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Salary Packaging and Employee Retention in the Not-for-Profit World

A strong Employee Value Proposition (EVP) is essential for all organisations fighting to keep their staff in the war for talent. When not-for-profits (NFPs) operate with limited resources, this correlates with short staffing and steeper turnover rates. Retention in the NFP sector can be a challenge. However, new research supports what some managers know – retention isn’t all about salary. In this article, we’ll explore some of the latest employee retention insights and how salary packaging can help employee retention in the NFP world.

The importance of salary packaging in the not-for-profit sector for retention

If you’re in the NFP sector and dealing with limited resources it might be a relief to know that staff retention isn’t all about salary. Recent times have been tough in the sector through the COVID-19 pandemic and with increasing challenges to budgets and funding. PwC’s What Workers Want research tells us that employees’ number one priority is remuneration, however, lived experience implies that other factors are stronger drivers in employee retention.

Generous, and well deserved, tax incentives, particularly around Fringe Benefits Tax (FBT) legislation give NFPs the ability to offer remuneration packages through salary packaging. HLB Mann Judd’s Not For Profit Leader’s Report found that 75% of organisations had a Salary Packaging program in place as part of their incentive structure for their employees. NFP organisations have plenty of opportunities to create attractive packages with the many salary packaging benefits that are available. PwC’s research also found that other factors such as well-being, culture and work flexibility contribute to retention, in total outweighing remuneration and reward. These factors are addressable through salary packaging, giving you a world of opportunity for a competitive EVP and increasing your employee retention.

Benefits of salary packaging for employees

Salary packaging enables employees of an NFP to maximise their remuneration package by allocating some of their salary towards various benefits such as household and living expenses, mortgage or rent payments, loan & credit card debt, or even a novated lease for a car. This reduces their taxable income and helps them save on taxes. It also provides employees with flexibility and choice in tailoring their remuneration package to suit their individual needs and lifestyle, enhancing overall job satisfaction.

Impact of salary packaging on employee retention

According to PwC’s What Workers Want report, remuneration and reward are important components to support retention, although not the only important component. The report identifies the key preferences for employees are:

Remuneration and reward (25%)
Well-being (22%)
Experience (16%)
Ways of working (12%)
Career Development (11%)
Brand (8%)
Workspaces and places (5%)

Salary packaging plays a crucial role in addressing the top three priorities highlighted in this report. It offers financial benefits to employees, ultimately alleviating financial stress. When a well-structured and effectively implemented salary packaging program is integrated into a broader commitment to employee well-being, it significantly enhances employee retention.

Implementing a salary packaging program

As an employer, implementing a salary packaging program is simple with the assistance of an expert organisation. At CBB The Salary Packaging People, we help identify staff entitlements, simplifying the process of designing attractive remuneration packages. We offer assistance with administration and tax compliance ensuring that businesses stay compliant whilst maximising employee benefits. Our education, training, and guidance for both employers and employees, ensures that all parties understand the advantages of salary packaging.

Get started with salary packaging

If you’d like to learn more about salary packaging options in NFPs, CBB The Salary Packaging People have the expertise to guide you. We’re independent specialists in NFP salary packaging. Contact us today or call 03 5229 4200 and unlock the full potential of your income.