In November 2015, Vivient Consulting and WorldatWork invited a sample of WorldatWork’s non-publicly traded members to participate in their “Incentive Pay Practices: Nonprofit, Government Organizations” compensation survey. More than 125 nonprofit and government organizations representing state, local and federal government entities, charitable and education organizations participated in the survey. This compensation survey updates the original survey completed by Vivient and WorldatWork in 2013.

The new 2016 compensation survey research shows that short-term cash incentives and bonus programs continue to dominate the incentive-pay landscape as a vast majority of organizations use and rely on incentive-based pay practices to recruit, motivate and reward employees.

Vivient’s Bonnie Schindler reports: “Nonprofits and government organizations report their annual incentive plans are more effective than their for-profit counterparts — a sign that incentives are leveling the playing field for all organizations competing for top talent.”

Key Findings from the 2016 Compensation Survey for Nonprofits and Government Organizations

• In 2015, more than 75% of nonprofit and government organizations favored simplicity by offering three or fewer short-term incentive plans.
• While government incentive-pay budgets remain modest, nonprofit budgets have increased significantly. Nonprofit, short-term incentive budgets are starting to approach the levels reported by the private, for-profit organizations.
• More than 80% of nonprofit and government organizations said their AIPs were effective at achieving their objectives.
• Of the nonprofit/government organizations with AIPs in place, 65% reported the programs are used to reward employees while 62% use the incentives to focus employees on specific organizational goals.

The survey, based on 2013 survey data, provides a rare look at how non-profit/government organizations attract, motivate and incentivize their employees. Data includes hard-to-find statistics on the size and nature of short-term and long-term incentive pay practices, including the types of plans and vehicles used. More than 175 participants from nonprofit and government organizations responded to the survey.

Previously conducted in 2007 and 2011, this year’s incentive pay compensation surveys represent our third collaboration with WorldatWork. With this longitudinal data, we provide insight on the key compensation trends and explain the reasons behind them.

Compensation Trends: Nonprofit/Government Organizations:

• In 2013, 78% of nonprofit and government organizations reported using short-term incentive plans, while 16% reported using cash long-term incentive plans.
• Nonprofit and government organizations favor simplicity by operating a limited number of short-term incentive plans. Of the respondents, 68% report having three or fewer short-term incentive plans in place.
• The majority of organizations (62%) rely on 4 to 6 performance measures in their Annual Incentive Plans in order to reward performance across several different dimensions.