Tuesday, November 07, 2006

Wage Compensation: Attracting & Retaining Qualified Professionals

Two days ago, somebody who chose to remain anonymous left a comment on my blog in response to a recent post entitled Strolling Down Memory Lane. This individual’s comments were a bit off topic and not directly related to my post. However, I thought the visitor made some interesting points making it worthy of uploading as a post of its own. I have included this visitor’s unedited comments below. Immediately following the visitor’s remarks, I offer a reaction of my own. Please feel free to offer your own responses or viewpoints on this subject in the comment section to generate discussion.
"I know this is not a related topic but I wanted to get peoples’ thoughts and opinions on the internal and external perceptions of being a Vocational Rehabilitation Professional. I recently completed an AmeriCorps term with a large vocational rehab company in the metro area. First off I would like to say that the company I worked for did a very good job of trying to provide quality services to persons with developmental and mental health disabilities. I found the mission statement and overall company philosophy to be very sound. I unfortunately walked away from this experience far more pessimistic in regard to a potential career in this field than when I started. For the most part the staff at the company I worked for were very professional, educated, and dedicated to their craft.
What I found disturbing was the universal frustration and contempt on the part of the staff that their work was unappreciated and very poorly compensated. Far worse than that in my opinion was the fact that people in this field should not expect to make market value wages based on education and experience and that a wage in the 20 to 30k range is "what this field pays" to quote an HR employee. I also want to make clear I am not talking about new individuals out of college or people with limited experience. I am talking about seasoned employees and managers with 5, 8, and 10 or more years of experience that are only making 20 or 30 some thousand a year. I watched as very experienced and competent individuals were forced to leave as they could not support their families on the low wages they were being paid.
Thinking this was an isolated experience I talked to as many of my peers serving in different areas as I could to compare notes with. To my surprise the same basic story was relayed to me. The defining moment for me came when I attended the MRA conference. Having the opportunity to speak candidly with professionals from organizations all over the state and country was very educational. I was basically told that I would never make a livable wage working for a non-profit and that they basically string employees along for as long as they can but they will never pay you a decent wage. I was told that if I wanted to make a fair wage that I need to focus on the workers compensation field, private for profit organizations or the Veterans Administration. I can’t begin to tell you how deflating that is to someone who really had an interest in this field.
Mr. Lavin your blog was referred to me by a Corps member who served with your company. She said that although all of the above was unfortunately true in your company that you were an open minded individual and that this would be a good forum to address this issue. I hope you and others in your position take these issues seriously. Your actions and policies have a profound impact on the lives of many people! I would love to hear posts from staff around the State to get their opinion on this. Thank you for providing me the opportunity to express my concern.
Dear Anonymous:
Thank you taking the time to search out my blog and share your concern. You have raised an interesting point and I felt it was important enough to place your comments in a post of its own to encourage others to share their ideas about possible solutions to this problem.
Let me begin by saying that attracting, nurturing, and retaining talented professionals is paramount to program excellence. We cannot run effective customized and supported employment programs without a skilled and stable team of staff. Many of the issues I have been tackling in my blog get down to a simple point-–we need change. And this means we need more leaders who have the skills to introduce and influence change.
In my judgment, this cannot happen without creative professionals who are capable of seeing, developing, and marketing the abilities of unemployed individuals with significant disabilities. Employment programs that experience high staff turnover compromise their service quality and consistency in supporting their key customers. High staff turnover occurs for many reasons but low wage compensation is certainly a long standing human resources problem for the non-profit sector.
The challenges we face today are systemic and not easily resolved by any single agency, manager, or administrator. We do not operate our programs in a vacuum and the salaries of professional positions are influenced by a number of internal and external factors. Many of these factors we have no control over. For example, wage compensation is indeed driven by a wider market supply and demand for professionals with specified skill sets (i.e., job coach, vocational evaluator, job placement specialist, vocational rehabilitation counselor, etc.). Also, wages are influenced by what government agencies and some private funders are willing to pay for discrete services including job placement, training, or supported employment services.
As an internal issue, existing staff salary levels are driven by historical precedence but cannot be ignored because it’s important to maintain wage equity and integrity for all. To illustrate, we could potentially pay a newer staff person at a higher wage rate after receiving a new government grant award. However, this practice this would demonstrate a lack of respect for our dedicated employees who have worked for our agency for many years. We are always mindful of our need to maintain consistency, integrity, and fairness in our salary compensation program. It's truly a complicated process to navigate toward a greater good unless you are improving the entire structure.
It’s no secret that government agencies today are struggling with supply and demand issues of their own. Most have increasing numbers of people with disabilities who need services and shrinking budget resources to assist all who are potentially eligible. Enter the budget games! Most funders try to purchase services at the lowest cost possible and serve as many unemployed people as feasible. Also, funding agencies will occasionally change their standards of eligibility or modify the selection process to eliminate certain people thereby prioritizing and reducing their cash outlays. Further, we see other budget games played between federal, State, and local government entities because each wants to be the last payee and pass along costs to the other. Often, non-profits are left trying to figure out how to piece together services from a very complex puzzle of funding streams with varying eligibility criteria.
Many of these issues tend to compress or flatten salaries that agencies can afford to offer to their professional staff. And be certain that competition among non-profits (and the public sector) enter into the picture. If my agency offers higher salaries and it drives up our cost of programs, will our funders give us more money to pay for the difference? The answer is no. Will they offer contract awards to competitor agency’s with lower staff and program costs? Absolutely. We are very cognizant of our need to deliver high quality services but at a competitive cost to remain viable as a service provider.
Can we make up this difference through increased productivity? Maybe yes, maybe no. Just how large a caseload can one professional support before his or her service quality moves measurably in a negative direction? What happens if we choose to pay our professional staff more money because we believe it is the right thing to do and we do not increase our productivity to justify the increased costs? Will my agency be able to control its program enrollments and third party payments needed to justify our increased costs? Are higher compensated professionals more productive than staff who make less income?
These are the kinds of questions that immobilize us from doing what you would like us to do. To illustrate, let’s go to your stated concern that salaries are often limited to the 20 to 30K bracket. Let’s say for the sake of discussion that I choose to increase compensation of our job placement specialists to the 40 to 50K bracket because I "value" their expertise and qualifications. If you are a student of State funding models you may have noticed recent changes within VR’s system for funding job placement services this past year. Minnesota has rolled out a new performance based agreement (PBA) that pays approximately $2100 for each supported employment outcome obtained (less for competitive job placements). This new payment system imbeds reimbursement milestones and we only receive full payment when a participant is placed and successfully closed in a community job.
In this model, my staff costs are much higher than most competitor agencies who are paying the 20 to 30K norm. And my costs are multiplied by the number of staff I have working in the job placement area. As you might guess, the referring agency (VR in this example) pays the same rate regardless of qualifications or pay levels of professional staff positions. There is only theory but no real evidence that my agency will receive more referrals or generate more income because I have increased staff salary compensation to higher levels. It’s risky business to say the least.
You mentioned that public agencies tend to hire professional staff at higher wage levels. Do you know why? The primary reason is they can! Public agencies can set pay standards for themselves because they are funding themselves. To illustrate, a job placement specialist who works for the State of Minnesota or a County agency is playing by a different set of rules. They do not have to generate consistency in funding performance levels to sustain their jobs like their peers in the non-profit sector. I am not criticizing these public employees but merely pointing out that there is a fundamental inequity in how wages are established and payed in the public sector. In the non-profit sector, we generate most of our income by billing units of service such as an hour of work or through PBA contract models. Remember, through a PBA there is no payment received if performance milestones are not obtained or a job is not found. Our public sector peers get paid either way.
Now I want you to understand that I prefer to pay our staff at the highest levels possible. Frankly, I detest high staff turnover and want to retain our skilled professionals because it makes good business sense for my agency. In sum, I want to see our professional staff fairly compensated for the hard and excellent work they do. I might add, the issue hits home directly for me because I have a daughter who works professionally as an employment consultant for another agency. It’s an issue I care deeply about.
With that said, the marketplace is sometimes a cruel reminder of how the public values the work we do and what it appears willing to spend. However, our rehabilitation and employment industry is not alone. Do any of us believe that childcare workers or nursing home professionals are fairly compensated for the important work they do? Low wages in human services and direct care work is systemic and a long-time national problem.
Anonymous, you mentioned that my own organization experiences problems in this area. Indeed, we do. We are not immune and we do experience more turnover than I would like to admit in certain professional areas from time to time. With that said, Rise also has a cadre of highly dedicated employees who believe in our mission and have worked for our agency for many years. Many of our tenured staff have developed skills to become managers and still others have emerged as sage mentors to our less experienced direct service professionals.
In our experience, wage compensation is a moving target that must be monitored continuously. What is interesting is that my agency’s management team reviews wage compensation issues for all positions regularly. We examine salary surveys of other non-profits and look closely at what our competitors are offering to professionals in the same or similar positions. We also look at what the public sector is offering for professionals with the same skill sets. We have even hired consultants to help us structure our wage compensation program. At Rise, we try to position ourselves to offer the best salary compensation and benefits possible while maintaining fiscal responsibility in the process. Our system is not perfect and it is challenging to administer in a highly competitive environment that is competing for human services talent. However, we do our best and take the matter of wage equity and fairness quite seriously.
So what are the answers to this issue? In all honesty, I don’t have a complete answer. However, I think some it has to do with public policy and examining ways to create greater parity with the public sector. We need to secure better pay and insure job tenure for the best practitioners in our non-profit sector too. It may well mean working to "professionalize" some of our trade positions by requiring educational credentialing or new licensing standards to insure minimum skill sets are maintained. If we want to have the best trained people doing the job, it means narrowing our professional recruitment to candidates who have the right skill sets. If we choose to leave the issue of job qualifications open for providers to discern, most will inevitably hire to lowest common denominator due to pressures to save money. A lack of commonly accepted standards only serves to flatten wage compensation levels of non-profit professionals because our candidate pools will be much wider to select from.
What if non-profit agencies felt strongly enough about this issue to band together and push for appropriate legislative changes? What if our State agency policies required that customized and supported employment services for people with disabilities can only be provided by trained, skilled practitioners who meet minimum licensing standards? This may not be a complete answer but it’s a place to start.
Would anyone else like to comment on wage compensation issues in the non-profit sector? What are your ideas to resolve the wage equity issue? Feel free to express them in the comment section below. Thanks!


Anonymous Concerned said...

First off I would like to thank both Anonymous and Mr. Lavin for their willingness to address this very important and complicated issue. I could not agree more with Mr. Lavin when he states that change is needed! The demand and need for Vocational Rehabilitation and Customized Employment Services is only going to increase as time goes on. It is imperative for the health of our industry that we are able to attract and retain young people to our field.

1:22 PM  
Anonymous A graduate of Rise said...

I think that Anonymous left out two important factors. First is that the outrageously high cost of health insurance impacts the wages of everyone but particularly those at the lower end of the pay scale. Is there anything that's price has rise by 500-1000% over the course of the past 15-20 years. When I first started working in the field (1986) the annual cost of health insurance for a single individual was less than $1000 and the employer generally most if not all of it. My company now pays in excess of $6000 per single employee with no children.

Secondly, while he/she is accurate in saying that individuals who chose to work in our field are paid a low(er) wage, many of us choose to stay because of the other outcomes/benefits we receive. As I said, I have worked in this field for 20 years now, and while I am lucky enough to now make what is deemed a high salary, I never stayed for the money. I don't generally compare myself to Mother Teresa but there are millions of us who do our work with a similar sense of altruism, if not nearly as faithful as she was. And I am pretty sure she didn't spend the Nobel prize money on a new outfit or a nicer car, and she is generally held in high esteem.

Of course the system is screwed up. But my first concern is fixing the system for the millions of people with disabilities that are systematically segregated from the rest of the world, primarily because they don't have a voice. Part of that is certainly improving the overall compensation of the people who provide the services. But on behalf of many of us who will continue to do this work of advancing the inclusion of people with disabilities, we hope Anonymous will find a job that provides him/her with the outcomes he/she seeks. After all, isn't that's what we do best?

2:59 PM  
Anonymous Metro Staff said...

I agree that health insurance is a big expense and a large contributor to this problem. The “Mother Teresa” explanation or rationalization has long been used as a way of softening the wage reality of the non-profit sector. To be honest this argument really frustrates me and is a contributor to stifling change. I would venture to guess that the vast majority of people in our field have a passion for the work they do and are in this business because they want to help make a positive impact on people’s lives.

The work we do is extremely important and your statement that “fixing the system for the millions of people with disabilities that are systematically segregated from the rest of the world, primarily because they don't have a voice” is a sentiment that most of us share. However, using the “Mother Teresa” approach is in effect a convenient way of ducking and avoiding a difficult problem. Worse than that it makes people feel bad about bringing up a valid and important topic! Graduate of Rise I do not question your intent and I applaud your attitude and dedication but I do question your rational. If funding complexity and attempts to pull on staff harp strings are the best answers we can come up with to this problem then we all know what will happen. Nothing! And in the end it is the people we serve who bear the brunt of this problem!

7:43 AM  
Blogger Don Lavin said...

First, I wanted to thank my recent visitors for sharing their viewpoints. Nice job.

Just a couple of suggestions. I would like to keep our dialogue broad so all of my visitors can relate to the topic and share their views. Keep in mind that we have a lot of visitors from all areas of Minnesota as well as from around the country. For this reason, I would appreciate it if we can keep the commentary general and please do not cite specific organizations or their salary practices. This post is not a referendum on any particular agency or organization but rather a thoughtful dialogue about systems-wide issues of concern to all of us working in the field.

Second, I don't want the dialogue to become a bitch session rehashing things we already know to be true. How about presenting some ideas and possible solutions? What can organizations or trade associations do differently to improve wage compensation concerns?

1:20 PM  
Blogger Erin said...


I might have missed it in the discussion above, but there is currently a bill being introduced to congress that addresses the issue of wages for direct support professionals. you can find out more information at www.ancor.org:
Direct Support Professionals Fairness and Security Act of 2005
Bill # H.R.1264

Original Sponsor:
Lee Terry (R-NE 2nd)

Cosponsor Total: 79
(last sponsor added 09/28/2006)
57 Democrats
22 Republicans

About This Legislation:

Introduced 3/10/2005.
Direct Support Professionals Fairness and Security Act of 2005 - Amends title XIX (Medicaid) of the Social Security Act to provide funds to States to enable them to increase the wages paid to targeted direct support professionals in providing services to individuals with disabilities under the Medicaid program. Directs the Secretary of Health and Human Services, through the Inspector General of the Department of Health and Human Services, to audit a sample from among the States in order to assess the effectiveness of progress made in reducing or eliminating the wage gap between targeted and reference direct support professionals through funds under this Act. Requires the Comptroller General to study and report to Congress on the wage equalization and recruitment and retention of direct support professionals who are providing services and supports to individuals with disabilities.

12:46 PM  
Blogger Don Lavin said...

Erin, thank you for sharing information about this bill with my readers. From the looks of it, the bill has bipartisan support and it sure seems like something most everybody could get behind. I think it would behoove direct service professionals working in Medicaid funded programs to go to the link and familiarize themselves with it.

Thanks again for visiting and sharing.

9:13 PM  
Anonymous A Graduate from Rise said...

After reading Metro Staff's response, I wanted to say that my Mother Theresa example was not "pulling on harp (heart?) strings". It was merely stating that there are vocational choices made by people every day where compensation is at the lower end of the list of reasons for making the choice. We acknowledge this same scenario when we assist people with disabilities in the process of going to work.

That being said, at the company I where I work, we have tried hard to increase compensation for our employees. Part of this is accomplished by keeping overhead costs to a minimum (77% of our annual budget goes to employee salaries). But the primary reason is through the method in which we provide our services. Traditional center based services operate on a staff to consumer model for both budgeting and service delivery. For example a typical center based service operates on a 1:8 staff to consumer basis. Our employment consultants through the use of job development strategies and natural job supports are able to support on average 20 individuals at a budget rate of 1:8 (since we see people less often, we bill less). The savings that we see from a lack of overhead, namely a building, allows us reroute this money directly to the compensation of the employees. In reviewing our salaries compared to the industry in our state, we find that we are paying 20% over the average. Are the wages we paying comparable to the for-profit world? Certainly not. But it does at least demonstrate that customized jobs are more economically beneficial than segregated work. I think we can all agree that customized employment is more beneficial in many other ways as well.

11:07 AM  

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