I am currently researching ideas or current practices that reward or compensation long term employees (5, 10, 15 or more years at one agency - often with little advancement opportunity), other than COLAs. Would be very interested in ideas or practices.
Good to get your comment. I wrote this article over 2 years ago and I had not been checking this for comments. so please accept my apology for the delay in replying.
One possible option I’ve seen nonprofits consider as a retention tool (so it might also be a good way of rewarding people you expect will stay with you for a while) is a supplemental retirement plan (SRP). Essentially what happens is that the organization promises to put away extra funds for the benefit of a key employee’s retirement, and those funds “vest” over time, meaning that ownership of those funds doesn’t really transfer to the employee all at once, but only as they meet certain milestones (usually, years of service). For example, for an employee earning $80,000, the organization might say to them “if you stay with us for 5 years, we’ll put away 5-10% of your salary in additional retirement funds”. If they stayed with you for 5 years, then that might add up to 5 years x $8000 per year = $40,000.
These numbers are just for the sake of example, of course.
This kind of long-term incentive, exotic as it may seem, is still not as complicated as trying to come up with incentive or bonus structures that reward performance within a given year. I wish more nonprofits were exploring incentive compensation more, certainly, but I think several things combine to prevent them from doing so - the perceived complexity, worries about locking in long-term financial commitments, concerns about fairness within and among employees, and more.
With any kind of incentive payment practice, there are a few key issues, including (1) making sure you design the incentives to reward the behavior you want, without encouraging people to “game” the system, and certainly (2) being sure you get excellent advice from experts on how to structure the incentives.
I hope this is a decent start. Please don’t hesitate to write me with any questions or comments, at .(JavaScript must be enabled to view this email address).
I believe that a sort of indirect gender bias is part of the problem—specifically many midsized NPOs lack a mid-level tier. I once worked in a communications/PR department where every job description said the position was for someone with 2-3 years of experience. People had been working at this level for 5-10 years. It seemed as if the imagined career path was that of a woman who works for two to three years, gets married, and then either comes back as a volunteer or is placed in the role of manager in style of a 1950s housewife who doesn’t work for money and leads/manages charity efforts in the community.
COMMENTS
BY Carolyn van Ravenswaay
ON September 6, 2007 11:00 AM
I am currently researching ideas or current practices that reward or compensation long term employees (5, 10, 15 or more years at one agency - often with little advancement opportunity), other than COLAs. Would be very interested in ideas or practices.
BY Pete Manzo
ON October 23, 2007 06:41 PM
Carolyn,
Good to get your comment. I wrote this article over 2 years ago and I had not been checking this for comments. so please accept my apology for the delay in replying.
One possible option I’ve seen nonprofits consider as a retention tool (so it might also be a good way of rewarding people you expect will stay with you for a while) is a supplemental retirement plan (SRP). Essentially what happens is that the organization promises to put away extra funds for the benefit of a key employee’s retirement, and those funds “vest” over time, meaning that ownership of those funds doesn’t really transfer to the employee all at once, but only as they meet certain milestones (usually, years of service). For example, for an employee earning $80,000, the organization might say to them “if you stay with us for 5 years, we’ll put away 5-10% of your salary in additional retirement funds”. If they stayed with you for 5 years, then that might add up to 5 years x $8000 per year = $40,000.
These numbers are just for the sake of example, of course.
This kind of long-term incentive, exotic as it may seem, is still not as complicated as trying to come up with incentive or bonus structures that reward performance within a given year. I wish more nonprofits were exploring incentive compensation more, certainly, but I think several things combine to prevent them from doing so - the perceived complexity, worries about locking in long-term financial commitments, concerns about fairness within and among employees, and more.
With any kind of incentive payment practice, there are a few key issues, including (1) making sure you design the incentives to reward the behavior you want, without encouraging people to “game” the system, and certainly (2) being sure you get excellent advice from experts on how to structure the incentives.
I hope this is a decent start. Please don’t hesitate to write me with any questions or comments, at .(JavaScript must be enabled to view this email address).
BY Douglas Langdon
ON December 4, 2007 02:09 PM
I am trying to find examples of large nonprofits that have actually implemented either individual or team-based incentive programs.
BY Barbara Saunders
ON June 23, 2008 05:45 PM
I believe that a sort of indirect gender bias is part of the problem—specifically many midsized NPOs lack a mid-level tier. I once worked in a communications/PR department where every job description said the position was for someone with 2-3 years of experience. People had been working at this level for 5-10 years. It seemed as if the imagined career path was that of a woman who works for two to three years, gets married, and then either comes back as a volunteer or is placed in the role of manager in style of a 1950s housewife who doesn’t work for money and leads/manages charity efforts in the community.