Ways for your Board to use a salary survey
By Bryan Orander, president, Charitable Advisors
Since 2010, Charitable Advisors has produced a bi-annual salary report for Central Indiana’s nonprofits to assist in determining competitive compensation and benefits for staff. Our methodology has relied on your support in providing raw data to provide our area’s actual compensation. For that we are grateful.
This Thursday (March 1), we will begin the information-gathering phase of our 2018 Central Indiana Nonprofit Salary Survey, and it seems the ideal time to explore how the final product can be a tool to benefit area nonprofits.
While the HR department most often uses salary surveys or to provide useful benchmarks when hiring new staff, here are three more ways that board members and staff leaders can use this information to help their organizations.
- IRS form 990: Every year, each nonprofit completes its Form 990 tax return and must explain how they set compensation for the chief executive (and other highly compensated staff, if applicable). Having a local salary survey that is targeted to nonprofits is an ideal tool and offers data support for completing this requirement.
- Competitive Executive Director/CEO compensation: Executive Director/CEO compensation is the one position that the board has complete responsibility and control over. Too commonly, the ED/CEO receives some type of annual performance conversation followed by a cost-of-living increase without regard to the overall marketplace compensation.
In other cases, the board may identify a “pay gap” but defers addressing it. In our executive search work we often find that organizations are surprised that they will need to pay more for their new, less experienced ED/CEO than they have paid their departing, more experienced executive. Use the report to define your ED/CEO compensation goal and then assemble a strategy to help fund it – it can be a multiple-year process, if needed.
- Compensation philosophy: While not the board’s role to review and approve individual staff compensation beyond the Executive Director/CEO, the board does have both a responsibility and an opportunity to apply their insight and expertise to help determine what benefits staff should receive and to understand where the organization fits in the overall nonprofit sector compensation scheme. Some questions to consider:
- What positions are most difficult to fill and retain? How does compensation compare with similar organizations?
- How does the organization compare in its offerings of health insurance, a retirement plan, and retirement match?
- Do you want compensation to be at the 50thpercentile, the 75th percentile or the 25th percentile?
- What resources does the organization have available and what are the trade-offs between paying less and managing more turnover versus paying more, and potentially hiring and retaining stronger staff?
Use these suggestions to spark a conversation at your next Executive Committee meeting about how your organization will apply the 2018 salary survey when it becomes available, perhaps as part of your 2019 budget discussions. The salary survey report can help provide perspective and data to support these types of conversations. And as you move forward, you will want to include your HR staff, PEO, or HR services provider.