Just a year ago, international NGOs (INGOs) were holding their collective breath as rumors circulated about pending deep cuts in international development and relief funding by the new administration. Organizations were sharing approaches to go “lean”, reorganizing and instituting cost cutting measures. As we start this new year, Humentum looks at the results of its recently published 2017 U.S. Headquarters Salary, Benefits, and Human Resources Policies Report to see how this roller-coaster past year impacted one of the largest budget expenses for organizations: compensation and benefits.
Salary increases consistent
For the past six years, the majority of US-based positions have seen modest salary increases, under 5%. In 2017, approximately 70% of the 100+ US-based positions benchmarked by Humentum saw increases on average of about 3%. This is in line with surveys conducted by the Society of Human Resources (SHRM) where projections to boost pay across all sectors was an average 3%; Humentum’s annual salary increase poll had forecasted the same result.
Last year, many member organizations reviewed staff salaries in preparation for the revised Fair Labor Standards Act (FLSA) overtime rule. We all know that at the eleventh hour, a federal judge put the brakes on the Department of Labor’s rule that would have doubled the FLSA’s salary threshold for exemption from overtime pay. Looking back, we wondered how many organizations increased salaries for certain staff to maintain the proposed exempt status. In response to that inquiry, our survey said that 36% of 138 organizations increased salaries.
Global pay equity
We continue to see an increase in NGOs reviewing their salary structure to ensure alignment with their compensation philosophy, market competitiveness and internal equity. In addition, more organizations are looking beyond their headquarters salary structure and working with their national offices to review pay equity and market competitiveness. This issue is a global dialogue as posted in a prior Humentum blog. Project Fair, an ESRC-funded international collaboration between the CHS Alliance, Birches Group, the University of Edinburgh and Massey University, undertook an exploration of practical alternatives to the dual salary system and pathways for reward fairness in international NGOs. Humentum will be co-hosting a webinar with CHS Alliance to learn more about their study on January 17th.
Alternative rewards continue to rise
While private sector employers use a variety of alternative reward programs—payments in addition to base salary such as bonuses, incentives, and stock options to build their compensation programs and reinforce engagement—nonprofits typically focus on base salary as the anchor of their compensation, and their inspiring missions as the means of engagement. For more than 10 years, the number of NGOs reporting the use of alternative rewards programs has fluctuated, but over the past four years, we have observed a small but steady increase.
This past year saw the greatest incremental jump in offering alternative rewards such as individual bonuses, group incentives, and skill-based bonus pay and other incentivized pay. Forty-eight (48%) percent of participating organizations (64 of 136) reported having some alternative rewards programs in place compared to 38% (52 of 138) in 2016. Of the organizations that reported having an alternative rewards program in place, 49% provide a flat dollar amount and 36% provide a percentage of salary. While the actual dollar amounts are small, with the average flat dollar amount at $1,862, what is noteworthy is the movement toward performance-based incentive plans.
Referral bonuses—cash awards paid to a current employee for referring a successfully hired job applicant—is another form of alternative rewards, which interestingly has not seen much adoption in this sector. In 2016, World at Work’s survey reported that 76% of organizations offer a referral bonus compared to 60% in 2010. Humentum’s survey indicates only 28% of organizations utilize a referral bonus as a tool to identify candidates and reward staff for their assistance. Of those respondents providing referral bonuses, the most common dollar amount awarded is between $100 and $500 after a specified waiting period.
Humentum will continue to monitor the sector’s usage of alternative awards to attract and retain talent.
Benefit packages competitive
International nonprofits continue to offer competitive benefits that create an attractive total rewards package to prospective hires. In 2017, 98% of surveyed organizations offered a retirement plan, with 50% of organizations providing a total employer contribution of between 1 and 6% (direct and/or matching contribution). Ninety-eight percent of organizations also provide life insurance, with 40% providing basic group term life insurance that is 2 to 2.9% of the employee’s salary. With increased scrutiny on cost-cutting, the number of organizations paying the full premium for employee health coverage continued to decrease, from 40% five years ago to 25% in 2017.
Over the past two years, there has been increased discussions among HR professionals regarding providing separate paid leave for the birth/adoption of a child. This issue was particularly top of mind for health organizations, whose focus on maternal/child health found their internal practices in conflict with what they were advocating for others. These discussions are reflected in changes in policy. In 2016, 75% of reporting organizations offered a separate paid leave policy for the birth of a child; in 2017, that percentage increased to 80%.
Rise in Wellness Support
At the beginning of 2017, we noted that given the uptick in organizations reporting higher employee anxiety and stress, we anticipated member organizations would be more focused on exploring ways to support their staff. The recent US survey showed that 88% of the responding 138 organizations now provide an employee assistance/wellness program (EAP) that includes access to a variety of counseling services (compared to 81% in 2016). Extending EAP support to Expats and TCNs as well as local national staff stayed steady at 39% and 30% respectively. In addition to EAPs, a much needed resource was published last year to support staff care, The Essential Principles of Staff Care. This guide, developed by Konterra Group with support from Disaster Ready.org and Humentum, outlined the principles, objectives, and practices organizations need to support the resilience and psychological health of humanitarian and development personnel around the world.
Workforce practices and capacity building
Alternative Work Arrangements: To attract and maintain talent, the sector is moving more towards flexible work arrangement. Almost 90% of survey participants report offering part-time employment as well as telecommuting options with 50% stating that telecommuting eligibility is on a case-by-case basis. Notably, there was an increase in organizations offering both flexible hours, 80% last year vs.71% in 2016 and compressed work weeks, 40% vs. 26%.
Staff Training & Development: Ninety-nine percent of participating organizations provide staff training and development to their US-based staff. Of the 137 respondents, 37% report having a more formalized staff development program vs. 29% in 2016, moving away from the ad-hoc approach. The usage of eLearning to facilitate training is on the rise. For US based staff, 74% report incorporating eLearning as a staff development tool vs. 60% in 2016. In addition, organizations are increasingly utilizing e-learning for both international and local staff: 73% in 2017 vs. 60% in 2016 and 54% in 2015. (See here for upcoming eLearning opportunities from Humentum.)
Looking Ahead at 2018
So, what changes can we anticipate in the upcoming year? The belt buckle won’t be loosened in 2018. Organizations will still walk a precarious tightrope with funding uncertainties. Although the economy is strong, we don’t foresee that translating into larger salary increases in the sector. We do believe new skills will need to be added to the organizational talent pool and we will be exploring new positions for benchmarking. Alternative reward offerings will rise slightly as more organizations move to a more performance-based reward system in order to recognize performance in creative ways with limited dollars. We don’t foresee any major changes to benefits currently provided and of course, we encourage organizations to highlight benefits that make them attractive as an employer to prospective candidates. In addition, with compensation a sizeable part of an organization’s budget, we recommend Humentum’s Introduction to Compensation Management workshop if you need to boost your in-house skill.
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