What Are Your Staff Worth? A Lot!

Let’s think about money today. Compensation! ??The purpose of this newsletter is to create a Fair Pay Plan and bonus plan for your nonprofit and argue a case for your own compensation to the Board.

How do you set pay scales at New York Nice NonProfit? Verne Harnish says that ‘Compensation is not logical, it’s psychological.’ Labor leader Samuel Gompers said, ‘We do want?more, and when it becomes?more, we shall still want?more.’ Most leaders are anxious about paying too much to staff, but they often don’t feel that the Board of Directors has lost sleep over the CEO/Executive Director compensation package either!

There are no perfect answers to compensation questions. It will help your staff to hear you say that occasionally. Meanwhile, let’s set 10 intel ideas to 10X Fair Pay.

1.??????? Employees Talk About Compensation

Staff will compare notes on compensation. Make sure that you have a Fair Pay Plan for compensation and mention that occasionally to the staff team. It can be internal and based on skills needed or education or seniority. It can be related to external competition and what other nonprofits pay. It can be based on employee effort.

You get points when people know you’re trying. I didn’t accept a raise for 5 years until I thought other staff were fairly paid. Of course, I make a lot more, but people respected my attempt to show fairness. On another occasion, the payroll master accidentally released all of the salaries to the entire Senior Staff team. While it was awkward, it was not demotivating because people could see that there was an attempt at fairness.

2.?????? Market Rate Compensation

Pay today what it would cost to replace that staff member tomorrow. I saw an older woman CEO with a Spanish surname replaced by a white male with a $50,000 raise in reported salary on the IRS 990 form. That was a stupid move that impacts employee morale. They have 500 staff, and some talked.

Another benefit of paying the market rate for every position is that you can’t be threatened. When someone requests a raise that isn’t justified, I can say no because I can replace them tomorrow if they quit and it does not change my budget.

3.?????? 10X Mission Statement

Have a 10X Mission Statement which staff must memorize. There are difficult moments in any job. Sometimes, staff keep going because of the mission. Two of us were working on the 4th of July weekend with a school principal. The government had come up with a poorly executed summer plan. At 7pm, we just kept saying to each other, we’re here because of the kids. We weren’t thinking about unpaid overtime. We were thinking of our lives and the purpose of our lives. This made sense to us.? In nonprofits, the mission is especially critical because people in nonprofits think more about vocation.? If you don’t have a well written mission statement, you demean the value of your jobs. Staff can’t get that extra motivation to stretch if there is no beacon shining from the mission statement.

4.????? Use a Spirit of Abundance

These staff are creating success for you. They may stay late to finish an important job or go to bed early just to have energy to 10x the next day. Why not do the best you can for them? Err on the side of abundance!

I use an appraisal system quarterly which rates all staff from Levels 2-5. Level 3 is perfectly acceptable performance, but many of the staff are tigers to get that Level 4. It becomes a virtuous cycle. They want to add value, and you want to have a spirit of abundance when you think of their compensation.

5.?????? Make a Pie Chart For Each Staff Member Annually

Show the total cash value of compensation and benefits. Staff need to be reminded that health insurance, virtual work, pension, bonuses, professional travel, allowances, education, holidays, and vacations, etc. are all part of the deal to work at New York Nice NonProfit. These vary by sector and geography. I worked for a nonprofit where every manager got a $4,500 professional allowance annually. My daughter-in-law got a 2 year assignment with housing, 1st class plane tickets for my son, and schooling for a child.? Some NGOs include housing or a car. A sister-in-law got housing in a Hyatt hotel suite for six months. These all add value to your job offer.

6.?????? Entry Level Positions

Follow the market and you will hear rumors about what the market is paying. Add 10% so you can attract and select the A level staff. I heard a great recommendation for my nonprofit – they expect a lot from staff, -- but they pay well.

7.?????? Compensation Surveys

A compensation survey such as Candid Guidestar breaks down what other nonprofits are paying by city, state, size, and nonprofit sectors. You can also check IRS 990s of similar nonprofits in your area and sector. Nonprofit boards typically have no idea of what to pay. I’ve had 5 nonprofit management jobs. One board member actually told me that if I was dumb enough to accept their offer, why would I want fair pay later? Fortunately, I had resources for later jobs and Boards will respect if not welcome an evidence-based argument on your request.

8.?????? Cash is a Satisficer

It does not motivate but the lack of adequate compensation demotivates. That means that rewarding staff effort with extra cash doesn’t do much. We added some bonuses to paychecks. One staff member asked when they would get their bonus and I showed them that they had already received it! For staff effort, Verne Harnish rewards with experiences instead of cash. I’ve done two staff celebrations this year at rooftop bars. I 10x the cash that I could have spent on a gift card or a Hickory Farms gift package.

9.?????? Leverage Technology

Use technology to reduce staff and pay more. We only use direct deposit for payroll and removed the whole job of handing out paychecks. That money becomes available for the abundance that you need.

10.??? Pay Weekly

And give raises semi-annually. We all have short memories when it comes to cash. Richard Irish says that the best way to hand out paychecks is to get a stack of $20 bills and invite each employee to your desk and pay out their cash in 20’s. ?A faster method is weekly payroll which is easy in the payroll system. Give raises semiannually to remind everyone that you are trying.

Which idea to implement and what to do first? Start with a popular quick win such as weekly paychecks and gain trust for other initiatives. Fairness, the market-based approach, or any change at all will offend a few people so make changes with the silent majority in mind.

I’m Ronald Tompkins, Managing Coach for TurnAround Nonprofit and Executive Coaching. More information is on my website at TAConsulting.live. Many leaders need team coaching to support them as they lead and change their nonprofit. If you watch this as a board member, ask your Executive Director to involve the Board and team in coaching. You can contact me for Team Coaching at 646 824 4647.

Thanks for joining me today and I’ll watch for you next week!

For Further study on 10x Fair Pay, I recommend

Harnish, Verne. Scaling Up Compensation: 5 Design Principles for Turning Your Largest Expense into a Strategic Advantage.?ForbesBooks. 2021

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