As I continue to reflect this week on nine years of blogging, it’s hard to recall that I started this before the Great Recession hit.  Since that time, all businesses have become more cost-conscious and creative in how they are structured and how they compensate their employees.  Non-profit organizations are no exception to that.  But how can these workplaces continue to “do good” while rewarding their employees?

Today, I’m pleased to share this post from Marc Kroll, Managing Partner at Comp360 LLC.  Marc talks total about how non-profits can implement a “Total Rewards” strategy and earn a return on their investment. 

And what is “Total Rewards”? As the Houston Chronicle described it in a recent article: “Formerly referred to as simply compensation and benefits, total rewards takes on a more creative and broad definition of the ways employees receive compensation, benefits, perks and other valuable options. Total rewards include everything the employee perceives to be of value resulting from the employment relationship.”

Having a well-thought out compensation system is a key component to reducing liability and, hopefully, ensuring happy, productive employees.  If you’re looking for ways to avoid dealing with employment lawyers on issues, getting ahead of issues like this is a natural step in the right direction.  My thanks to Marc for his insights.  

As a result of the slow growth economy, non-profit organizations are facing decreased funding due to federal and states’ fiscal deficits as well as a significant shift with grant-makers who are increasingly funding awards on a performance/return on investment basis.  In addition, the soaring costs of healthcare insurance are adding significant pressure to operating costs.

Without new revenue growth, many non-profits are looking for ways to measure and increase the value/return on their social mission and investments.

Consistent with these changes, some non-profits are responding by trying to increase the “return” on their services and programs in terms of program execution, utilization, and measurable results.  Given this environment, non-profits are being forced to examine the viability of their highest cost centers, most particularly, employee compensation and benefits for value against performance as well as market competitiveness.

Non-profit Boards and senior management are questioning what the appropriate compensation and benefit programs should be, at what levels they should be funded, and how to drive accountability and performance in the employee workforce.

While non-profit organizations have predominantly been about social service and charity with their cultures reflecting a “do-good” environment and a concern for employee welfare, present conditions have forced many to consider a culture shift toward performance and accountability as well as changes in their Total Rewards programs.  This delicate balancing act between affordability and the ability to attract and retain a stable and talented workforce presents challenges in nonprofits’ capacity to assure effective organizational culture, management practices, labor market relevance, and strategic/operational priorities.

To help navigate this challenge, the following insights to six key questions provide a prescription for change in Total Rewards:

1. What should your Total Rewards strategy be?

This is a statement developed by your Board or management committee on how the organization’s compensation and benefits programs will support and relate to your operational objectives, culture, management practices, and employee performance.  It also describes both the labor market within which the organization wishes to compete and the level at which both compensation and benefit programs will be set and funded.

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