Zack Pace, SVP, Benefits Consulting at CBIZ; and Priya Kapila, Manager, Compensation Consulting at CBIZ present at the CBIZ Annual Update on January 14, 2015.
By: Zack Pace, SVP, Benefits Consulting
Priya Kapila, Manager, Compensation Consulting
Because cash compensation is lower at nonprofit organizations than at for profits, nonprofit benefit compensation is higher. That’s been the Prevailing Wisdom for years, right? For example, a CBIZ colleague that teaches the Certified Employee Benefits Specialist (CEBS) course confirms that this lesson is part of the curriculum.
However, over the last few years, we’ve noticed changes afoot. We began noticing less differentiation between nonprofit and for profit salaries and benefit designs. Thus, we began to wonder if the Prevailing Wisdom was changing.
For our Annual Client & Friends seminar, we decided to research this topic and confirm if our observations were anecdotal aberrations or part of a larger trend. Our resulting presentation is located here, on SlideShare: Total Compensation Considerations for Nonprofits.
Our research confirmed that:
- Because nonprofits are increasingly competing with for profits for talent, the difference in guaranteed cash compensation has narrowed.
- The benefits compensation gap has also narrowed because of this increasing competition and the impact of the Affordable Care Act.
- This narrowing is more pronounced for staff total compensation than it is for executives.
Our source material is cited in the presentation.
Five interesting examples from our research:
- More pay disparity often exists between various types of nonprofits than does, for example, between a nonprofit association and a for profit employer.
- While there’s downward pressure on nonprofit executive pay via regularity scrutiny and public opinion, there’s upward pressure via transparency and competition with for profits.
- High Deductible Health Plan adoption among nonprofits is almost on par with for profits.
- Because of The Affordable Care Act, for profits have lowered their hours requirement and reduced their eligibility waiting period to levels similar to that of nonprofits.
- Considerable interest in Nonqualified Deferred Compensation programs is building among nonprofits as a means of creating “golden handcuffs.”
We concluded our presentation with this call to action:
- Benchmark your benefit programs.
- Benchmark your salary levels and executive pay.
- Evaluate how much your organization is competing against for profits for talent.
- Make any prudent adjustments.
- Develop a 3-year evergreen plan.
Final Questions to consider:
- Is your nonprofit increasingly competing with for profits for talent?
- If wages at your nonprofit are now similar to for profits, should reductions in your benefits compensation be considered?
Please let us know via the below comment section.
You can reach Zack on firstname.lastname@example.org and follow him on LinkedIn & Twitter.
You can reach Priya on email@example.com and follow her on LinkedIn.