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  • Writer's pictureRich Haglund

Does doing the right thing really cost too much?

Compensation for employees of government agencies and nonprofit companies is often significantly lower than compensation for similarly skilled and experienced employees of other companies.

Does it have to be that way?

Have you, as an organization leader, done the math? With all the elements included?

Or have you only looked at the historical pay rates you inherited and compared them--on the back of a napkin--to the latest NBA free agent signing?

Did you at least start with a serious comparative study across similar organizations? Then, did you compare salary ranges in your organization with ranges in for profit companies? Finally, did you consider all the costs of low compensation? Those costs include:

  • Small candidate pools for open positions,

  • Even smaller pools of candidates with the levels of skill and experience you'd like to start with,

  • Low employee morale,

  • High employee turnover rates,

  • The costs of constantly recruiting, hiring, and training new employees,

  • Historical knowledge that is lost or never acquired because of turnover, and

  • Clients or stakeholders dissatisfied with the quality of work.

Add up all those costs.

Subtract them from modest increases in pay.

What is the sum of that equation?

Now, "compensation" doesn't just mean pay. And "benefits" doesn't only mean health insurance. Employees typically value working conditions more than salary. There may be many benefits of working for your organization: a compelling mission, development opportunities, remote work opportunities, and a vibrant work culture.

Maybe statutory pay ranges or other constraints wholly outside your immediate control make it difficult to increase pay for your employees. Even if that is the case, what benefits can you improve or offer? And what is the real cost of offering those benefits? For example, if you were to increase paid parental leave by a few weeks, and every one who might become a parent in the next year were to do so, how much would that really cost, given short term disability and other supports? Compared to your operating budget and the impact on the work environment and the work product of offering employees such a benefit, is the cost worth paying?

When considering increased pay and better benefits, the more productive question to ask might be, what is the real cost of not offering them to employees?

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