Getting NFP salary benchmarking right is harder than most boards realise. Too low, and you lose good people to the private sector. Too high without proper evidence, and funders start asking uncomfortable questions.

The truth? Most not-for-profit organisations are making pay decisions based on incomplete data or gut feeling, and that creates real risk.

Here is a practical, honest guide to doing a salary review properly.

Why NFP Salary Benchmarking Actually Matters

Staff turnover is expensive. Recruiting a single mid-level manager can cost thousands in lost productivity, recruitment fees, and training time. When pay is out of step with the market, your best people quietly start looking elsewhere.

Competitive remuneration in the NFP sector is not about matching corporate salaries. It is about being fair, transparent, and consistent, which builds trust across your whole team.

Step 1: Define the Roles You Are Reviewing

Before pulling any data, get clear on what you are actually measuring.

• Write or update position descriptions for each role
• Identify the level of responsibility, decision-making authority, and qualifications required
• Group roles by function (e.g., frontline support, middle management, leadership)

Vague job titles create messy comparisons. A “Coordinator” at one organisation is a “Manager” at another. Clarity here saves time later.

Step 2: Gather Reliable Salary Data

This is where many organisations fall short. Using one or two informal sources is not enough.

Strong remuneration benchmarking draws from:

• Industry salary surveys specific to the community and the NFP sector
• Government and peak body data relevant to your region
• Professional HR consultants with NFP-specific experience, such as Pathways Australia
• Internal pay history and current pay bands

Pathways Australia supports NFP organisations through this exact process, helping teams access sector-relevant data rather than relying on generic market reports that do not reflect the realities of community service organisations.

Step 3: Analyse the Gaps

Once you have the data, compare it honestly.

• Where are your current salaries sitting relative to the market median?
• Are there roles significantly underpaid or overpaid?
• Is there pay equity across gender, tenure, or role type?

Look for patterns, not just outliers. A single underpaid role is a problem. A pattern of underpaid roles in one department is a structural issue.

Step 4: Build a Pay Structure That Makes Sense

Effective NFP remuneration reviews do not just fix current problems. They establish a system of guiding policies to be followed in the future.

Consider building:

• Pay bands for each role level
• Clear criteria for how staff move through a band
• A regular review cycle (annually is standard)

This eliminates subjectivity in pay discussions and provides managers with something to have in support.

Step 5: Communicate Changes Transparently

Even sufficent pay increments can be the cause of anxiety in the case they are not properly handled. Be clear and straight.

• Explain the process used to review salaries
• Share what benchmarks were referenced
• Outline how decisions were made

Staff do not need every number. They do need to trust the process.

Common Mistakes to Avoid

• Reviewing salaries too rarely: Annual reviews are the minimum
• Ignoring the full package: Super, flexibility, and leave entitlements all count
• Skipping board involvement: For senior roles, boards should sign off on the framework
• Using only one data source: Cross-reference at least two or three

Build a Pay Culture That Retains Your Best People

NFP salary benchmarking is not a one-off task. It is an ongoing commitment to treating your team with respect and making evidence-based decisions. When done well, it strengthens culture, reduces turnover, and gives your organisation a real competitive edge in the talent market.

Pathways Australia works with not-for-profit organisations across Australia to deliver practical, sector-specific remuneration reviews and HR consulting support that make a genuine difference.

Speak to our dedicated team of experienced NFP Consultants today to arrange your once off or packaged salary reviews.