Job Clarity and Organisational Direction are Key to NFP Employee Engagement

Successful employee engagement in the not-for-profit sector is highly dependent on clarity around job roles and organisational direction rather than pay rates, according to Pro Bono Australia’s annual NFP salary survey.

The latest research found that employee engagement was positively associated with a broad range of organisational performance measures but clarity around specific roles and organisational strategies delivered a significant impact in job satisfaction.

Now in its fifth year, the Pro Bono Salary Survey is the largest of its kind and includes responses covering 1,366 cases across 16 positions, with the aim of providing reliable salary benchmarking data for key roles in the not-for-profit sector.

The survey was conducted in association with Beveridge Consulting and supported by HESTA and accounting firm HLB Mann Judd.

Some 72 per cent of respondents were female and 28 per cent were male. Practical experience in the field of work was 17.8 years overall. Most of the respondents to the survey had Bachelor degrees or higher and 71 per cent of respondents worked five days or more, followed by 13 per cent working four days.

“The research demonstrated particularly strong links between measures of clarity and employee engagement, followed by resources and then pay,” Andrew Beveridge from Beveridge Consulting told Pro Bono News.

“While the results are generally positive, having 18 per cent of respondents not responding positively about their understanding of their organisation’s strategy and direction was somewhat concerning in such a senior group.

“Engagement levels we found are high, probably higher than you would generally expect. The vast majority of people were engaged or highly engaged within their organisations. So we looked at three areas of engagement around clarity, resources and pay.

“We looked at two elements of clarity. One was being clear about the strategy and direction of the organisation… the big picture clarity of where the organisation is headed, and the second part is around quite specific roles – knowing what is expected of me in that role in the broader strategy.

“Overall, we found that most people are pretty clear about both the strategy and their role. But if we look at the people who aren’t clear about those things it has quite a significant negative impact on engagement.

“Of the things that we looked at that could potentially erode someone’s engagement with the organisation, clarity was clearly the frontrunner there and it would be the number one priority for a not-for-profit organisation to address.”

The survey found that up to 82 per cent of participants said they were clear about the organisations strategy and direction.

“The flipside was that 10 per cent weren’t clear and the rest were neutral. Another 87 per cent were clear about what was expected of them in their role. When role clarity wasn’t there, engagement dropped down from 87 per cent to 26 per cent. So a big reduction for those who weren’t clear about their role.”

Beveridge said the link between pay and employee engagement was “particularly interesting”.

“When surveying employees about workplace conditions, ‘pay’ often comes up as the most pressing issue. But does that mean that addressing perceptions around pay will increase employee engagement? Does pay and employee engagement have a closer link than clarity or resources?

“We looked at two elements of pay, namely pay being seen as reasonable when compared to other similar organisations and pay being fair when compared to others within the same organisation.

“People were least positive about their pay being reasonable when compared to other organisations, with just 55 per cent of respondents believing this to be the case. Ratings of pay fairness within organisations were more positive, with 65 per cent believing they were paid fairly.”

He said the link was stronger between internal equity of pay and employee engagement, than for external competitiveness of pay and employee engagement.

“This aligns with anecdotal observations that people tend to become more upset about their pay being unfair when compared to their peers within an organisation, than they are about how their pay lines up against other organisations,” he said.

The data collected for the Pro Bono Salary Survey also provided an opportunity to examine perceptions of pay competitiveness against actual pay competitiveness.

To do this, Beveridge said the survey looked at just the data provided by CEOs (425 in total).

“The competitiveness of their pay was calculated by comparing individual salaries against the median salary for all CEOs,”  he said.

“We found that CEOs typically don’t have an accurate awareness of the competitiveness or otherwise of their pay. Going one step further, we found an almost zero correlation between how competitively CEOs are paid and their employee engagement score.

“Being paid well does not necessarily mean the person will be more engaged, and vice versa. It appears that perceptions relating to pay have a stronger relationship to employee engagement than reality.”

Beveridge said the research highlighted several other interesting findings including a strong link between pride in the organisation and recommending the organisation as a place to work and an equally strong link between job satisfaction and anticipated staff turnover (ie wanting to stay with the organisation more than one year).

It also appears that CEO pay rates have not increased in the last 12 months.

“We looked at pay across a range of organisation sizes and overall we saw a decrease in pay. This wasn’t likely to be decreases for individuals but we are certainly not seeing a strong forward movement in pay. Depending on the size of organisations, CEO pay has gone up slightly in some cases but it has gone backwards in others,” Beveridge said.

“Wage growth in Australia more broadly is historical lows – currently below 2 per cent. So we need to look at things outside of pay to motivate people and what we suggest is that clarity is a good place to start and also resources as well, so that people have the tools to do their job well and aren’t faced with too many significant barriers to performance.

“People are not in a great position to know how well or otherwise they are paid. While that doesn’t necessarily have a high impact on their engagement in the organisation, boards and CEOs can use salary benchmarking to build greater clarity around where they sit in the market and why.”

Pro Bono Australia founder and CEO Karen Mahlab AM said the Pro Bono Salary Survey was “indispensable”.

“This is the largest survey of its kind in Australia and therefore an indispensable decision-making tool on remuneration for all C-suite executives and boards,” Mahlab said.

“The social sector is characterised by its diversity. Consequently, we have drilled down into sectors within the sector, revealing distinct variations as well as presenting the research sorted by location, job title, organisational size and turnover.”

Accounting firm HLB Mann Judd said it was honoured to again be a part of the Pro Bono Salary Survey.

“Increasing challenges facing not for profits such as additional needs, new programs, more wants from members and those they service, fundraising and many other factors mean that having the right people in the right roles is essential,” head of not for profits at HLB Mann Judd Darryl Swindells said.

HESTA CEO Debby Blakey said: “HESTA is a specialist industry super fund dedicated to health and community services. We understand the level of work invested in creating this benchmarking tool which is why we’re pleased to get behind it.”

The Pro Bono Salary Survey provides exclusive data which is broken down by salary, superannuation, allowances, professional registrations, memberships, insurance and subscriptions, and bonuses and incentives.

It can be purchased in full, as a special executive edition or in sections according to individual roles. Find out more here.