The Value of Strong Compensation Management

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The Value of Strong Compensation Management

This edition of 5 Things Friday was written by Lisa Brown Morton, President and CEO of NonprofitHR. Thank you for sharing with us, Lisa!


Compensation has a huge impact on your organization’s ability to attract, motivate and retain top talent. Effective, well-communicated compensation policies can show your employees that they are valued, help manage their expectations and keep them engaged with your organization.

Need some tips for making a strong business case for why your organization needs to focus on compensation management?

Here are five ways compensation management can benefit your organization:

It can attract, motivate and retain top talent.
This is one of the foundational principles of strong human resources. In order to attract, motivate and retain top talent, your compensation package need to be competitive, well-thought out, and effectively communicated to staff at all levels. Having a non-competitive compensation program will often make the difference between your ability to bring top talent through the door and having them walk out the door earlier than you want.

It helps set performance standards.
By communicating performance expectations to your employees and tying these expectations to tangible rewards, you are setting a standard for your staff’s work that they’ll be motivated to meet. Measurement of specific, realistic and time-bound performance goals can be helpful in employee reviews, where conversations about performance and compensation are often intertwined.

It opens up employee communication.
Employees often want to have conversations regarding benefits, rewards or financial compensation, but these subjects can be tough to bring up in some work environments. Transparency and clear communication around compensation guidelines can make it easier for employees to advocate for themselves and ask questions of management that might otherwise be uncomfortable.

It keeps your organization competitive and relevant in the sector.
One of the quickest way to take your organization out of the running for top talent is offering compensation packages that don’t stack up to the competition. Your current and future employees are going to be up-to-date on what competitive employers are offering, so it’s important to build your compensation program with a thorough analysis of the market in mind.

It creates consistency across departments and divisions.
If your finance department receives bonuses annually, but your programs department is given bonuses based on performance quarterly, you may have an issue. Keeping benefits and financial compensation packages consistent across departments will go a long way toward keeping employees happy and avoiding conflict.


Are you paying salaries that will attract, motivate, and retain top talent? Participate in our Compensation and Benefits Survey to find out. Participants receive a Comparative Market Analysis. This vital report lays out a clear picture of how your organization’s salaries compare to organizations of similar budget size, geographic location, field of service and number of employees.

Need help with your compensation management? NonprofitHR can help.