Recently, the Wall Street Journal reported that pay for CEO’s jumped 11% in 2010, following a year of flat salaries in 2009. As corporations finally start to recover from the Great Recession of 2008-2009, they are rewarding their executives for regaining lost profits and share prices. One executive, Viacom CEO Philippe P. Dauman, almost doubled his pay in 2010 taking home $83.4 million!
Now I think that most of us realize that nonprofit CEO’s and executives probably won’t be doubling the amounts on their pay stubs within one year, but this report does beg the question, are nonprofit executives and staff deserving of salary raises too? Our answer is a wholehearted YES! and here is why:
- Many founding executive directors are so passionate about the mission of their organization that they simply feel selfish taking money from the budget as part of their compensation. However, if you aren’t allowing appropriate compensation for an executive director, particularly a founding one, you are probably just truncating their career with your organization. No one can run on just passion alone, so please, give your executive director a compensation package that allows for time-off, vacations, and well-deserved R&R! This will go a long way in prolonging a nervous break down or unexpected retirement to Tahiti, and happy employees are always more productive employees. So go ahead, take/ give that raise and feel good about it.
- The pay structure of most organizations is top down, where salaries ranges for positions below executive management are determined by the range earned by the executive director or CEO. If your organization’s top salary is only $60k, you probably aren’t giving competitive compensation at any level of the organization, and won’t be able to attract or retain quality talent and human capital. So benchmark your salaries against the industry and increase them over time, at least at a rate concurrent with inflation. Remember that keeping salaries low does not promote social justice values nor does it ensure that the organization is having greater impact. The inability or unwillingness of many nonprofits to invest in their own staff’s development is modeling the wrong behavior for the community and is frequently at odds with an organization’s stated values.
- We have heard many horror stories around leadership sustainability, but one that can be particularly devastating is one that most people don’t think about salary gaps created by staff members who exit the organization at a range that is well below industry standards. A founder that has been with an organization for 20 years without a raise is slowly increasing the gap between what s/he gets paid, and what it will take to attract a new executive director to take their place. We have seen differences that are double the salary of the exiting directors, which can not only throw off your budget but will throw off the rest of your staff’s pay scales. This scenario could result in a considerable unrealized liability for your entire organization, so don’t play the martyr by denying a raise.
Money is not always the most comfortable topic to talk about, but we feel that this issue of compensation is one that could be a landmine if it doesn’t become normalized within your organization. Of course there are a few incidences of compensation abuses, and those are the ones that get extensive press, but far more common is the tendency to subsidize an organization’s mission through lower pay for its employees. So please, take a good look at how your organization compensates its staff and try to ensure that you are following industry trends. Not only will your current staff thank you, but your potential future staff will demand it.