Compensation: BVARI’s
Philosophy and Practice
Presented by: Becki Amaral
BVARI Annual Business Meeting
August 12, 2011
Boston VA Research Institute, Inc.
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Issues:
• Increased IRS Oversight
• Incentives for change
• “Reasonable compensation”
• Private inurement concerns
• Founded on BVARI’s philosophy
• Develop a process
Boston VA Research Institute, Inc.
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IRS Requirements
• Requires 3 to 5 comparable organizations
that are similar in size – both number of
employees and revenue, in the same
geographic area, and that have the same
focus activity.
Boston VA Research Institute, Inc.
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Compliance
• Since we were unable to find three
comparable organizations, IRS
informed us that we could use salary
survey information for non-profits in
our area.
Boston VA Research Institute, Inc.
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Surveys Used
• Economic Research Institute, “Salary
Assessor” tool licensed to BVARI.
• Third Sector New England, “Valuing Our
Nonprofit Workforce 2010”.
• Total Compensation Solutions, LLC,
“2009-2010 Not-For-Profit Compensation
Survey”.
• Robert Half Corp., “2011 Salary Guide”.
Boston VA Research Institute, Inc.
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Additional Incentives for Change
 Retention of valuable employees
 Compliance concerns for organization
and Board of Directors
 Need for written philosophy and process
to guide compensation decisions
Boston VA Research Institute, Inc.
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“Reasonable compensation”
Training and experience
Duties and responsibilities
Time and effort devoted to organization
What comparable organizations pay
The use of a process to determine
compensation
Boston VA Research Institute, Inc.
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Private Inurement Concerns
“A section 501(c)(3) organization must not
be organized or operated for the benefit of private
interests, such as the creator or the creator‘s
family, shareholders of the organization, other
designated individuals, or persons controlled
directly or indirectly by such private interests. No
part of the net earnings of a section 501(c)(3)
organization may inure to the benefit of any
private shareholder or individual. A private
shareholder or individual is a person having a
personal and private interest in the activities of
the organization.”
Boston VA Research Institute, Inc.
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Proposed Philosophy of Compensation
Compensation is the value we place on
the knowledge, skills and abilities an
associate brings to the job. It is the intent
of BVARI to employ the best individuals
with the necessary skills for the function in
which they operate and to pay them
according to the value they bring to the
organization.
Boston VA Research Institute, Inc.
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CANDIDATE INTERVIEWS
•Based on job description and minimum job qualifications
•Knowledge, skills and abilities
•Behavioral questions
Boston VA Research Institute, Inc.
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EVALUATING THE CANDIDATES
3 Components of BVARI’s Compensation Analysis Model:
1) Education or training
2) Experience that outlines the candidate’s broad
generalist knowledge of the job role
3) Expertise in one or more areas considered essential
components of the function
Boston VA Research Institute, Inc.
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EVALUATING THE CANDIDATES
Level 1 – Entry level
Level 2 – Qualified
Level 3 – Accomplished
Level 4 – Advanced
Level 5 – Expert
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COMPENSATION PROCEDURE
Interview
Candidates
Annual
Review
compensation
Decide on
Compensation
Evaluate
Candidates
Select New
Hire
Boston VA Research Institute, Inc.
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EMPLOYEE SATISFACTION:
Salary Top Cause of Employee
Dissatisfaction: Salary is by far the
leading cause of employee dissatisfaction
among U.S. workers, cited by 47% of
respondents in a recent survey.
Boston VA Research Institute, Inc.
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EMPLOYEE SATISFACTION
• Other leading causes include:
•
workload (24%),
•
lack of opportunities for advancement (21%)
•
employee's manager or supervisor (21%).
• It is important note that a strong correlation exists
between employee satisfaction, customer
satisfaction and, ultimately, a company’s revenue
and profitability.
Boston VA Research Institute, Inc.
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Next Steps
• Review all current BVARI employees to ensure that our
compensation philosophy is applied;
• Develop a checklist of components and scoring that will be
consistent with applying a level (1-5) to all new
employees;
• Orient all supervisors and PIs to BVARI’s new pay
philosophy
Boston VA Research Institute, Inc.
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Questions
• Becki Amaral
labamaral@verizon.net
Boston VA Research Institute, Inc.
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