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.

1. The Path to
Pay for Performance
Joe Brown
Slope Resources
Nonprofit HR Symposium
San Diego, CA
June 16, 2010

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. Where are you?
 How many utilize…
 Formal pay for performance program
 Formal, non-performance-based
compensation program
 Informal/ad hoc compensation
practices

4. Barriers to pay for
performance?

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. Performance management
program essentials
 What…
 Job responsibilities
 Goals
 …how
 Competencies
 Expectations

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. 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. Compensation program
development
 Identify markets
 Assess market competitiveness
 Published surveys
 Custom surveys
 Informal data collection
 …caveat emptor

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. 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. Compensation program
development
 Construct salary ranges
Minimum Midpoint Maximum
(80%) (100%) (120%)
Hiring range
Low Average High
Performance over time

13. Compensation program
development
 Salary administration guidelines
 New/changed jobs
 Promotions
 Hiring
 Over maximum
 Implementation
 Communication and feedback

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. Compensation program
management
 Periodically…
 Review internal equity and market
competitiveness
 Adjust salary ranges
 Ensure alignment with compensation philosophy

16. Continue building
Non-cash
rewards
Professional
development
Strategic
planning Career
development
Succession
planning

17. Thank you!
Joe Brown
Slope Resources
jbrown@sloperesources.com
908 241-8592
sloperesources.com
twitter.com/joe_brown