Author: Bob Cryer
Executive Coaches of Orange County
Employees can really get upset, distracted and even dysfunctional if they feel they are not being fairly compensated for the work they do for their nonprofit. Do you have a defensible system for determining salaries for the key positions in your nonprofit? Should your key employees know how that system works and should they agree that it is a reasonable and fair method of setting compensation levels?
My former employer, Procter and Gamble, used to identify companies that they felt had a culture and employment standards that were similar to P&G’s. These “sister” companies would share data on what they were paying people in a few standard job classifications in each functional area of the business. This data became the basis for setting salary levels in each functional area of P&G.
A nonprofit could do something similar, identifying nonprofits, positions and personnel in other nonprofits that were similar to their own. These nonprofits might agree to share data, or a nonprofit could just go to www.guidestar.org and look at those nonprofits’ 990s to find out what they were paying their top five executives and officers. This could be the basis for setting salaries for a nonprofit’s key employees.
In addition, there are organizations that do annual salary studies. The Center for Nonprofit Management (www.cnmsocal.org/salarysurvey) does an annual survey of Southern California nonprofit salaries for dozens of positions broken out by the size of the nonprofit’s budget, the county they are located in, the nonprofit’s field of service and the number of employees managed by that position. Nonprofits can buy the entire survey for $425 or just get the survey results on one particular position for $20-$40.
Regardless of the method, every nonprofit should have some sort of system in place to insure that the compensation of their key personnel is “just and reasonable”, as required by California’s Nonprofit Integrity Act of 2004.