Non-Profit Total Rewards Strategy: Earning Return on Your Mission

While our economy is starting to shake off the effects of the Covid pandemic, non-profit organizations are continuing to face financial and operational challenges. With inflation becoming more of a reality, the need for how fundraising/grants will best be utilized, will continue to be a critical “to-do” for both foundations and front-line community service organizations. Crafting performance metrics and total rewards strategies that will drive an organization’s mission will be critical to maintaining a similar level of services.

The tight labor market is driving both salary increases and levels higher compared to the last ten years. As a result, hiring of talent is taking significantly longer. The soaring costs of healthcare insurance in a very tight labor market are also adding significant pressure to operating costs. And if that were not enough, mandated laws impacting salary levels (i.e., pay equity, minimum wage at $15/hour) pose an additional challenge to maintaining previous funding levels.

In addition, how the virtual workplace will be utilized in the future is impacting both workplace culture and Total Rewards (i.e. flexible work, geographic pay, performance management). Several organizations (profit and non-profit) are still sorting out what this means going forward.

While non-profit organizations have been about providing social services and charity, with their culture reflecting their mission, present conditions have forced many to consider a culture shift toward performance and accountability. Total Rewards strategy should support this relationship. We realize this is a difficult transition and should be considered carefully. The balancing act between affordability and attraction/retention of a talented workforce presents a significant challenge. 

Non-profit Boards and senior leaders should question and deliver on what the appropriate compensation and benefit programs should be, and at what levels they should be funded as well as how to drive accountability and performance in the employee workforce.

With significant experience in working with nonprofits, we hope that the following insight, prompted by six key questions (below) provide a path for successful Total Rewards change.

These questions will be the basis for six blog posts that will outline a process that will guide the reader through Total Rewards change that is mindful of both the labor market and organizational culture. They are as follows:

1. What should your Total Rewards Strategy be?
2. What is the present role of pay and benefits in your organization’s culture and management practices? Does the Board or management committee want to change that role? Why?
3. How do you determine the appropriate mix of pay and benefits for a non-profit organization? How do you determine affordability? Can your Total Rewards attract and retain an effective workforce?
4. What is the appropriate labor market to compare your organization’s pay and benefits to?
5. What are the financial and practical impacts of making changes to your Total Rewards programs?
6. How will implement and communicate Total Rewards program change (or new) programs to your workforce?

Each blog post will be posted within 30 days of each other. 

Please contact me if you have any questions or comments that you would like to share.