In our last blog post, we noted that compensation ought to address the needs of teachers and staff, as well as to the organization’s own objectives. We recommend that you start with establishing a sense of just how competitive you want your compensation to be, and in what specific roles and markets.
Ask your team and board:
What is our total value proposition?
How competitive do we want/need to be?
Where are we in our growth cycle?
What is it that we want to reward in this organization?
Who are our staff?
How do we balance paying competitive market rates with maintaining internal equity?
Doing the Research: How to Study Market Rates
To create a market-based compensation structure, you’ll need to understand where you stand relative to the market, which depending on your organization may include the local school district, similar organizations, as well as other nonprofits, public agencies, and even companies who might be competing with your organization for talent in key roles. Wherever possible, stick to comparisons with your own organization’s industry, mission, geography, and budget/staff size.
To find comparable compensation data, consider searching:
Publicly available data, such as district pay scales, nonprofits’ IRS form 990s (which report pay for the mostly highly compensated employees in each organization) through Guidestar or the Foundation Center, and databases like Transparent California, which logs compensation information for public employees in California
Try to use at least three sources to ensure that the data is sound. At Edgility, we are wary of sites like Glassdoor and Payscale, who sometimes report salaries for jobs based on a very small sample size. We prefer specialized databases like CompAnalyst, which is updated monthly to keep up with fluctuations in the market and covers more than 4,000 benchmark jobs gathered from comprehensive employer surveys.
Creating a Compensation Structure
With data about your organization’s compensation philosophy and comparable market salaries in hand, you can then consider building a pay structure, including:
Pay grades or levels, in which similar jobs are grouped together. For example, an entry-level data associate, a reception clerk, and a paraprofessional might all be included in the same grade, with the averages of their market salaries used as the midpoint for that grade, or you might group all principals or program managers in the same grade.
Pay ranges or salary spans within those grades or for each role — according to ZipRecruiter, the range typically extends 30% range of the midpoint or average market salary for a junior or support role, 40% for mid-level management, and 50% for executives. New hires tend to earn around the middle of that range, and experienced top performers earn 80-100%.
For particularly large or complex organizations, pay schedules may be created, which vary by business line (in the case of a school organization, this may vary between school sites and the central office) or by location based on the cost of living and competitor salaries in that market.
For example, the National Center for Montessori in the Public Sector suggests this starting point salary schedule for teachers in public Montessori charter schools, along with benefits, 2% yearly step increases, periodic retention bonuses, and stipends for taking on additional responsibilities.
Finally, map current jobs and salaries against the new structure to determine whether your new compensation structure matches existing pay, including whether there is equity across levels, roles, and other characteristics. You’ll get an immediate sense of whether there is equity across the organization, and whether there are adjustments that need to be made.
What Matters Most: What Happens When You Address Compensation
Organizations that take a strategic, research-based approach to compensation find that new employee salaries are easier to set, and that existing employees feel more properly valued and compensated.
“Compensation analysis helped us determine highly beneficial changes that are attracting and retaining top talent,” agrees Margaret Winnen, Director of HR & Talent Development for College Track.
At Compass Charter Schools, Superintendent & CEO J.J. Lewis says his team recently shared a new compensation structure and benefits package with staff, who were pleased that salaries will now account for past teaching experience. Teachers and non-instructional staff will also receive bonuses tied to criteria like workload, enrollment, and student performance.
Over time, happy and appropriately compensated employees translate into less turnover, more stability, and greater productivity — an effort we think is well worth the cost.