The Path to Pay for Performance

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Joe Brown's presentation from the June 2010 Nonprofit Human Resources Symposium at the University of San Diego outlines the steps nonprofit organizations can follow to develop an implement an effective, performance-based base salary compensation program.

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The Path to Pay for Performance

  1. 1. The Path to Pay for Performance Joe Brown Slope Resources Nonprofit HR Symposium San Diego, CA June 16, 2010
  2. 2.  Founded in 1998  Human resources and organization management consulting services for nonprofits  Compensation and performance management  “Big firm” background  Blog: Done by People
  3. 3. Where are you?  How many utilize…  Formal pay for performance program  Formal, non-performance-based compensation program  Informal/ad hoc compensation practices
  4. 4. Barriers to pay for performance?
  5. 5. Building blocks Compensation program Reward Internal equity opportunity Market competitiveness $ Base salary Actual rewards Incentive compensation Performance management program Performance Individual/team contribution
  6. 6. Performance management program essentials  What…  Job responsibilities  Goals  …how  Competencies  Expectations
  7. 7. Performance management program essentials  Focus on “management”… …not “evaluation” or “rating”  Emphasize communication… …not the form  Keep it simple… …and make it fit
  8. 8. Compensation program development  Communication and input  Job descriptions  Employee ► manager ► HR  Grouping/grades $100  Assess internal equity $80 Compensation $60 $40 $20 $0 Job Size
  9. 9. Compensation program development  Identify markets  Assess market competitiveness  Published surveys  Custom surveys  Informal data collection  …caveat emptor
  10. 10. Compensation program development  Articulate compensation philosophy  What does the organization pay for?  What values should be communicated and reinforced?  In what forms is compensation delivered?  What budgetary constraints are reflected?  How competitive should compensation be?  With what market(s)?
  11. 11. Compensation program development  Develop salary policy  E.g.: median of metro area organizations with operating budgets of $5 million to $10 million  Costs  Under minimum  Equity increases  Short-term/long-term targets?
  12. 12. Compensation program development  Construct salary ranges Minimum Midpoint Maximum (80%) (100%) (120%) Hiring range Low Average High Performance over time
  13. 13. Compensation program development  Salary administration guidelines  New/changed jobs  Promotions  Hiring  Over maximum  Implementation  Communication and feedback
  14. 14. Merit increases Performance evaluation Merit increase Position in salary range Merit increase grid (example) Position in salary range Performance evaluation <90% 90% - 110% >110% Exceptional 6% 5% 4% High 5% 4% 3% Successful 4% 3% 2% Below Requirements 3% 2% 0% Unacceptable 0% 0% 0%
  15. 15. Compensation program management  Periodically…  Review internal equity and market competitiveness  Adjust salary ranges  Ensure alignment with compensation philosophy
  16. 16. Continue building Non-cash rewards Professional development Strategic planning Career development Succession planning
  17. 17. Thank you! Joe Brown Slope Resources jbrown@sloperesources.com 908 241-8592 sloperesources.com twitter.com/joe_brown

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