Attracting and retaining talent is critical to the success of any organization, especially nonprofits, where budgets are tight and staff resources may be limited. Identifying what is important to employees and how to retain them is paramount to keeping them engaged.
Compensation has a significant impact on employee satisfaction. To meet the ever-changing and growing demands of employees, nonprofits must be creative in developing a compensation strategy that can effectively address employees’ needs.
In this article, we discuss the following topics:
- What is a Total Rewards strategy?
- The nexus between Total Rewards and employee retention
- The importance of indirect compensation
- Total Rewards equity – a key player in retaining talent
What is a Total Rewards Strategy?
The goal of a Total Rewards strategy is to find a balance between direct (monetary) and indirect (non-monetary) compensation. An organization’s culture plays a significant role in identifying the components of a progressive Total Rewards program.
Direct compensation includes salary, hourly pay, and overtime, incentive pay and/or bonuses. Indirect compensation includes all the other ways an organization can reward them, that includes health insurance, paid time off, a retirement plan, various other ways employees’ are recognized, and the internal culture that an organization creates.
The Nexus Between Total Rewards and Employee Retention
When developing a Total Rewards strategy, it is important that employees clearly understand the elements of the program and the value to them. Employees want to be recognized for their contribution to the organization. They also want to understand that their employer is providing compensation, benefits, and other rewards that speak to their needs and also align with the organization’s values and nonprofit brand. Investing in your employees in a way that is meaningful to them will have a positive impact on an organization’s employee retention rates.
The Importance of Indirect Compensation
Not only do indirect benefits give employees insight into an organization’s culture, but they also demonstrate an employer’s investment in them beyond monetary compensation.
Invest in your employee’s mental health by offering:
- Employee assistance programs
- Wellness benefits, such as gym memberships
- Time off benefits
Empower personal and professional growth by offering:
- Tuition reimbursement
- Sabbaticals to pursue work and non-work-related interests
- Corporate volunteering programs
- Student loan repayment
- Continuing education opportunities
Support familial and future obligations by offering:
- Child and elder care
- Flexible work schedules – hybrid, remote or compressed workweeks (i.e., 4-day workweek)
- Retirement benefits
Providing programs that are meaningful to your employees is critical to the value these programs bring. One of the best ways to determine what benefits are most beneficial to your employee base is to conduct a survey. While you can create a survey internally, HR consultants can guide you through the process and then assist in developing a strategy that fits your values, mission, and workforce.
Retaining Talent with Total Rewards Equity
As part of a robust retention strategy, a Total Rewards program should be evaluated for equity. Review employees’ pay data to evaluate the fairness of base salaries, wages, and other monetary payments. Highlight any pay gaps that allude to inequitable practices. All of your indirect compensation programs should be viewed through the same equitable lens and held to the same rigorous standards as pay equity analyses.
Performance management systems, upskilling, continuing education, training programs, and tuition reimbursement programs should also be examined with job equity in mind. Employees should be given equitable opportunities for career advancement. By auditing these programs and correcting any deficiencies, nonprofits can ensure that everyone has equal opportunities and access to excel and grow with the organization.
Creating a Balanced Workplace Culture
One of the reasons why Total Rewards is so effective is due to its holistic employee recognition approach. You’re showing your employees that you care about them beyond their ability to further your organization’s goals—you care about them, not just the work they do.
Enhance your commitment to your employee’s well-being and boost morale and retention by implementing an employee recognition program. Some examples include:
- Employee gifts. Give your employees tangible gifts in return for their dedication and hard work. You can even partner with a company that specializes in gifts to reduce the stress of gift-giving by selecting rewards you already know your employees will love.
- Milestone celebrations. Show your staff members that you value their commitment to your organization by celebrating important milestones. This includes their birthdays and their work anniversaries.
- Peer recognition. Peer-to-peer recognition within the workplace can lead to tighter-knit coworkers and a more positive workplace environment. Encourage your employees to appreciate each other for their contributions to foster a culture where everyone feels appreciated for their work.
- Awards. While having ad-hoc recognition programs, such as a Bravo Board, is important, management should also implement formal recognition strategies to recognize consistent high performers. A classic way to do this is through employee achievement awards. For instance, you can award an Employee of the Month with their name on a plaque and a lunch on the company’s dime. Or, you could do more specialized superlative awards, such as Biggest Team Player or Rising Star. These awards give management the chance to show that they value outstanding work and can inspire team members to go above and beyond.
- Employee appreciation events. One of the best ways to publicly recognize your employees and distribute awards is via appreciation events. They can be as simple as a pizza lunch or as formal as a dinner gala. Whatever you choose, ensure that there are activities and prizes to celebrate your employees’ hard work and accomplishments.
Implementing a Total Rewards strategy is more than just changing your employees’ compensation—it means a change in your entire workplace culture. By using this strategy and augmenting it with other employee recognition programs, you’ll be creating a workplace culture that more effectively balances your nonprofit’s interests and your employees’ expectations. And ultimately, this leads to a greater employee retention rate.