Money gets people in the door, but it is not what keeps them. At least that is what we’d like to believe.
A great culture, strong compassionate leadership, good benefits, career opportunities and training are all things that help retain and motivate employees. But along with those things, employees must be paid appropriately for the work they do – including raises and bonuses - or they will ultimately leave your organization.
Times are changing. Employees are becoming less loyal and more mobile. With the challenges of the pandemic, rising inflation, interest rates going up and uncertainty in the financial markets, people are becoming more focused on their weekly pay cheque. Many families are just trying to make ends meet. If nonprofit organizations want to attract and retain staff in a tight labour market, they must start looking at their compensation model and consider including pay-for-performance rewards.
Attracting top talent
First things first, what attracts people to the nonprofit sector? People want to work for a nonprofit often because they believe in the mission and have a strong desire to give back to the community. They will also seek out “top employer” organizations that have great cultures, strong leadership and advancement opportunities. Finally, they apply to organizations that have a competitive compensation and benefits package that meets their lifestyle requirements. This includes performance-based compensation.
KPIs (Key Performance Indicators)
When creating a performance-based compensation model, you need metrics that help support the mission and goals of the organization. These are called KPI’s (Key Performance Indicators). For example, fundraising KPI’s could include: gifts secured, donation growth, average gift size, gift growth, pledge fulfillment percentage, cost per dollar raised and online gift percentage
You will need to develop specific KPI’s for various job functions – right up to executive leadership. KPI’s should be flexible enough to apply to all positions within the organization.
Keep in mind, not all rewards need to be monetary. Things like, flexible schedule, a WAH (Work at Home) option, hybrid work arrangement, time off, peer/public recognition, free lunch, gifts and branded swag are all things that can help keep people motivated.
Make sure your program is honest, transparent and fair. The last thing you want is for people to become disgruntled due to unrealistic expectations or perceived favoritism.
What are the numbers telling us?
Through the Nonprofit Employer of Choice Award program, we conduct an employee survey that measures 10 operational dimensions. The data from the survey helps organizations determine in what areas they are doing well and where they need to focus to improve employee engagement and culture.
One key dimension that continually comes up in our work with nonprofit organizations is compensation. Year after year, it is one of the lowest scoring categories. From the 2022 Nonprofit Employer of Choice Award survey, the following graphic demonstrates how employees feel about compensation.
We can see that 45% of respondents scored either neutral or disagree. This is a real problem. Close to half of all employees surveyed feel either ambivalent, or that they are not paid appropriately. This can have a significant negative effect within your organization including:
Whether or not you feel performance-based compensation is right for your organization, it is important to consider both the positives and the negatives. If you are not sure, ask your employees. They will tell you. But be prepared. If they vote “yes,” you’ll want to make sure you can deliver a solution that works.
Jeff Doran is Founder and President of CCEOC Inc. He has been improving customer experience and corporate culture for over 30 years. jdoran@ccemployerofchoice.com
