The war for talent is here and not going away anytime soon. Nonprofits in particular are feeling the subsequent pains. While many people who work for nonprofits do so to make an impact in their communities through meaningful work, it may become increasingly difficult to make employment decisions based strictly on those reasons.
Nonprofits are focused on the public, and their funds go primarily to the mission and programs of the organization. As a result, salaries may be lower at nonprofits than at for-profit companies because of leaner budgets. However, some nonprofits may choose to augment salary with increased benefits or other perks: “A growing number of organizations are enhancing compensation packages with fringe benefits … these non-wage perks may adequately replace a portion of a standard salary for some people.”1 So, how do nonprofits convey this message to their existing employees and potential hires, so they see the whole picture and make informed decisions? Let’s consider a concept called a total reward statement.
Employee compensation is much more than a base salary or how much an employee earns in overtime or variable pay shown on a paystub. In addition to cash, compensation includes employer benefits, payment of “perks” for employees, educational offerings, etc. A total rewards statement is a personalized statement showing the overall value of the employee’s compensation. Individuals who work for nonprofits are often value driven. They desire to help an organization achieve its mission promoting social welfare and improving the lives of people locally and in the larger community. The communication culture of the organization is likely less fixated on improving sales or profits and focused more on how to best serve the community. Employees want to be seen as a person, not a number, so the total reward statement should move beyond only numbers.
A well-designed total rewards statement developed by a nonprofit board or management committee looks at costs paid by the organization on the employee’s behalf in addition to the value an employee places on non-monetary rewards such as work-life balance, the culture of the organization management practices, and educational opportunities. Given the challenges of the current economic, regulatory, and funding environment, it is important to set a total rewards strategy for the financial viability of an organization.
If your organization is unfamiliar with total rewards statements, examples can be found online, as well as templates and websites that offer services for total reward statement creation. In its simplest form, a total rewards statement can be a list of each benefit an employee is receiving in addition to their salary; more complex statements may include charts and visuals to accompany the data.
Items to Include in Your Organization’s Total Reward Statement
Know that each organization is unique in what it offers to the world and to its employees. The best rule of thumb is to use this opportunity to remind employees of the benefits portion paid on their behalf. Base pay and any variable pay offered will make up the largest portion of the total rewards value. However, the many smaller offerings made on the employee’s behalf can be collectively significant. Consider showing the organization’s portion of the health plan coverage. Other items to include on the statement are life, disability, or accident insurance. Retirement or pension fund investments should be itemized, if offered. In addition, list out all programs in which employees are automatically enrolled, and do not forget to itemize educational opportunities, employee assistance programs, wellness programs, and other unique benefits. Consider reporting the average investment per employee for these benefits based on head count and annual costs. Required Social Security and Medicare payments are also investments made on behalf of each employee, as well as yearly bonuses and other additional monetary rewards. Nonprofits invest significantly in their employees, so be sure to include all offerings.
Presenting the Information
There is no one standard for presenting information on the total rewards statement, but there are considerations that may make your efforts more successful.
Try to create a statement that is both simple to interpret and visually appealing. Since not all people at your organization process information in the same manner, you may want to consider different ways of presenting the same information. For example, presenting a broad overview with a chart showing the employee percentage paid for a benefits package compared to the amount paid by the employer, followed by a more detailed breakdown in chart or list format, to provide complete transparency.
When presenting the information for the first time, make sure the people in your organization understand the purpose of this statement and how it impacts both them and the organization’s efficiencies overall. Be sure they understand this isn’t about scrutiny or penny pinching—rather, it is to show how the organization is investing in them. Decide who is best suited to present the information, be it the board of directors or a manager. Regardless, make it heartfelt and meaningful and, above all, ensure the information is factual. Never inflate or oversell the variables listed in a total rewards statement, as you may risk losing your employees’ confidence and the value that can be added through total reward statements.
Distributing the Statements
Now that you know what you want to include, consider the timing. Do you want to begin the employment relationship reflecting your investment in them? If so, you may want to provide a total rewards statement shortly after new hire benefit elections have been made. In contrast, many employers find that after merit increases, or the start of the organization’s new fiscal year, an annual statement makes more sense.
How you distribute the statements may vary. Consider the technology access of your employees. Online statements may work well for some, but others may need printed copies. Regardless of how you choose to distribute the total reward statements, ensure the information is easily accessible. Employees may also want the ability to compare statements from year to year, so consider how you will save or file statements for future availability.
Total reward statements tell a story. Let your organization’s story shine by investing time in developing total reward statements for your employees. These statements can help provide a competitive hiring edge in the nonprofit sector and yield increased employee retention, greater employee morale, and improved employee engagement, allowing you to focus on the critical aspects of your mission and contribute to the long-term success of your nonprofit organization.
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Nonprofit Practice
At Forvis Mazars, we care about you and your organization. As recruitment and retainment challenges persist, our interdepartmental teams are ready to support your organization and help with its organizational talent strategy.