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PPC Newsletter
Current HR Trends – Spring 2016
The Use of Incentive Pay in Nonprofit and Government Organizations
While most public companies use incentives as part of their pay strategy, a recent WorldatWork Survey* reports the steady use of short-term incentives (STI) by both nonprofit and government organizations in order to compete for talent. [STIs include annual incentive plans (AIP), discretionary bonus plans, spot awards, profit- sharing, team awards and project bonuses.] AIPs are the most prevalent and are typically linked to the achievement of goals established at the beginning of the performance cycle. While incentives are generally more prevalent in nonprofits (76%), it is noteworthy that more than half of government respondents (55%) report the use of all forms of STIs.
Spending for STIs has also been increasing over the last few years. The survey reports that the median budget for STIs in 2015 as a percent of operating budget is 3% (up from 1%) with a high of 10% at the 75th percentile and 1% at the 25th percentile. Government STI budgets are more modest with NFPs reporting larger increase percentages.
Plan elements most often cited as strengths include goal setting (discussed below), as well as performance linkage and level of award.
Whether your organization is public, private or tax-exempt, PPC can assist in developing or evaluating your organization’s incentive plan. Contact Linda Ulrich for further information.
Goal Setting: Top Down or Bottom Up – Which is best?
There have been many articles about the pros and cons regarding the most effective approach to the goal setting process within organizations today. The majority of practitioners believe that a well-structured and communicated top down process is most effective in achieving desired results. Why? Running a successful organization today is complex; it requires not only setting strategic and clear objectives that are aligned internally but demands buy-in from employees who feel that the goals are realistic and attainable. Leadership should establish the roadmap with subordinate managers implementing it within their functions, setting appropriate programs, systems and timetables to meet desired outcomes. Celebrating the timely achievement of these objectives with staff members is a critical step in the overall goal setting process and further cements employees’ active involvement and trust in the organization and its leadership.
We, at Pay and People Consulting, can assist in structuring a well-designed goal setting process in your organization. Contact Gary Ulrich to discuss further.
Other Relevant News – EEO
In support of recent initiatives to close the gender pay gap, the EEOC has proposed revising the EEO-1 report that employers file annually with the agency. The proposal would require employers with 100 or more employees to disclose data on employees’ pay and hours worked starting in 2017.
PPC can assist in reviewing pay practices and assess any risks they may pose to your organization with this potential requirement. Please call Linda Ulrich to discuss further.
*Incentive Pay Practices: Nonprofit/Government Organizations, WorldatWork and Vivient Consulting 2/2016
The PPC Newsletter is produced by Pay and People Consulting, LLC. PPC is a consulting firm specializing in issues related to human resources; https://www.payandpeople.consulting. Contact Linda Ulrich (413-262-6739) to discuss pay or Garrett Ulrich (413-531-8870) to discuss people needs. This publication is for information only and does not constitute legal advice; consult with legal, tax, and other advisors before applying this information within your organization. If you do not wish to receive the PPC Newsletter, please reply to this email with “unsubscribe” in the subject line.