Watson Wyatt Data Services (www.wwds.com) has included some intriguing new statistics in the compensation surveys released as part of its 2006/2007 Standard Reports Package: profit status differentials which address differences in pay between for-profit and not-for-profit organizations. These statistics suggest that the differences in pay between these sectors may not be as significant as some might guess (although, per my closing thoughts, it will be important to put this conclusion in context with respect to the data it is drawn from).
Released so far and included in the summary below is information on Office (predominantly nonexempt administrative support) positions, Administrative Professional (Finance, Accounting, Marketing, Law, etc.) positions, and Specialized Professional (IT, eCommerce, Engineering, R&D, etc.) positions. The information below focuses on not-for-profit pay, for salary and total cash (salary plus any bonus/incentive) compensation, as a percent of the overall national sample.
For Office positions:
- NFP Salaries = 99.4% of the overall national sample
- NFP Total Cash Compensation = 98.4% of the overall national sample
For Administrative Professional positions:
- NFP Salaries = 99.5% of the overall national sample
- NFP Total Cash Compensation = 98.1% of the overall national sample
For Specialized Professional positions:
- NFP Salaries = 98.1% of the overall national sample
- NFP Total Cash Compensation = 96.8% of the overall national sample
Overall, we can see that all not-for-profit salary levels are within 2%, and all not-for-profit total cash levels are within 4% of the overall national sample. The pay gap, although not large, is more pronounced for total cash than for base salaries, reflecting the fact that bonus/incentive compensation may not yet be as prevalent in the not-for-profit sector. The more technical positions which fall into the Specialized Professional category seem to exhibit the biggest profit status differentials.
As a closing note, it is worth mentioning (based on many years of experience using the Watson Wyatt reports) that the not-for-profit organizations represented in these surveys tend to be bigger and are heavily dominated by healthcare institutions. So, the conclusion that there isn't a significant profit status pay differential would apply more to organizations of that nature; whether or not it applies to smaller tax-exempt organizations or those primarily in the business of human services may be another question.
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