Why Should Nonprofits Be Transparent About Compensation?

By: Helen Weeber

September 15, 2023

More and more American workers are demanding “pay transparency,” and nonprofit employers must listen – and act. The concept of pay transparency holds that employers should openly discuss their compensation policies and practices with prospective job applicants, current employees, and the general public. Many states and municipalities have passed pay transparency legislation. Even if you aren’t required by law to provide salary ranges for specific positions, consider sharing how your company determines compensation, raises, and incentives.

Employers and Employees Agree

Payscale said in its 2023 Compensation Best Practices Report that 45% of businesses now provide pay ranges in their job postings. Furthermore, 48% of organizations reported that legislation has prompted them to adjust their compensation plans. According to a different Payscale analysis, a majority of employers stated that compensation transparency, when analyzed in isolation, “decreases [worker] intent to quit by 30%.”

Employee surveys, particularly among younger workers, highlight the need for transparency today. According to a 2023 survey from Symplicity, a technology services company, 87% of Generation Z respondents said pay transparency was “important” or “very important,” and more than half indicated they’d be discouraged from applying for a job if a wage range wasn’t provided.

Providing Rationalizations

However, simply disclosing salary ranges in job postings is insufficient. Your organization should also clearly explain to job prospects how you determine salary and why the compensation you offer is competitive with that of other nonprofits (and potentially with that of similar for-profit businesses).

Also, describe what employees must do to obtain raises – and what types of raises are reasonable. Be as explicit as possible, and be sure to address compensation raises and job promotions with employees during performance assessments.

Comply or Voluntarily Adopt

If your state or city has approved pay transparency legislation, check your employment rules to ensure they comply. If no law applies, consider voluntarily adopting these practices. Pay policy transparency might help you recruit serious job seekers in a tight labor market. It can also contribute to the trusting and equitable workplace atmosphere that most nonprofits strive to achieve.

Please contact us if you are unsure how to set salary ranges. We can examine internal and external data to develop the best compensation targets for your nonprofit.