Salaries are always one of the most difficult topics any organization has to deal with — and that is no different in the development sector.
“For many years we have had this unwritten rules that NGO workers have to make a lot less money than they would have if they worked for the private sector,” said Jake Harriman, the founder of Nuru International, a social venture based in the U.S. with projects spread across rural villages in developing countries.
This rule does not always apply anymore. At least not in Kenya where NGO workers are reported to be among the highest paid in the country based on the 2016 Economic Survey released by the Kenya National Bureau of Statistics. But that has caused its own problems with an apparent disparity between what local NGO workers are paid when compared to their expat colleagues.
NGOs in Kenya are putting different measures in place to ensure transparency in salaried compensation in order to improve how their organizations work and also as a way of retaining talented staff.
A recent directive by the NGO Council in Kenya has also required that human resource managers of international and local NGOs harmonize the salaries between local and international staff. This is expected to protect the interest of local workers in the country.
“It also indicated that there was a huge salary disparity between Kenyan and foreign staff leading to a trend of career expatriates hopping from organization to organization in search of lucrative perks at the expense of qualified Kenyans,” said Hellen Kong’ong’o, regional director of human resources at RTI Africa, a global nonprofit research institute that provides technical assistance and institutional support across sub-Saharan Africa.
One of the goals of the NGO Council in Kenya is to ensure that NGOs only engage expats when the skills that these professionals bring are lacking in the local market. At the most senior level, this is not usually a problem. “This is often because the local staff can see the benefit — experience and skills — that the international hire brings. Often these are skills that are not readily available in the local market,” Kong’ong’o said.
It is when expats are recruited for midlevel or entry level positions and paid a higher salary that controversy ensues.
“The local staff would view the pay practices as discriminatory on the basis that other local staff in similar roles would be paid a lot less than a midcareer expat who brings no [extra] value,” said Kong’ong’o.
The core challenge that executives and human resource managers are left to tackle is determining how to recruit, engage and retain the best and brightest people without compromising on the salary policy.
For expat vs. locals: Stay true to the market
Nuru’s Harriman is a big believer that organizations need to pay market price for talent — whether local or expat — but that those market prices can be different. “I believe that the advice you can give people is try to stay true to the market,” he said.
Nuru International depends on expats to train locals who then take up managerial positions within the organization in their communities. At least two years is needed for a successful knowledge and skill transfer training. This means the need to engage the services of an expat professional for that length of time.
“If you don’t want volunteers that are looking for six months experience or kids out of college, or people with one year on the field, you have to be able to pay them because there is an opportunity cost for them,” Harriman said.
One of the approaches that is used at Nuru is to pay the expat in Kenya “the market rate for Western NGO workers,” which is not as high as what he or she would have earned in his or her home country but way higher than what locals earn.
In an ideal world, Harriman said, he would pay those two individuals the same amount. “But the unfortunate reality is that if I underpay [the American], I am not going to get the right level of quality of a team leader that can stick around long enough,” he said.
And if he pays the local country director as much as the expat who works as a team leader, it would make the Kenyan a very wealthy person. “And it does screw the market a little bit and it also attracts the wrong kind of people,” Harriman said.
For inpats vs. other locals: Leave it open to negotiation
Inpats is a term that describes those development workers with international work or education experience who wish to work in their home country, while other local workers are professionals with both local education and work experience.
New employees — whether inpat or local — are placed on higher grades based on their previous salary history. “This sometimes accounts for why two staff on the same job level and scope earns different salaries,” said Jacqueline Athieno, regional human resources manager at Relief International.
In a bid to prevent controversy over salary disparity between these groups, some NGOs often set a salary range and leave it open to negotiation during the recruitment process, like how it is done in the private sector.
“Most salary decision in the humanitarian field is made based on the negotiation skills of the candidate,” said Athieno.
Involve HR department and local consultants
When it comes to hiring a new employee, the management team of every organization should involve the HR department from the beginning of the process to ensure all salary rules and regulations are followed. “The request for recruitment should be signed off by HR to ensure that the position is placed within the right grade,” Athieno said.
Understanding how the market works and getting the right salary from the beginning also helps NGOs avoid losing talent to other organizations or attracting the wrong employees who just want to earn a higher salary.
“What we have done that has worked well for us is to hire HR consultants who understands the labor market in their country really well or find local organizations willing to share labor market information,” Harriman said
And by doing so, the organizations agree to pay country directors or program managers the same salary to reduce talent poaching or job-hopping, he said. When employees who would normally hop jobs for better salary see this uniformity, they remain in their position.
Develop a well-defined salary structure
Armed with a good grasp of what expats, inpats and locals who hold the same position earn in Kenya, an NGO should create a well defined salary structure that matches their needs and budget.
As the NGO grows, this structure will also guide its compensation policy to ensure that it keeps up with the competitive process of recruiting and retaining the best talent. “We have a salary structure that is developed based on multisector data; NGO, USAID local compensation plan and other sector salary data,” said Kong’ong’o.
This empowers HR to set job classifications and define roles, duties and responsibilities; and align them with the grading in the NGO’s salary structure. That salary scale also allows for staff categorization to reflect packages and benefits offered based on the countries where RTI operates.
Kong’ong’o gives an example of how this works for an inpat returning from a market where they were on an international scale, “RTI does not pay salary in foreign currency,” she said.
This mean inpats who are employed locally are compensated based on the salary structure already established. They are then rewarded for performance and skills development.
In addition, the HR team also talks to potential candidates about other benefits of joining the organization that are not directly linked to monetary compensation — a factor often overlooked when focusing just on salary size.
“For some level of staff, they need more than just compensation for motivation,” Kong’ong’o said.
Keep the salary structure under constant review
Balancing the desire to have fair and transparent salary policies with the need to attract top-level talents is no small feat. But, it is achievable as long as employers keep their salary structure up to date to match market trends.
“Every year, all countries of operation participate in the annual salary survey to benchmark our salaries against the market,” said Athieno, still describing what has worked for Relief International.
This process is followed by an analysis of the data collated from the survey to see how many of their staff members are below the market.
“Based on this [finding] we review salary scales and salaries for the most affected staff,” she said.
The headquarters office also participates in order to stay informed about the changing landscape of expat salaries and benefits.
“At the Kenya office, in addition to the global benefits, we also do lots of surveys and benchmarking exercise with what the other NGOs offer,” she said, giving an example of how expats only receive housing allowance based on the local cost.
A successful salary review process is one done while actively engaging the employees. “Make the policies clear,” Athieno said, “and communicate to all employees to empower them.”