much hope for any appreciable positive change in sight. 

What can the Not for Profit boards do to help retain talent and still balance the budget?  A few thoughts!

Right Size the staff immediately.  Reorganize and retain necessary staff and use available budget funds to keep critical ongoing staff.  This is a tough decision and you may have already made this change.  If not, it’s overdue, and it’s time right now.

Consider use of low or no cost benefits for your staff.  These can include health oriented programs such as wellness, smoking cessation, flu shots, etc.  Give employees flexible work hours.  Where possible, let employees work from home.  Make your organization a great place to work that places an emphasis on care, convenience and assistance to your staff. 

Health Care:  Everyone is concerned with health care.  In fact, costs have risen dramatically the last two years for both the organization and staff.  The Congressional Budget Office estimates that by 2025, one out of every four dollars in our national economy will be made in the health care system if we don’t have change. 

Given the current uncertain congressional negotiations do not make any change now.  I would also recommend you communicate that decision to staff immediately as they are certainly worried about the negotiations and how they will affect them.  Will they have a plan change or increased contributions?  Simply say, “We’ll make no changes now.  Our plan is to wait until we have new legislation, and then we’ll make changes based on new health care laws and regulations.” 

Additional Time Off:  Consider increasing paid vacation time, perhaps granting more personal days.  Unpaid leave might also be very attractive to some of your employees. 

Bottom line.  Do what you can to convince your staff they are valued and that staff cuts are behind you…that you are “Right Sized” and moving forward with a plan, a budget and at current staff levels.  It is important to allay their fears to the extent possible.  Workers can’t be creative and productive if they’re preoccupied with a potential lay off.