I don’t know or meet many executives working at human service, community service, healthcare or other not for profit organizations who work just 9:00 to 5:00 five days a week. It’s more like 10-12 hour days, some nights, and don’t forget the weekends. Yet, we see newspapers, television and more and more frequently government getting into the business of “gotcha” and complaining or trying to control compensation.
Today, with regulation abounding and economic pressure strong, it seems that the first thing that folks look for is information about how much the executive team gets paid and what benefits they might have. Rarely does anyone ask what the responsibility is or how much they do and how long it takes to do it. The organization might be in a not for profit category, but if it does not pay its bills and provide for mission growth, it will likely fade away, taking with it valuable benefits and services for its constituents.
The difference between these organizations and the corner grocery or IBM is that they don’t pay taxes, which serves as a way to attract contributions and other support and as a way to recognize their importance. They do hold a special place in our democracy. That said, quality leadership is just as important in a not for profit institution as it is in the private economy.
Top management for program, financial, human resources, operations, innovation and community relations is just as important for not for profits as it is in the private sector. The competition for top management crosses all spectrums and we are seeing managers moving between the two sectors with increasing ease.
Thus, folks in place and others being recruited should not be considered as being “lesser” in value than those in the private sector. The watchdogs should look at equivalent responsibilities before determining that excessive compensation headlines and rigid compensation numbers are the thing to do. Hiring and compensation should be tied to the job, the experience required and the goals, and if compared, should be compared to organizations both not for profit and private that have similar budgets and goals with a need for similar skills. Hard numbers do not do the job, nor do they do not for profit executives justice. Remember, not for profit workers do not enjoy the ability of earning capital, e.g. stock options or grants. Why should they take less in terms of salary and benefits?
Such decisions should be left to boards of directors and the exercise of their fiduciary duty with regard to their organizations. Broad guidelines are useful, but handcuffing an organization’s potential by worrying about reasonable compensation being unreasonable and food for the media - rather than being good for it is mean spirited. There are tools for finding the abuses, but the tools, rather than good decisions are often driving the compensation process.
For further information, contact Barry N. Koslow, JD, at bkoslow@mkaplanners.com or 781-939-6050.
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