There are many ways that experts use the Compensation Report, but here is one that over the years we have found useful for assessing how existing salary data stacks up to how much a candidate should be paid, using comparable data. See also this TEDxInternationalSurfLA video in which Dan Pallotta talks about discrimination of compensation in the nonprofit sector.
Step 1: Turn to the Job Title Summary page for the specific job that matches most closely to the job you’re reviewing.
If you’re a participant (knowing your own code) you can see exactly where you rank; if you’re a non-participant, look at where you are relative to the average, and which quartile you are in.
Unless you are looking at a position in which you have several employees, you can probably safely ignore the Weighted Average in the Overall Position Data Highlights box. This value better reflects organizations that have multiple people in that same position.
Step 2: Recognize which quartile you want your salaries to be in relative to the average for all the nonprofits surveyed.
Organizations usually know where they want their salaries to be relative to the average – well above average (top quartile), above average (second quartile), or middle (lower half) – as a matter of philosophy, so they can visually see whether they are there.
Step 3: If you want to get more complex, turn to the Weighted Average Salaries at the front of the book.
This shows the factors that drive salaries for different nonprofits. These primary factors are budget size, staff size, and category of nonprofit. In the Weighted Average Salaries sections, you are able to look up the salary data for a given position according to a specific budget size, staff size, and/or organization category. To use these tables, find the column that applies to your organization (for example, if your budget is 2 million, look at the budget size “1-3M”) to see what to do about overtime compensation and salary levels of organizations similar to yours.
The weighted average for your budget size may be lower than you saw on the Job Title Summary Page; the average for your type of organization may be higher. Don’t worry. This reflects reality and you have to weigh those two different factors pushing you in opposite directions and decide how you want to adjust for them.
Step 4: At this stage, you have to factor in other elements related to the unique characteristics of your organization, the position or the candidate/job occupant, that cannot be reflected in a Compensation Report, but nevertheless have to be taken into account.
For instance, the budget/financial state of your organization may not allow above-average salaries to be paid for the time being.
Or the position may involve additional responsibilities beyond the job description.
Or the individual has an extraordinary level of experience or value to the nonprofit – such as institutional memory.
Step 5: Take a little time to record the process used, including how you used the Compensation Report and the factors taken into account.
This is especially important if the process involves an executive position in which the IRS might be interested in, but it is a good practice even if the file is just for an employee review or candidate offer.