Your annual budget may already be approved but how do you make an effective case for a salary increase? Consider that not all employees perform equally and if your contribution in the last year was extraordinary, then an adjustment to your compensation may be in order. However, a case has to be prepared.
Employees have some latitude to ask for a salary increase that goes beyond the average allocated in the organization budget. Boards of directors usually approve an overall increase to the organization’s total compensation budget but do not become involved in deciding how much each employee receives. The actual increase for the individual, and whether it is below average, average, or above average, is usually left to the employee’s supervisor and/or executive director or, in the case of the chief staff executive, a compensation committee that has been mandated by the board. The decision invariably is tied to performance with outstanding employees receiving more than staff who under perform.
On average, in 2010, data from many sources including major human resource consulting firms and the Canadian Society of Association Executives showed that compensation increased by 2.2% (ranging from 2.0 to 3.5%). The projections for 2011 are that compensation will rise on average by 2.7%. Inflation has been running in the 1.8% to 2.0% range.
These compensation adjustments are in stark contrast to the experience of many organizations in 2009, at the height of the recession, when consulting firm Morneau Sobeco reported that approximately one-third of employers in Canada actually froze wages. Not-for-profit organizations were particularly hard hit although not equally. Organizations depending upon businesses for support (through fundraising or membership dues) fared worse during the recession than other groups, such as professional bodies, health care associations, and regulatory organizations who were not hit as hard by the economy.
Building an effective presentation to make your case for a salary increase starts with an honest self-assessment of your performance. Hopefully, feedback is provided throughout the year and not only at an annual performance review. The feedback may come in the form of specific information on your own work, or through reports to the board on key results such as revenue, participation levels, and projects. Staff should know how success is defined and measured. Based upon these factors, evaluate if your performance has met or exceeded expectations. Be prepared to refer to specific results that you realized, of course giving credit to others if it was a team effort.
The next step is to do research on compensation levels and increases. Fortunately, there is considerable information on the Internet on what employers are paying staff in positions similar to your own. Review job advertisements on-line, searching by job title, nature of the employer, and location. Be aware that not-for-profit organizations are dissimilar. Charities pay less than professional associations, and trade associations pay more than professional organizations. If the organization is headquartered in Toronto or Ottawa it is likely to pay more than one in other regions of Canada. Budget size is also a factor to consider. Identify the salary or compensation range among similar jobs and employers where compensation details are provided in the advertisement. You may also need to visit the advertiser’s website to obtain additional information (e.g., if the organization’s budget is not in the advertisement, there may be an annual report with financial summaries on their website).
At this point you should be knowledgeable about the “fair market value” of the position you occupy and the average increase to compensation that may be available based on broad data such as the rate of inflation and published studies.
Now, the difficult part is to also put yourself in your employer’s position. What is happening within the sector your organization serves or to your constituent stakeholders? If your members or directors are seeing no increases for themselves next year, it is unlikely your employer will risk criticism by awarding a significant increase for staff. You can mitigate this response through research on what other not-for-profit organizations are doing, but be realistic. To use a baseball analogy, many games are won hitting singles so do not set the equivalent of a salary home run as your goal. You may want to make the case for something other than an increase to salary and instead request support for an education course, additional vacation, or perquisites such as a membership for you in a professional association.
In summary, here are some tips to enhance your prospects for success in requesting a compensation increase:
- Have a plan and prepare the case in advance.
- Show how you are contributing above and beyond what is expected.
- To be credible you must demonstrate that you are delivering and can deliver tangible value for the organization.
- You must document the “return on investment” you deliver. The return on investment should have some measurement. For example, did your actions:
- Reduce or avoid costs (e.g., a more efficient system) for the organization?
- Increase revenue (e.g., new or improved service resulting in more members, higher attendance, better sales, etc.)?
- Say what you want (how much of an increase), back it up with the research, and be realistic. Be open to alternatives to salary such as more benefits or time off.
- Don’t be critical or make threats (e.g., “we’ll have high turnover/employees will quit because the staff isn’t appreciated/the employer is cheap”).
Every compensation decision has a financial impact for the organization, so be aware of the impact of your request, and the outcomes you have accomplished that made the organization more successful.
Content is © Jack Shand and is reprinted with permission.
Jack Shand, CMC, CAE, is president of Leader Quest, a management consulting firm providing expert advice to not-for-profit organizations since 1997. Leader Quest specializes in executive search/staff recruitment, strategic planning, governance, and organizational reviews. Jack can be reached at 905-842-3845 and 1-877-929-4473, or jack-at-leaderquest-dot-com.
