280 Human Resources Management for Public and Nonprofi t Organizations
Conclusion
Compensation systems should be designed with the intent to attract,
motivate, and retain profi cient employees. A number of factors determine
the salaries paid to public and nonprofi t employees: the salaries paid in the
external labor market, federal laws such as the FLSA and the Equal Pay
Act, and the responsibilities and KSAOCs required to perform the jobs,
as well as an agency ’ s ability to pay competitive wages.
Equity refers to the perception by employees that they are being paid
fairly. External, internal, and employee equity infl uence compensation
systems. Market factors infl uence external equity, job evaluation or job
worth infl uences internal equity, and employee equity is said to exist when
employees performing similar jobs are compensated based on their indi-
vidual contributions. Broadbanding, skill - based pay or pay for knowledge,
merit pay, and gainsharing are examples of some of the innovations in
public and nonprofi t sector compensation systems.
Public and nonprofi t executives are hired for their professional experience
and expertise. They lack job security and serve at the discretion of elected
offi cials or board members. Because of this unique aspect of their employ-
ment, executives typically negotiate employment contracts that specify the
level of compensation and benefi ts they will receive. Executives of some
nonprofi ts also receive bonuses on their agency ’ s performance.