For most nonprofits, the recent past has been hard given significant workplace and labor market change.
With many clients, the last few years have presented unique and difficult challenges including:

  • Pandemic workplace changes;
  • FLSA changes;
  • Labor market scarcity;
  • How work is performed;
  • Intensified grant-maker scrutiny to fund on a ROI basis;
  • Increasing costs of healthcare insurance; and
  • Escalating talent costs due to tightened labor markets and higher minimum wage regulations.

Non-profits and their Boards are now focusing on developing a greater “return” on their services – efficiency of execution, utilization and measurable results – balancing affordability with critical needs to attract and retain a talented workforce. Their capacity to cultivate effective organizational cultures, management practices, and labor market relevance will continue to require impactful strategy and program changes.

What’s been changing lately?
Recent shifts have included:

  • Implementing executive incentive and supplemental retirement plans;
  • Cascading incentive bonus plans to managers and/or all staff, mostly discretionary in nature;
  • Effecting out of cycle pay adjustments to correct labor market positioning;
  • Providing lump sum payments (rather than increases in salary) to key job families;
  • Ongoing remote or hybrid work arrangements and/or offering a flexible work schedule; and
  • Increasing employee benefits’ contributions or deductibles.

What do we see on the near horizon?

  • A long standing shift from higher competitive levels for benefits than pay due to soaring benefits costs;
  • Shifts in Total Rewards strategies and programs;
  • Focus on developing organizational cultures as a key retention lever and employee benefit; and
  • Escalation of organizational communications initiatives to enhance workforce connectivity including changes in Total Rewards.

Best Practices Going Forward
To increase performance and retention:

  • Increase managerial training to strengthen “organizational glue;”
  • Redouble efforts to focus on inclusion in the workplace… for all;
  • Scrutinize and redesign employee recognition programs;
  • Assess and redesign policies to better support employees’ life needs; and
  • Stay current on relevant labor market Total Rewards (compensation and benefits) positioning.

The Total Rewards future for non-profits will continue to be volatile. Continuing labor scarcity will drive higher talent costs. The organizational constant will be developing work cultures that drive inclusion with diversity and focus on “connection.”
-By Marc Kroll, Sr. Total Rewards Consultant