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A Compensation Consulting Crash Course for Nonprofits

With the current economic challenges affecting individuals and nonprofit organizations, managing compensation plans is more difficult than ever. The Great Resignation, or the large number of resignations that occurred in the U.S. within the past year, taught employers that maintaining a competitive compensation plan is critical to retaining top talent. As an employer yourself, it’s your duty to ensure employees are compensated with a liveable wage despite rising inflation rates.

Increasing salaries, however, can be a pain point for nonprofit organizations. As everyday costs stack up for your employees, your nonprofit’s operating costs do, too. However, failing to develop a strong compensation plan can eventually lead to widespread retention issues for your organization.

One way to remove the guesswork from designing a compensation plan is to partner with a compensation consultant. In this crash course, we’ll break down some common questions about compensation consulting:

  • What is compensation consulting?
  • What services do nonprofit compensation consultants offer?
  • What are the benefits of compensation consulting for nonprofits?
  • How should nonprofits choose a compensation consultant?

With 84% of nonprofit professionals reporting that they are satisfied with their jobs, it’s no secret that nonprofit employees tend to love what they do. However, a poor compensation plan could lead to a domino effect of negative consequences. Unhappy employees may have lower productivity and performance levels, negatively impacting everything from volunteer programs and fundraising efforts to connecting with supporters.

What is compensation consulting?

Consulting is a field in which experienced professionals offer their knowledge and expertise about a given topic to nonprofits and businesses.

More specifically, nonprofit compensation consultants evaluate nonprofit organizations’ compensation plans and suggest ways to improve them. If needed, they may design or redesign your organization’s overall approach to compensation to maximize what your organization has to offer. Some consultants may also suggest taking a total rewards approach to compensation, in which you provide employees with both financial and non-financial forms of compensation. This strategy is more holistic and comprehensive. 

Investing in a reliable compensation consulting partner provides many benefits to your nonprofit. For example, a key element to developing a strong brand as a nonprofit is being a good employer. As Getting Attention’s nonprofit branding guide points out, a strong brand cultivates trust with your audience and increases awareness of your mission so you can grow as an organization.

What services do nonprofit compensation consultants offer?

Evaluation and plans for your compensation strategy.

Evaluating your nonprofit’s current approach to compensation is a compensation consultant’s bread and butter. They’ll look at how your organization has handled compensation in the past and suggest methods to improve it in the future, often by adding new packages and policies. 

The advice you receive from a compensation consultant ultimately helps reflect your organization’s goals for employee compensation and overall satisfaction. 

External analyses.

Keeping an eye on the job market is one of the most exhausting, forever-ongoing parts of maintaining your compensation plan. However, working with a consultant takes this weight off your shoulders.

Compensation consultants take a look at the current market in your sector so you can accurately compare your compensation offerings to similar organizations. This is a great method to keep your organization from underpaying employees (which can result in dips in employee retention). On the flip side, being informed about average compensation rates keeps nonprofits from overpaying and potentially cutting into precious funds meant for delivering their missions.

Creation of new policies.

New policies can help motivate employees to be more productive and improve their performance. For example, implementing an incentive program that promises a payout to employees who complete certain goals motivates them to perform at a higher level.

Of course, it’s ideal to base pay on performance. If your organization is not currently using a performance-based compensation strategy, a compensation consultant can assist you in both designing and setting up new policies and procedures like administering performance reviews. Policies like these strengthen your compensation offerings and reward your most dedicated, hard-working employees.

What are the benefits of compensation consulting for nonprofits?

A compensation consultant’s expertise helps your nonprofit determine the best compensation strategies for your organization. After your nonprofit creates a strong compensation plan, you can expect to see increases in:

  • Employee retention 
  • Employee engagement
  • Workplace positivity
  • Productivity levels
  • Employee satisfaction

Not only do your employees and the work they do benefit your organization, but your bottom line will thank you, too. The right consultant will maximize your budget by choosing a compensation strategy that uses funds efficiently while boosting employee engagement, retention, and productivity. 

How should nonprofits choose a compensation consultant?

Pinpoint qualities you’re looking for.

Your nonprofit should outline the qualities it’s looking for in a consultant before digging into further research about specific firms. A short list of top preferences weeds out any firms that won’t be a good fit and saves you time and effort in your search. For example, if you’re looking for a consultant that has ample experience working with nonprofits, you can skip out on firms that are geared toward for-profit businesses.

As you pinpoint the qualities you’re looking for in a compensation consultant, be sure to make note of any other guidelines or restrictions. Important details to iron out before settling on a firm or contacting a prospective consultant include your budget, the timeframe of the partnership, and when you want to start working with the firm.

Clear details with leadership.

Various leaders from your nonprofit, including board members, the HR team, and managers, should be made aware of the decision to hire a consultant. Meet with your organization’s leadership to explain why working with a consultant is necessary and beneficial for your organization. Take this time to share the qualities you’re looking for as well as your estimated budget and timeline for the partnership.

When you seek approval from leadership regarding your decision to partner with a consulting firm, you’re ensuring you will accurately represent your nonprofit’s needs and budgeting capabilities as you begin reaching out to various consulting firms. Additionally, talking with leadership gives your organization’s leaders a heads up about the valuable opportunity to work with an outside expert. Then, your leadership can prepare any information and questions they might have for the consultant once your organization chooses a firm.

Choose a consulting firm.

The final step in the path to finding a great compensation consultant is choosing a firm that meets your needs. Create a list of firms you think can work for you based on your preferences and budget. At this point, it’s best to reach out to the firms you’re considering with a letter or email to make a personal connection.

If you’re finding it hard to narrow down your list to just one choice, double-check your options for the following qualities:

  • A team with experience, specifically with working with nonprofit organizations. 
  • A fair cost structure that aligns with your nonprofit’s financial needs and restrictions.
  • A workplace culture that shares values with your nonprofit. For example, you wouldn’t want to work with an organization that doesn’t align itself with your mission statement.
  • Proof of past successes with other nonprofit organizations. This can include things like reviews, testimonials, or statistics.

Finding a trusted resource for consulting firm recommendations can be tricky, especially when you’re searching for compensation consultants that know the nonprofit sector. If you’re ready to choose a consultant but need help finding high-quality firms, check out the recommendations in Astron Solutions’ compensation consulting guide. The firms in this guide specialize in niches from executive compensation strategy to benefit-focused consulting, so your nonprofit can find a firm tailored to its needs.

Maintaining a strong compensation plan complete with competitive salary and benefits is a key factor in attracting highly qualified applicants to roles in your organization. More importantly, good compensation will help you retain your current employees and increase how satisfied and fulfilled they feel in their jobs. A compensation consultant can help you achieve those goals by designing a compensation plan that fits your nonprofit’s budget and reflects your values.

A Compensation Consulting Crash Course for Nonprofits

With the current economic challenges affecting individuals and nonprofit organizations, managing compensation plans is more difficult than ever. The Great Resignation, or the large number of resignations that occurred in the U.S. within the past year, taught employers that maintaining a competitive compensation plan is critical to retaining top talent. As an employer yourself, it’s your duty to ensure employees are compensated with a liveable wage despite rising inflation rates.

Increasing salaries, however, can be a pain point for nonprofit organizations. As everyday costs stack up for your employees, your nonprofit’s operating costs do, too. However, failing to develop a strong compensation plan can eventually lead to widespread retention issues for your organization.

One way to remove the guesswork from designing a compensation plan is to partner with a compensation consultant. In this crash course, we’ll break down some common questions about compensation consulting:

  • What is compensation consulting?
  • What services do nonprofit compensation consultants offer?
  • What are the benefits of compensation consulting for nonprofits?
  • How should nonprofits choose a compensation consultant?

With 84% of nonprofit professionals reporting that they are satisfied with their jobs, it’s no secret that nonprofit employees tend to love what they do. However, a poor compensation plan could lead to a domino effect of negative consequences. Unhappy employees may have lower productivity and performance levels, negatively impacting everything from volunteer programs and fundraising efforts to connecting with supporters.

What is compensation consulting?

Consulting is a field in which experienced professionals offer their knowledge and expertise about a given topic to nonprofits and businesses.

More specifically, nonprofit compensation consultants evaluate nonprofit organizations’ compensation plans and suggest ways to improve them. If needed, they may design or redesign your organization’s overall approach to compensation to maximize what your organization has to offer. Some consultants may also suggest taking a total rewards approach to compensation, in which you provide employees with both financial and non-financial forms of compensation. This strategy is more holistic and comprehensive. 

Investing in a reliable compensation consulting partner provides many benefits to your nonprofit. For example, a key element to developing a strong brand as a nonprofit is being a good employer. As Getting Attention’s nonprofit branding guide points out, a strong brand cultivates trust with your audience and increases awareness of your mission so you can grow as an organization.

What services do nonprofit compensation consultants offer?

Evaluation and plans for your compensation strategy.

Evaluating your nonprofit’s current approach to compensation is a compensation consultant’s bread and butter. They’ll look at how your organization has handled compensation in the past and suggest methods to improve it in the future, often by adding new packages and policies. 

The advice you receive from a compensation consultant ultimately helps reflect your organization’s goals for employee compensation and overall satisfaction. 

External analyses.

Keeping an eye on the job market is one of the most exhausting, forever-ongoing parts of maintaining your compensation plan. However, working with a consultant takes this weight off your shoulders.

Compensation consultants take a look at the current market in your sector so you can accurately compare your compensation offerings to similar organizations. This is a great method to keep your organization from underpaying employees (which can result in dips in employee retention). On the flip side, being informed about average compensation rates keeps nonprofits from overpaying and potentially cutting into precious funds meant for delivering their missions.

Creation of new policies.

New policies can help motivate employees to be more productive and improve their performance. For example, implementing an incentive program that promises a payout to employees who complete certain goals motivates them to perform at a higher level.

Of course, it’s ideal to base pay on performance. If your organization is not currently using a performance-based compensation strategy, a compensation consultant can assist you in both designing and setting up new policies and procedures like administering performance reviews. Policies like these strengthen your compensation offerings and reward your most dedicated, hard-working employees.

What are the benefits of compensation consulting for nonprofits?

A compensation consultant’s expertise helps your nonprofit determine the best compensation strategies for your organization. After your nonprofit creates a strong compensation plan, you can expect to see increases in:

  • Employee retention 
  • Employee engagement
  • Workplace positivity
  • Productivity levels
  • Employee satisfaction

Not only do your employees and the work they do benefit your organization, but your bottom line will thank you, too. The right consultant will maximize your budget by choosing a compensation strategy that uses funds efficiently while boosting employee engagement, retention, and productivity. 

How should nonprofits choose a compensation consultant?

Pinpoint qualities you’re looking for.

Your nonprofit should outline the qualities it’s looking for in a consultant before digging into further research about specific firms. A short list of top preferences weeds out any firms that won’t be a good fit and saves you time and effort in your search. For example, if you’re looking for a consultant that has ample experience working with nonprofits, you can skip out on firms that are geared toward for-profit businesses.

As you pinpoint the qualities you’re looking for in a compensation consultant, be sure to make note of any other guidelines or restrictions. Important details to iron out before settling on a firm or contacting a prospective consultant include your budget, the timeframe of the partnership, and when you want to start working with the firm.

Clear details with leadership.

Various leaders from your nonprofit, including board members, the HR team, and managers, should be made aware of the decision to hire a consultant. Meet with your organization’s leadership to explain why working with a consultant is necessary and beneficial for your organization. Take this time to share the qualities you’re looking for as well as your estimated budget and timeline for the partnership.

When you seek approval from leadership regarding your decision to partner with a consulting firm, you’re ensuring you will accurately represent your nonprofit’s needs and budgeting capabilities as you begin reaching out to various consulting firms. Additionally, talking with leadership gives your organization’s leaders a heads up about the valuable opportunity to work with an outside expert. Then, your leadership can prepare any information and questions they might have for the consultant once your organization chooses a firm.

Choose a consulting firm.

The final step in the path to finding a great compensation consultant is choosing a firm that meets your needs. Create a list of firms you think can work for you based on your preferences and budget. At this point, it’s best to reach out to the firms you’re considering with a letter or email to make a personal connection.

If you’re finding it hard to narrow down your list to just one choice, double-check your options for the following qualities:

  • A team with experience, specifically with working with nonprofit organizations. 
  • A fair cost structure that aligns with your nonprofit’s financial needs and restrictions.
  • A workplace culture that shares values with your nonprofit. For example, you wouldn’t want to work with an organization that doesn’t align itself with your mission statement.
  • Proof of past successes with other nonprofit organizations. This can include things like reviews, testimonials, or statistics.

Finding a trusted resource for consulting firm recommendations can be tricky, especially when you’re searching for compensation consultants that know the nonprofit sector. If you’re ready to choose a consultant but need help finding high-quality firms, check out the recommendations in Astron Solutions’ compensation consulting guide. The firms in this guide specialize in niches from executive compensation strategy to benefit-focused consulting, so your nonprofit can find a firm tailored to its needs.

Maintaining a strong compensation plan complete with competitive salary and benefits is a key factor in attracting highly qualified applicants to roles in your organization. More importantly, good compensation will help you retain your current employees and increase how satisfied and fulfilled they feel in their jobs. A compensation consultant can help you achieve those goals by designing a compensation plan that fits your nonprofit’s budget and reflects your values.

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Nonprofit Tips
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Jennifer C. Loftus

Jennifer C. Loftus is a Founding Partner of and National Director for Astron Solutions, a compensation consulting firm. Jennifer has 23 years of experience garnered at organizations including the Hay Group, Parsons Brinckerhoff, Eagle Electric Manufacturing Company, and Harcourt General. Jennifer has held volunteer leadership roles with SHRM, New York City SHRM, and WorldatWork. She serves as a subject matter expert to the SHRM Learning System and as a SHRM instructor. Jennifer is a sought-after speaker for local & national conferences and media outlets. Jennifer has an MBA in Human Resource Management with highest honors from Pace University and a BS in Accounting summa cum laude from Rutgers University. Jennifer holds Adjunct Professor roles with Pace University, Long Island University, and LIM College. Jennifer received the 2014 Gotham Comedy Foundation’s Lifetime Ambassador of Laughter Award.