Surpassing Expectations Deserves a Reward

In 1985, I decided to stay at school and take some classes instead of going home for the summer.  I took a job at store that sold textbooks that I ended up hating, quit pretty quickly, and then took a job waiting tables and tending bar in a local greasy spoon called Muther’s Cafe.  I didn’t get a lot of hours on my schedule, and the pay was low, so I had to survive on tips.  I learned pretty quickly that just doing what was expected by my customers, mostly cheap college students, was not going to get me more than enough for some cheap beer after work, so I followed the example set for me by coworkers who reaped the generosity of their customers.  I took their orders accurately, checked on them a couple times while they waited for their meals, made sure they were happy with everything, and took care of any problems that might have come up quickly, whether they were my mistakes, the cooks’, or the customers’.  That extra effort soon paid off.  Tips grew bigger and I had my beer money for the week.

Employers pay their workers wages or salaries to perform at a certain level of competency, and if you do what is expected but no more, that is all you should get.  That is pretty much true, whether you work in the business sector, government, or the nonprofit sector.  In my opinion, employers should pay fairly but should not reward mediocrity or failure, although some big businesses seem to do that, according to reports in the media, and that is something for stockholders to change.

However, smart managers who want more out of their employees provide incentives to encourage them to produce more or be innovative so the company will be more effective and profitable. These incentives can be very good for the company and the employee.

Many do not realize bonuses can be available in the nonprofit sector, but if you want one, it takes some planning and negotiation early on.  The AFP Code of Ethical Principles and Standards states “Members may accept performance-based compensation, such as bonuses, provided such bonuses are in accord with prevailing practices within the members’ own organizations and are not based on a percentage of contributions.”  The AFP understands that bonuses can be effective motivators, so it allows them, but it wants to ensure that they are in line with the ethical standards of the organization.

The following conditions are taken from the AFP Code of Ethical Principles and Guidelines (long version), and will give you and your Board guidance when discussing the bonus plan.

“Members may accept performance-based compensation under the following conditions:

(1) the member’s organization has a policy and practice that awards performance-based compensation; and
(2) the policy has the approval of the organization’s governing body; and
(3) the policy and practice include, but are not limited to, the member’s area of responsibility (e.g., are a norm within the organization); and
(4) the criteria are restricted to mutually agreed-upon, pre-established overall goals; and
(5) the criteria for determining the eligibility for, and amount of, such compensation shall exclude any consideration of a percentage of contributions. This should be interpreted as
an absolute prohibition of any reference to, or use of, a percentage of income to determine compensation, either in effect or actuality.”
At the beginning of every year, sit down with your Executive Director and the Board, set specific measurable goals so you know what is expected of you, then determine a fair amount of compensation should you surpass some or all of these goals.  Get it in writing, and place that agreement in your employee file.  If you reach your predetermined goals, you have earned your salary.  If you work hard, go the extra mile and surpass your goals, you should earn your well deserved bonus.
I believe more organizations should consider creating bonus opportunities for their valuable employees.  Rewarding the extra effort of good employees will go a long way in helping organizations create greater job satisfaction and retention, saving them resources spent on expensive employee replacement searches, which in the long run would help them better serve their constituents.



About greatergoodfundraising

Richard Freedlund has been active in the nonprofit sector in a number of ways, both professionally and as a volunteer. He is the founder of Greater Good Fundraising, a business that helps schools and organizations raise money for their programs while accomplishing something positive for the community. After living in Oregon for 27 years, he has returned to his hometown of Rockford, Illinois and hopes to make his mark on the nonprofit sector there. He is the father of a talented jazz musician and the son of philanthropic parents that continue to support multiple causes. To contact Richard for consulting, fundraising, or speaking opportunities, email or reach him on @ggfundraise
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