Establishing pay levels is not an exact science, but there are standard approaches and numerous resources available to assist you in this decision-making process.
Gather Job Responsibilities, Hiring Requirements
To begin calculating a salary that is fair and equitable to both the employee and the organization:
- Identify the skills, education, experience, and competencies necessary to perform the job. This data might be gotten from the incumbent or the supervisor.
- Determine the job's true impact on the organization and its importance in comparison to other positions (the greatest contributors should be paid at higher levels than those with less impact).
- Make sure you fully understand the job to accurately match it to similar positions in the external market. Don't make matches based solely on job title, because similar titles don't always reflect similar duties.
Consult Creating Job Descriptions in the Recruiting section for more about job responsibilities and hiring requirements.
Compile and Analyze Relevant Salary Data
Smaller and not-for-profit organizations may not have access to numerous salary surveys, and surveys may contain data only for “benchmark” positions – jobs found in most organizations and with standardized duties, such as secretaries, accountants, and payroll clerks.
However, vital information can be gotten from determining which organizations comprise your competitive market:
- From what type of industries you typically hire or lose employees (not-for-profits only, real estate organizations exclusively, or any type of organization).
- What size organization constitutes your employment competitors (very small number of employees or budget, considerable amount of employees or budget, or any size).
- From what geographic area do you recruit (local, state, region, nation).
For example, appropriate market data for a secretarial position typically isn't influenced by industry type or organization size, but is greatly affected by geography. Local data is generally appropriate for such a position.
Alternately, market data for an Association Executive is usually affected by all of the criteria. The pay for this type of position is greatly impacted by the not-for-profit industry, the size of the association, and its location.
Download a PDF (20K) for a list of Web sites for salary surveys and for organizations that provide or sell survey data for not-for-profits.
Set an Appropriate Pay Level
Once you have defined a competitive salary for a job, determine the appropriate pay level for an employee working in that position. Salary surveys often provide average or median pay data based on an experienced worker with overall good performance.
Most organizations will pay employees within +/- 20% of the competitive market median, though outstanding performance, tenure, or other employee pay levels may create a need to exceed these typical salary ranges.
Determine Whether a Position Is Exempt, Non-Exempt
The Department of Labor sets very strict rules on whether or not a position is exempt from overtime. State laws may have their own rules as well, so be sure to check your state law.
We have developed a checklist to help you determine whether or not a position should be exempt from overtime based on the Department of Labor's standards. Note that all criteria under each exemption must be met in order for the position to be exempt. The exemption should be based on the duties of the position and not a position's title.
For additional information on the Department of Labor's exemptions, visit www.dol.gov. Enter the phrase "FLSA," which will then take you directly to the proper location within the site.
Get more information on exemption and overtime from the Fall 2009 issue of RAE Magazine.
This material was developed for use by State and Local Association Executives. Some of the information may not be applicable to other audiences. This guide is intended to provide accurate and authoritative information with regard to the subject matter covered. Although every effort has been made to ensure the accuracy and completeness of this information, the authors and editors of this guide cannot be responsible for any errors or omissions. This guide is not a substitute for legal or technical advice. Associations that need legal or technical advice should obtain opinions from their own legal or technical advisors.
Consulting Services Available from NAR Human Resources
Fee-based consulting services are available from NAR's Human Resources Department. For more information, contact Donna Garcia, Director of Human Resource Services, at email@example.com, 312-329-8311.