Special Report: Some Benefits Rub Employees the Right Way

February 1, 2001       Clint Carpenter      

Trying to raise money or run a program can be stressful. But, the folks at Alaska Assets, Inc. in Anchorage have a solution. Massage therapy.

"An employee, about once a month," explained Executive Director Diana Strzok, "can sign up for up to 30 minutes for a chair massage (kneeling into a special chair) that is similar to those at malls and airports. It can be wonderful in terms of stress reduction and it is invigorating."

The concept came from the staff retention committee that meets quarterly to identify and build on the things that will help keep the staff.

While nonprofit executives may not be able to command the $252 million contract recently signed by baseball slugger Alex Rodriguez, packed with dollars and fringe benefits, nonprofits still compete for executives. Because salaries are getting very comparable to each other, the edge may go to the organization that is more creative with its benefits package.

Long-term bonuses, deferred payment plans, substantial health insurance coverage, and extra vacation time are commonplace. However, certain novel compensation deals are attracting top-level executives to nonprofits.

The type of benefit package depends on what part of the nonprofit industry you’re in, said John M. Isaacson, president and founder of Boston-based Isaacson Miller, an executive recruitment firm.

According to Isaacson, there are some unique "core payment" strategies being used by various organizations. For example, higher-end academic and health care executives are establishing long-term bonuses where money is earned in 3-to 5-year increments based on hitting targets. "It’s meant to mimic stock plans," he added.

Christopher P. Bryant, president and chief executive officer, AST/BRYANT in Santa Monica, Calif., said executives are getting release time, which is new to the sector. Release time is when a couple days a month are given to an executive to do consulting work for another organization. This is used when salary demands can not be met, Bryant explained. "It helps augment salary through outside consulting work."

Lump sum signing bonuses ranging from $5,000 to $25,000 are trendy, too, according to Bryant. The signing bonuses are given upon acceptance of the job and all money is in addition to standard relocation benefits.

In the higher education side of the sector, Bryant said additional sabbatical time beyond vacation is becoming more and more prevalent. For example, an executive receives four weeks vacation and eight weeks on top of that for successful completion of a capital campaign – an "At-A-Boy" after a long and grueling effort on a capital campaign.

Length of service incentives can also attract higher education personnel, said Bryant."Put X-thousands of dollars away each year (for example: $10,000/year for five years), plus all accrued interest, and pay a $50,000 bonus when the five years is up," said Bryant. "If four-and-a-half years are up and termination occurs, no bonus is remitted."

Bryant cited specific examples of executive benefits packages:

• A vice president for advancement at a liberal arts college in the West was given a three-month sabbatical following a successful capital campaign;

• A vice president for advancement at a small Western institution provided a $25,000 lump sum incentive bonus for a woman upon her 5th anniversary at the institution;

• A Mid-Western institution gave an executive 20 percent of base pay as a signing bonus – the salary was $105,000/year; and a Mid-Western executive received a $5,000 signing bonus and an additional $5,000 upon first anniversary with the organization.

According to Roanne L. Barnes, executive vice president at Nequon, Wis.-based Barnes Development Group, LLC, benefits packages are all over the board.

Some benefit packages at smaller nonprofits are often times very liberal with vacation days because they may not be able to compete with larger organizations salary-wise, Barnes noted. But the perk of more vacation time may sway an executive’s decision.

"Some of the smaller nonprofits have a difficult time competing for executives’ because they cannot pay the same. But offering more health care coverage or more vacation and sick days is the only bargaining chip they have," said Barnes.

A unique benefit at The Student Conservation Association, Inc. in Charlestown, N.H., called a short-term disability pool, allows employees to carry over all vacation, sick-day, personal day, and holiday time into an account pool from which they can choose throughout their time at the organization.

"It’s something I’ve never seen anywhere else," said SCA Director of Human Resources Kim Henning. "There is no cap and some people have six months worth of time in their pool." One father took paternity leave and he used his pool, said Henning. "He didn’t have to use any of his vacation."

Henning said the pool was loosened up last year to coincide with the Family and Medical Leave Act. "You couldn’t do that before," she said.

Henning describes the organization as "pretty progressive" in its approaches to work ethics and benefits in general and even offers telecommuting to individuals as a means of compromising with a job description.

She acknowledged that SCA uses its benefits package as a way to entice executives into accepting a post. "The benefits are wide-ranging," she said. "Some aren’t actual benefits, but pluses that add to the environment."

William Whitney, a principal at executive recruitment firm Larsen Whitney Blecksmith and Zilliacus in Los Angeles, said nonprofits generally offer normal healthcare and vacation packages. "But, there is more emphasis than it used to be on items such as automobiles. This is because the job and labor market has become tighter and the search for good candidates in the nonprofit field has become more difficult."

He said, "Nonprofits can offer their version of a 401(k) where employee contributions can be matched or not. With the limited pension plans offered, there has to be a tradeoff – which is – there has to be a passion to be in the nonprofit field, as a result of the lack of opportunities for personal wealth building," Whitney said.

Colleges and universities have the broadest and best plans in the nonprofit sector, according to Robert Sellery, president of Robert Sellery Associates, Ltd., in Washington, D.C.

"They can offer subsidized mortgages or university housing, tuition plans where they are working, or a reciprocal education plan for a candidate’s child at another institution. This is where a group of colleges have banded together to offer a choice in location for the educational programs available at full or partial payment of tuition. For employees themselves, there may be no tuition required for participation in graduate student programs," Sellery said.

Where the nonprofit is not a school, Sellery mentioned, "One modest plan, for example, has an educational reimbursement plan for $1,800 annually with a lifetime cap of $5,400. This is a standard part of the benefits package at this organization."

That same nonprofit, according to Sellery, offers paid time off plus 10 holidays per year. The first three years has 20 days off; the fourth through seventh years offer 25 days; and the eighth year and beyond permits 30 days off. "Health insurance is a cafeteria plan (health, prescription and optical) with a $50 a month deduction for a preferred provider plan. With dental, visits to certain doctors are at no cost – but using outside-the-plan dentists creates a charge of $2.50 per month for a single person or $4 a month for a family," said Sellery.

"Life insurance at three times salary is free of charge, as is short-term and long term disability," said Sellery. Short-term covers 60 percent of salary after a two-week waiting period and long-term provides 60 percent after a three-month waiting period.

The sample nonprofit offers a pension plan open to participation after one year. "The nonprofit will put up to 8 percent of salary (up to the FICA limit) and 14 percent of salary above the FICA limit, which is in the $70,000 range," said Sellery, who said that vesting varies from place to place. Sometimes it takes effect immediately. Sometimes it is portable and sometimes not.

"One nonprofit vests 60 percent after three years of employment; 80 percent after four years; and fully vested after five years," said Sellery. "In addition, there is a tax-deferred annuity plan – and some organizations may offer matching contributions to 401(k)-type savings plans."

Sellery said that no-cost confidential employee assistance programs are being offered at nonprofits, as possibly a free checking account. "A lot of fundraisers do ask – or are provided with – automobiles and club memberships, which are indeed useful for their jobs. Presidents and executives at a higher level get these," said Sellery.

Kris Morris, partner at Morris & Berger in Pasadena, Calif., mentioned Supplemental Employment Retire-ment Programs (SERPs) as something executives seek when looking for benefits.

Morris said housing assistance is commonplace, but she is seeing more than just paying for the "pack up, pick up, and move." Morris gave an example of above and beyond paying for relocation. If an executive moves from Denver to New York City, one of the ways supplemental compensation is used is if the executive’s salary of $100,000 isn’t going to give them that much of a raise, the nonprofit pays (usually 3-5 years) for extra housing costs ($2,000/month to subsidize the cost for housing).

Another example, Morris said, is a five-year mortgage subsidy where it’s $2,000 per month the first-year, $1,500 the second, $1,000 the third and fourth year, and $500 the fifth and final year. A six-month to one-year clause may be agreed upon for when leaving the organization.

Anne Hyde, president of the Hyde Group, Inc., based in Cos Cob, Conn., said there has been much greater turnover during the past few years. "Such organizations have had to become much more competitive in developing both their donations and fund developing programs to include bonuses. However, they have to be based on results. The best approach is for a board to establish goals and objectives right up front."

"For nonprofits with 100 or more staff (not including volunteers)," said Michelle Pangallo, an executive with D.E. Foster Partners, Inc., Alliance Firm of KPMG LLP, "to attract and retain high-caliber talent, smart organizations recognize that certain privileges and benefits can tip the balance."

Pangallo said, "To most CEO-level candidates, the typical expectations would include car or car allowance, and parking — plus a car/cellular telephone. Also, memberships in an in-town club, to afford an appropriate and convenient venue for meetings, is fairly typical expense reimbursement for a CEO-level candidate, as is providing for professional membership dues," she said.

"I think that organizations are going to have to become more creative (with their benefits packages) because they can’t compete on base salary (because it’s too equal)," said Bryant. "Creativity will attract the (highly talented executives) and that will enable the organization to retain that talent for a longer period of time."



NPT staff writer Jeff Berger also contributed to this story