NGOs and Salary Allocations

ngos skills recruitment salaries human resources
Thursday, 14 February, 2008 - 07:40

South African NGOs need to be aware and take cognisance of the fact that skills shortages and high turnover have become a global phenomenon.

The New Reality for South African NGOs

South African NGOs need to be aware and take cognisance of the fact that skills shortages and high turnover have become a global phenomenon. Skills are easily transferable across international boundaries and employees have an abundance of choice in an age where access to information is just a broadband connection away.

Globally employee turnover rates are approximately 25 percent per annum. This means that on average organisations are replacing their entire workforce every four years.  It has been estimated that the cost of losing an employee is 150 percent of the total cost to organisation of employing that employee. There are separation, recruitment, induction and learning time and costs involved when someone leaves your organisation. If you loose a manager who has been paid say R300 000 per annum, the cost of replacing that person and getting the new manager to the same level of productivity will be in the region of R450 000. These horrifying statistics have important implications for donors, CBOs, strategic partnerships, cost control, employee morale and delivery within the South African NGO sector.

South Africa has added complexities, as in addition to technical skills shortages, there is a general shortage of basic managerial and leadership competencies. This is the direct result of an education system that has significantly deteriorated in its ability to provide adequate developmental opportunities in the core areas of verbal reasoning and problem solving. 

The statistics below provide an insight into just how serious the situation is in South Africa

  • 1.2 million children enter school each year – 500,000 matriculate and only a fraction of
    them with maths and science
  • Only 15% of university and Technikon entrants are graduating annually

For organisations in South Africa the challenge is not just skills retention – skills and competency development is just as critical.

Globally and in South Africa there has been a paradigm shift with regard to people and organisations.

Table 1 below, reflects the difference between the old and new shifting paradigm reality

The Old Reality

The New Reality
People need organisations

Organisations need people

Capital and geography are the competitive advantage

Talented people are the competitive advantage

Better talent makes some difference

Better talent makes a huge difference

Employees are loyal and jobs are secure People are mobile and their commitment is short term
People accept the standard package they are offered People are now demanding and getting much more
Jobs are scarce

Talented people are scarce

1. Market related salary levels in the NGO, international and private sector organisations:

The market for any job category is “where you loose your labour to or attract your labour from”

Table 2 below, shows the difference between “total cost to company” (this represents the basic salary or cash component plus the value of any guaranteed or variable performance incentive bonus as well as all guaranteed cash and non-cash fringe benefits) salaries and comparative ratios or percentage differences between independent NGOs, international NGOs and private sector organisations in South Africa for six common job categories within these sectors:

Market related salary levels and comparative ratios as at July 2007

Position Title

Independent NGOs

International NGOs

Comparative Ratio* or %
Difference compared to
 Independent NGOs

Private Sector

 

Comparative Ratio* or %
Difference compared to Independent NGOs

CEO / Managing Director for an organisation which has an annual turnover of R30,0 million or less per annum 520,000 637,380 122,57
+22,57%

985,201

189,46
+89,46%

Operations or Programmes Manager

480,000

501,046

104,38
+4,38%

706,480

147,18
+47,18%

Project Manager

377,238

410,853

108,91
+8,91%

526,773

139,63
+39,63%

Personal Assistant to the CEO or Executive Director

154,261

251,880

163,28
+63,28%

215,849

139,92
+39,92%

Receptionist

93,304

99,602

106,74
+6,74%
88,789 95,16
+9,16%

Cook / Cleaner / Messenger / Filing Clerk

51,917

65,675

126,49
+26,49%

67,935

130,85
+30,85%

Overall comparative ration or percentage difference compared to independent NGOs

100,0

 

122,06
or 22,06% more

 

140,37 or 40,37% more

*The comparative ratio shows the percentage difference between two sets of figures. The comparative ratio of 1 or 100 equals the same amount. Less than 1 or 100 equates to less, and above 1 or 100 equates to more than or the reverse.

Table 2 above, shows that the private sector is paying over 40,0% more than independent NGOs, while international NGOs in South Africa are also paying in the region of over 22,0% more than independent South African NGOs.

The above table also supports the statement that “South African NGOs underpay senior staff and overpay support staff” in the article “The Harrowing Tale of NGO Human Resource Management” on the SANGONeT website.  For executive and management positions the gap between the private sector and independent NGOs in South Africa is much greater than for lower level support staff. It does not take rocket science to realise that it is in the specialised, skilled, managerial and executive levels where skills are globally in short supply.

Hence the importance of ensuring that when looking at market related salary levels for any job category, NGOs now more than ever need to ensure that they target and pay according to the correct market for the job category concerned. This market could be the private sector, other NGOs in relevant sectors such as Housing, Health including HIV and AIDS, Education and Research, Social Services, etc. “is this where your organisation is loosing your labour to or attracting your labour from?”

2. Salary and other retention and attraction strategies:

During 2007, the South Africa Reward Association (SARA) commissioned a Salary Retention Survey to be carried out.  The aim of the survey was to see how organisations use salaries to attract, retain and motivate skills and talent.

Sixty-five top organisations in the private sector participated in this survey. Whilst this research was related predominantly to private sector organisations, South African NGOs can also learn from this research. According to the research, the four main reasons why people leave organisations is due to the following:

  • Guaranteed salaries not being market related
  • Lack of individual employee recognition and career development
  • Relationship with immediate boss
  • Work-life balance

South African NGOs should develop and implement the necessary human resource strategy interventions to address the above risk areas in their organisations. Whilst paying the correct salary levels would go a long way towards retaining talented and skilled employees if the employee does not have a work-life balance, if the relationship with his or her immediate boss is not satisfactory the employee will still leave your organisation!

3. Concluding comments:

Salary is one of the most critical components of a human resources strategy. Now more than ever it is essential that South African NGOs must pay their “hot, core or scarce skills” according to the correct market for the relevant job category. The cost of not doing so will result in more and more South African NGOs closing their doors in future than in the past because of the skills shortages and high turnover which has become a global phenomenon.

If South African NGOs want to ensure programme delivery as well as their long term sustainability, they have to start paying due diligence to attracting, retaining and investing in people. The cost of not doing so and the effect on our beloved South Africa is too adverse to contemplate!

- Written by Averile Ryder Accredited Global Salary Specialists’ Founding Member, Averile Ryder
Tel: 031-262 8889 Fax: 088-031-262 8889 Cell: 083 293 2037 E-mail: averileryder@mweb.co.za.

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