Four Biggest Mistakes People Make When Using Compensation Survey Data
The 2020 Report on Nonprofit Wages and Benefits will be published soon. In advance of publishing, here are four mistakes to avoid when using compensation data:
Mistake #1: Thinking the data are more than guidelines.
Surveys are a snapshot in time reflecting the practices of those organizations who responded. The data is a record of what this group of organizations is doing, NOT a prescription of what you should be doing. Knowing what others are doing helps you understand what you need to pay to be competitive, but every organization has its own unique challenges as well as its own values and strategies related to talent attraction and retention. Surveys can inform your decisions, but they should not be taken as gospel.
Ask yourselves, what does this data mean in relation to your situation and your compensation philosophy? How close do your positions match the surveyed descriptions? How similar is your organization likely to be to the participants in this survey in terms of mission, services, size, and location? Does this data raise any flags about your compensation practices, such as violations of the IRS prohibition on excessive compensation, or very low salaries that may be the root of some of your employment issues?
Setting compensation is as much an art as it is a science. Use the data to guide you but be sure to honor the art of it all.
Mistake #2: Skipping the explanations and going right to the charts.
Any good compensation report explains who was surveyed, when they were surveyed, who responded (in non-identifying detail), and how the data was analyzed and presented. Reading this information carefully can help you decide how much of a grain of salt to take with the data points.
This good information can help you decide which charts to use. For instance, if the sample size is too small in your budget category, you can know that the data may not be all that representative of true practices. If outliers are not omitted, the median may be a better measure of center than the average (aka mean).
Mistake #3: Focusing only on wages and not considering all the compensation data available.
An attractive compensation package includes much more than a good wage. A survey that includes benefit details is a great resource for creative compensation ideas as well as a benchmark for what other employers are providing. Selecting a package of benefits that meets the needs and preferences of the workforce you are trying to attract can make all the difference in the world.
Mistake #4: Using only one survey or the wrong kind of survey.
There are many compensation data options available. There are a myriad of online tools, annual national or local surveys, data that is mined from nonprofit 990s, and hyper-customized reports. We will cover some pros and cons of the various types of data tools in the next post of this series. Many advisors will recommend using 3-5 sources.
Purchasing more than one tool can be cost-prohibitive for many smaller nonprofits. While there are some low cost and free options (coming in part 3 of this series), they may have limitations or require a lot of sweat equity. If you can afford to purchase more than one survey, look for data sources that can complement each other. An example of this would be to use the MANP report to get a local picture of the 32 job categories surveyed, and a national industry specific report that dives more deeply into the positions your organization has. The national data on those positions can be compared to other local data to help you find good ranges for all positions in your organization.
If you can only afford one, be sure it will answer the questions you need it to answer. Stay tuned for our next post.
In the end, compensation data is important to ensure compliance with excess compensation rules for nonprofits, help you be competitive in the marketplace, and ensure you are doing your best to live up to your compensation philosophy. Data can lead you astray however, if you fail to recognize its limitations and you don’t embrace the creative aspects of compensation setting.
After a 20-year career with the Maine Association of Nonprofits (MANP) and 5-years as the first director of operations for Dietel & Partners, a philanthropic advisory firm, Brenda started a consulting business in July of 2019. Brenda provides interim leadership, operational assessments and improvements, and research and reporting to Maine nonprofit organizations.
While at MANP, Brenda created and managed the bi-annual Report on Nonprofit Wages & Benefits, conceptualized and managed the bi-annual “Partners in Prosperity” report which is now called “Adding up Impact.” She also re-launched the MANP Advocacy Program while serving as the Director of Operations and Public Policy. While at Dietel & Partners, Brenda was responsible for all business operations and enjoyed engaging in work around reducing the power dynamics in philanthropy.
Consulting clients have included: Preble Street, Maine Children’s Alliance, Foundation for Portland Public Schools, Engine, and MaineShare.
Prior to working at MANP, Brenda was a high school math teacher. Brenda serves on the boards of the Locker Project and Genesis Community Loan Fund. She is passionate about her family, especially her two adult children, her circle of good friends, and her amazing colleagues in the nonprofit sector. She lives in South Portland with her pug, Ozzy.