2023 Compensation Increases: A Sign of Recovery or Cause for Concern?
US employers are providing their employees with larger pay increases in 2023 than they have in years. According to new data from Mercer, annual merit increases have averaged 3.8%, while total compensation, which includes merit awards, as well as other types of compensation such as promotional, cost-of-living, and minimum wage increases impacting base pay, have increased by 4.1%. These figures are just below the estimates from last fall, but still remain above the increases provided in 2022, making them the largest since the 2008 financial crisis.
This is great news for employees who have faced tough times due to the pandemic-induced economic downturn, but it begs the question: is this a sign of economic recovery, or is it a cause for concern?
On the one hand, the increase in compensation can be seen as a sign of a recovering economy. As the job market continues to improve, employers are offering higher wages to attract and retain employees. Moreover, the life sciences, energy, and services industries, which are among the fastest-growing sectors, are leading the way with the largest compensation increases. This suggests that these industries are doing well and are optimistic about their future growth prospects.
On the other hand, there are signs that things may be starting to slow down. While the increase in compensation is a positive development, it is important to note that the actual increases are slightly below the initial projections from last fall. Moreover, the average base pay increase has dropped from 4.7% to 3.4% from January 1, 2022, to March 2023, indicating that pay is being driven up by more than just annual increases.
Additionally, fewer organizations plan to give base pay raises this year, with only 80% of organizations saying they plan to do so in 2023, down from the 92% that gave raises in 2022. This may suggest that companies are becoming more cautious about the economic outlook and are holding off on offering large compensation increases.
Furthermore, while pay transparency legislation has given employees more data than ever to assess their compensation in the external market, it is also putting pressure on employers. With more and more employees demanding pay transparency, organizations are feeling the pressure to offer competitive and equitable compensation packages.
Despite these signs of potential slowdowns, there are still several reasons to be optimistic about the economy. For one, the labor market is still strong, despite signs of a slowdown in some industries. This suggests that there is still demand for workers, which is driving the increase in compensation. Additionally, many organizations are looking at compensation more strategically and are focused on addressing critical gaps in pay equity.
The increase in compensation in 2023 is a positive development and suggests that the economy is recovering. However, signs of potential slowdowns indicate that companies may be becoming more cautious about the economic outlook. Nevertheless, with the labor market remaining strong and organizations focused on addressing pay equity, there are still several reasons to be optimistic about the future.
Compensation studies are one of our specialties. We have deep experience with base compensation benchmarking, incentive program development, and total rewards. Check out our updates on workforce strategy and compensation or contact us for other helpful resources.
Strategies for nonprofits to compete for talent despite lower salaries and benefits
Nonprofits often face the challenge of competing with private industry and the public sector for top talent. While they may not be able to offer salaries as high as for-profit companies or benefits as comprehensive as those in the public sector, there are strategies nonprofits can employ to attract and retain high-quality employees. Let’s explore various approaches that can help nonprofits stay competitive in the talent market, despite their financial limitations.
Emphasize mission and impact
Nonprofits can attract mission-driven individuals by highlighting the organization’s purpose and the impact their work has on the community. Showcase success stories and demonstrate how employees’ contributions directly contribute to positive change. By connecting employees with the organization’s mission, nonprofits can foster a sense of purpose and satisfaction that can help retain talent.
Create a positive organizational culture
A healthy organizational culture can be a significant factor in attracting and retaining employees. Nonprofits should focus on fostering an inclusive, collaborative, and supportive work environment. Providing opportunities for employee recognition, open communication, and team-building activities can contribute to a positive work culture.
Offer professional development opportunities
Investing in professional development can help nonprofits attract employees who are eager to learn and grow in their careers. Provide resources such as training programs, workshops, conferences, and mentorship opportunities. Encourage employees to develop their skills and advance within the organization, which can also contribute to increased employee retention.
Provide work-life balance and flexibility
Many job seekers prioritize work-life balance and flexible work arrangements when evaluating potential employers. Nonprofits can offer flexible work hours, remote work options, and generous vacation policies to appeal to these candidates. A focus on work-life balance can help employees maintain their well-being and prevent burnout, which can contribute to higher retention rates.
Leverage volunteer and internship programs
Nonprofits can build a pipeline of potential talent by offering volunteer and internship opportunities. These programs can provide valuable experience and help individuals gain insights into the organization and its mission. As volunteers and interns become familiar with the organization, they may be more likely to consider full-time employment opportunities when they arise.
Promote opportunities for growth and advancement
Job seekers are often attracted to organizations that offer opportunities for growth and advancement. Nonprofits can create clear career paths and promote from within the organization whenever possible. Providing employees with a vision of their potential career trajectory can help keep them engaged and committed to the organization.
Build a strong employer brand
A strong employer brand can help nonprofits stand out in the competitive talent market. Develop a clear and compelling employer value proposition, highlighting the unique aspects of working for your organization. Utilize social media, your website, and other platforms to showcase your organization’s culture, mission, and impact.
While nonprofits may face challenges in competing with private industry and the public sector in terms of salaries and benefits, there are various strategies they can employ to attract and retain top talent. By emphasizing their mission and impact, creating a positive organizational culture, offering professional development opportunities, and providing work-life balance, nonprofits can appeal to mission-driven individuals who prioritize these factors over financial compensation. Additionally, leveraging volunteer and internship programs, promoting growth opportunities, and building a strong employer brand can further enhance the organization’s ability to attract and retain high-quality employees, contributing to their long-term success.
OA works with nonprofits of all size and type. We have deep experience with base compensation benchmarking, incentive program development, and total rewards. Check out our updates on workforce strategy and compensation or contact us for other helpful resources.
Client success story – Oberlin Public Library
Our latest success story highlights our talent acquisition and recruiting services and how we have successfully helped library trustees when they need to appoint a new library director.
Oberlin Public Library in Oberlin, Ohio is committed to their mission of informing, educating, inspiring, and entertaining. They strive to create an environment where civic engagement, learning, and literacy thrive. In addition to the Library, they operate The Bridge, a community technology center. The Bridge provides free internet and computer access and educational classes to help bridge the digital divide within the community.
We were pleased to help them select David Fausnaugh as their new director. The Oberlin Review had a nice article about David and his excitement about his new role.
Our library consulting projects include professional librarians with extensive library management and operations experience. This ensures the solutions we recommend are anchored in the realities of leading a public library system.
Organizational Architecture is the trusted partner for dozens of public libraries for human resources consulting, recruiting, performance management, and leadership development. Of course, we also help with the recruiting needs of nonprofit and private-sector organizations as well.
If you need help in any of these areas, contact us and check out other success stories to learn more.
Job Opportunity: Library Director for the Birchard Public Library
The Birchard Public Library [BPL], located in Sandusky County, Ohio is seeking an accomplished leader to serve as their next Library Director. This dynamic leadership position reports directly to a seven-member Board of Trustees and is responsible for the executive administration of the organization. The Library Director will provide sound operations and fiscal management while prioritizing patron satisfaction, community collaboration and engagement, and employee relations and development.
Learn more about the opportunity here.
About the Library and Community
BPL was established in 1873 by Sardis Birchard [President Rutherford B. Hayes’ uncle] and the library celebrated 150 years of public service to Sandusky County residents this year. The main branch is located in Fremont, Ohio and is undergoing an impressive 8,500 square foot building expansion which will provide space for new, vital community services and will include a state-of-the-art technology training room, sound and video productions studio, new children’s area, dedicated teen room, meeting rooms, reading garden, and more. The library has three additional branch locations, a strong Foundation with a one-million-dollar endowment, and an active Friends group that provides additional funding and support.
BPL’s mission is to meet the information, education, and recreation needs of the residents of Sandusky County, to provide easy and equal access to materials in their variety of forms, and to develop broad community awareness of the library and its services. For more information about BPL, visit: birchard.lib.oh.us.
Located on the Sandusky River and rich in local history, Fremont is a tight-knit, friendly community with a recently revitalized downtown/historical district featuring boutiques, gift shops, restaurants, and other attractions. The area also boasts many beautiful outdoor parks and natural recreation areas and is located less than 30 miles from the world-famous Cedar Point amusement park, Marblehead/the Lake Erie shore and islands, and the metro-Toledo area.
Position Qualifications and Compensation
Qualified candidates will possess:
- Five or more years of experience in operations and prior library management experience.
- Experience in fiscal oversight of an annual budget, and the ability to advocate for public library levy funding and support.
- Experience collaborating and partnering with trustees, civic/community partners, local businesses, and other key stakeholders.
- Experience improving facilities, collections, programs, and workforce development.
- Experience implementing policies and upholding the principles diversity, equity, and inclusion [DEI] and intellectual freedom [ensuring free, equal, and confidential access to information for all people of the community.
- A master’s degree in a relevant discipline.
A generous compensation package includes a competitive starting pay range minimum of $90,000; healthcare benefits include generous paid time-off allowances; medical, dental, vision, and pension plans; and more.
To Apply
To be considered for this position, please submit your resume and a cover letter [including salary requirements] to: ryansheehan@oahumanresources.com. Applications will be accepted until the position is filled. The Birchard Public Library is an Equal Opportunity Employer [EOE].
Client success story – Architecture and engineering firm
We’ve been working with great clients for over 16 years and one of the sectors we’ve done a fair amount of work is in the engineering and architecture space. Considering ‘Architecture’ is part of our name, it’s not surprising, right? Our latest success story highlights our human resources consulting and the work we do assisting organizations with assessing their hiring, retention, and pay practices.
The client is an architecture firm in Cleveland, Ohio. They are a multi-disciplinary firm led by architecture and supported by engineering and construction services. Their comprehensive services streamline project management and create continuity for their clients. They also provide construction management and services in several engineering disciplines. Their civil engineer department serves as municipal engineers for three northeast Ohio cities.
Our project partners were the President and Chief Financial Officer. Our work for them entailed:
- Defining roles and responsibilities and organizational structure and making recommendations on how to enhance them to operate more efficiently internally while meeting the changing needs of their clients.
- Analyzing compensation and making recommendations on how to compete more effectively in the marketplace and structure base and incentive programs to be more meaningful.
- Performed a talent acquisition strategy analysis including a competitive analysis of employer branding, job branding, and messaging to the labor market.
- Recommendations on ways to communicate and reinforce organizational values using communications, coaching, and performance management.
Mid-sized organizations sometimes struggle with attracting top talent, especially when competing with national or global organizations that have more resources to go after it. Having a clearly and concisely defined employee value proposition with the analysis and tools to back it up can give them the competitive edge they need.
Our team of workforce strategy and talent acquisition professionals have diverse experience helping all types of organizations, from private -sector companies to nonprofits and public-sector organizations. Want to know more? Check out some of our other success stories and contact us to see how we can help you with your compensation program.
When outsourcing makes sense
By Asha Vyas
Libraries are a hub of information and are transforming into spaces for social services, virtual offices, and cyber connectivity. To manage that evolution, knowing the financial story of your library is critical to planning, funding growth, and gaining community support. Translating that story begins with the Fiscal Officer [FO].
The days of the ‘accidental bookkeeper’ who is tasked with entering transactions into the accounting system because they are good with numbers are over. This approach exposes the board to risk. Volunteer board members and directors should understand the importance of a technically knowledgeable FO. In fact, some situations of fraud and mismanagement can lead to boards and directors being personally liable.
A strong library FO plays a pivotal role in the board’s fiduciary responsibility of public funds. They should be able to articulate the big-picture financial overview as well as the stories in the details. Sometimes the FO may not have the time, staff, or skills to explain your organization’s financial health.
In those circumstances, a partnership with a good outsourcing provider is a value-based solution to supplement and support. This reduces stress on the internal team and provides information to educate your board and community on the stewardship of public funds.
Outsourced services can include
- Daily and weekly transactions
- Month-end reconciliation and board reporting
- Year-end financial statements, analysis, and budgeting
- Special projects – new software, grant sourcing and compliance, and data visualization
There is no ‘standard’ cookie-cutter way that libraries operate so the outsourced firm needs to be prepared to work with each library’s unique situation.
There are plenty of reports highlighting the shortage of accounting professionals. Proactively looking at outsourcing as a solution before you need it prevents the pressure of reactive decision-making. Outsourcing can be temporary or permanent. It can supplement and support an existing internal department or be a completely independent team. With outsourcing, you only pay for what you need.
Outsourcing benefits
- Cost – cost-effective access to specialized services, and support from subject experts
- Fresh perspective – evaluating existing processes or technologies to find efficiencies
- Education – Training of existing staff on current or new processes
- Support – outsourcing can help fill gaps for a temporary need or special projects.
- Separation of Duties – bringing in external help provides another level of internal control
At YPTC, we do one thing, and we do it well: financial management for nonprofits and similar organizations like libraries. YPTC provides accounting, financial reporting, and best practices quickly, efficiently, and accurately. We support organizations of all sizes, and in any location: onsite or remotely. We help them turn their accounting departments into a source of strength, so library leaders can focus on the work that counts: their mission. External experts help organizations that lack the budget or technically skilled staff form a strong internal finance department.
Asha Vyas is a Training Content Specialist with Your Part-Time Controller, LLC [YPTC]. YPTC provides customized accounting and financial management services for over 1,200 nonprofits nationwide. Since 1993, YPTC has built transformative, personalized solutions based on clients’ financial needs, including cash flows, funding streams, financial concerns, and internal control challenges. YPTC is committed to educating organizations through webinars and resources that provide relevant takeaways and best practices. To learn more about YPTC and browse our content, visit www.yptc.com.
It’s our SIXTEENTH Anniversary!
It’s our Sixteenth anniversary. We couldn’t have made it this far without a great team of Amanda, Alex, Heather B, Cody, Melissa, Ryan, Heather M, Cari, Natisha, and all the others who have been a part of our success over the years. And of course, thank you to all of our great CLIENTS…you’re the best!
THANK YOU!
Mark
Client success story – Baked goods manufacturer
We’ve had the chance to work with many great private-sector companies over the years. In fact, when we started most of our work supported financial services, healthcare, professional services, and manufacturing. Our latest success story highlights our human resources consulting and the work we do assisting organizations with assessing their pay practices and improving their compensation processes.
The client is a baked goods manufacturer and has facilities all over North America. They make and package cookies, bakery bars, artisanal breads, and many other delicious products.
Our project partner was the Senior Director of Human Resources. We had the opportunity to work with them in the past when they led the Human Resources function for a local community bank. It was great to work with them again! They said:
We engaged OA to conduct a compensation study for our organization. Their team was incredibly collaborative and worked closely with us to understand our unique needs and goals. One of the key areas we needed help with was benchmarking of all our hourly and salaried positions. This was challenging because we have grown by acquisition and not only had to address the numerous regional differences in pay but also the pay practices that were in place before. OA provided detailed analysis and recommendations that have helped us make informed decisions about pay structures and address geographic differentials.
Additionally, we were impressed with their familiarity with food manufacturing. They had previously conducted work for similar organizations and were able to hit the ground running, leveraging their past knowledge and experience to our advantage.
Throughout the project, OA worked closely with us to locate and assess survey data that was specific to our industry. They understood the importance of having accurate and relevant data to inform our decisions, and they went above and beyond to ensure that we had access to the most current and reliable information. They assisted us in identifying and analyzing relevant compensation surveys and provided guidance on how to interpret and apply the data.
Compensation analysis is an area in which we have deep expertise. Our team of compensation professionals has diverse experience helping both large, private-sector companies to nonprofits and public-sector organizations. Want to know more? Check out some of our other compensation projects then contact us to see how we can help you with your compensation program.