Whether at a CASE conference or other gathering of senior advancement executives, the topic of turnover always
arises: How do we attract and keep talented staff? Could offering bonus pay help?
Incentive compensation is not prevalent in advancement; some liken it to paying gift officers a commission. Another complaint: Such programs often only apply to fundraisers, excluding other staff who are pivotal to advancement.
No part of a donor's gift should be paid to a fundraiser as commission. But a well-crafted incentive compensation program that includes all staff members can boost performance and lead to longer tenures—and stronger relationships with donors.
A new stimulus package
Upon my arrival as president of the University of Cincinnati Foundation in 2013, I revamped the incentive program. Since then, we've stopped hemorrhaging 25 percent of our staff each year and exceeded our annual fundraising targets. The key is administering the program with a commitment to integrity and fairness. There can be no favorites.
The program proffers annual bonuses to staff who meet individual goals and help the foundation attain organizational ones. Here's how it works:
All 165-plus employees participate. This includes alumni staff, gift processors, and administrative assistants. Inclusivity recognizes that front-line development officers aren't the only ones who help the organization perform.
The goals are clear. At the beginning of each fiscal year, employees learn what accomplishments will qualify for individual bonuses. These measures are customized for each employee and require staff to exceed their standard goals. Putting on improved events, as measured with satisfaction surveys, for example, would earn events staff members extra compensation. Department managers who balance their budget and identify cost savings without compromising service would qualify for bonuses.
The bonuses are meaningful. All staff members can earn a bonus of 1 percent of their pay if the foundation reaches its base goal; 4 percent if we hit our stretch goal. For meeting individual goals, the bonus is 10 percent for vice presidents and full-time fundraisers; 6 percent for assistant vice presidents (who aren't fundraisers); and 2 percent for other staff. The higher percentages favor the fundraisers and leadership primarily responsible for leading and conducting the external-facing work.
Longer tenures, lasting relationships
The bonus program has transformed the UC Foundation. We had record turnover in 2013: 25 percent of staff—half of whom were fundraisers—left voluntarily or involuntarily. By 2014, the number dropped to 4 percent of development officers. The figure was 1 percent in 2015 and 6 percent in 2016. Marginal or unacceptable performance reviews have also dropped significantly.
Our fundraising performance has increased as well. Our eight-year annual fundraising average coming out of the $1 billion Proudly Cincinnati campaign was $127.6 million. This became our new baseline, and we've exceeded it every year, ending 2014 up 134 percent, 2015 up 110 percent, and 2016 up 203 percent.
Staff understand that we are in a long-term relationship with our constituents and that staff performance affects our alumni's and donors' experience with the organization. That, I believe, is why turnover is down and fundraising is up.
UC Foundation's experience is consistent with the findings of a June 2016 Marts & Lundy report, Insights into Incentive Compensation. The report is based on a survey of institutions that offer incentive compensation as well as those with a metrics-only program that tracks and evaluates employee performance on measurable activities. Metrics common to both program types include dollars raised and visits and solicitations made. Sixty-seven percent of incentive compensation respondents, compared to 25 percent of metrics-only respondents, found that employee retention improved.
"Rather than pushing short-term gains from donors," the report concludes, "incentive compensation programs are designed to create longer-term relationships between advancement employees and their institutions, and this strategy appears to work. More stable relationships between fundraisers and their institutions can translate to stronger relationships between the donor and the institution."
Over the past three years, I've worked to create the best-in-class fundraising organization in the U.S. Staff members make this happen. They need to believe in our mission and direction. They need to feel supported and respected. They need to know that their work is appreciated. Incentive compensation is a way to say, "Thank you for your efforts-you are a valued employee of the organization."