Out On a Limb by
John
McIlquham
The Nonprofit Times, March 2002
Payroll
Roulette �You have to pay to play
Have you ever walked into a financial services
firm and asked to speak to the advisor who makes the least amount of
money? While you�re at it, demand to speak with the person who earns the
least commissions.
That�s exactly the mindset non-profits have
constantly sought to portray to the donor public year after year after
year. This year�s salary figures, published in last month�s NPT, are
startling not only in the modest amount paid to the chief executive of
nonprofit organizations, but also that executive salaries are so disparate
to the type of organization.
The data makes you scratch your head. Why should
the CEO of a major health care institution generating $50 million in gifts
make less than the CEO of an association with 90 percent less revenues and
far fewer problems and challenges? A 900-member association CEO, for
example, makes $30,000 a year more than a CEO of a health-related
association that might have tens of thousands of members and 90 percent
more in revenue.
The simple fact is that nonprofit executives are
being asked to manage the resources of an organization based on a
prismatic view. Shouldn�t donors demand that the best, rather than the
least, manage their gifts?
Most people you ask would want their hard-earned
income that they invest to be managed by the most successful person who
has a demonstrated track record and proven earnings history. It�s hard to
believe that donors and volunteers would assent to their stewardship of
time and money by the least paid and motivated executives.
It is shameful that boards, whose membership is
often comprised of supposed business leaders who have sales people who are
often the highest paid executives in their companies, check their
entrepreneurial brains at board meeting doors. They have myopic vision
when it comes to hiring talent for their nonprofit organizations.
Instead, they try to secure the services of
qualified executives, such as development or volunteer directors who raise
the money and manage the resources for the organization, for the least
amount of money. Yet, they desire the greatest amount of managerial
talent. They know this inverse ratio doesn�t work in the for-profit world,
so why do they scratch their heads when they don�t apply the same
reasoning to their organizations.
Boards often demand pristine and almost
insurmountable performance with less than desirable compensation packages
and speculate why the money doesn�t flow in. They seem to believe that
rather than pay more, they will just keep hiring and firing until they
find success, which often doesn�t happen. And certainly, this is a
practice they would not tolerate in their own performance-rewarded
successful companies.
It would seem that boards have lost their way. Is
it no wonder that recent headlines, including the cover of our last issue,
show that turbulence at the top. Organizations, especially well-grounded
board members who theoretically deal with the real world, look at their
executive ranks among nonprofits with some sort of stigmatism.
If you took the revenues of many of the charities
represented in our survey and put them into a ranking of top businesses in
this country many of them would be at or near the top. An executive pay
scale offered to executives of these for-profits is almost always two,
three or four times more. For-profit boards that hire management demand
performance and reward it. Why shouldn�t nonprofit boards demand and
compensate managers in the same way?
Fear of donor backlash could be a reason. After
all, press reports almost always taint a nonprofit executive salary as
somehow being obscene, regardless of the number. It�s as if they shouldn�t
be paid at all. On the other hand, they ridicule nonprofits as being
poorly managed.
Ironically, you do have nonprofit executives who
make six figures who have no performance goals against which to measure
results. Unlike the for-profit world, where share price and price per
earnings rule the compensation formula, nonprofits have poorly defined
tools through which board and donors can measure the success of their management.
It�s almost laughable when you hear a famous radio
personality, such as Don Imus of MSNBC�s Imus in the Morning show or other
pundits complaining frequently about nonprofit salaries. Don Imus� recent
complaints about the salary of the American Red Cross president, who
manages an organization with thousands of employees and more than $2
billion in annual revenues, unabashedly points out that he only takes $1
in salary for the management of his non-profit children�s ranch in New
Mexico. He forgets to mention his own multi-million salary from his radio
show. He probably wouldn�t be as flip if his only source of income was
from the ranch.
Too, another compunctious part of this year�s
salary survey is that one of the most important aspects of a nonprofit
that make it richly unique in this modern world -- the director of
volunteers -- makes one third the salary of it�s top officer. Volunteer
managers that demand extraordinary recruitment and retention skill are
paid one third of the person at the top. Yet, it is volunteers that often
define an organization and the backbone of their service delivery.
You would have to be living on another planet not
to appreciate the difficult challenge all organizations face each year in
finding, motivating, training and keeping volunteers. Each year, the pool
of volunteers dwindles at exactly the same time they are more urgently
needed. Yet, the director of volunteers, who manages this critical
function, is paid on the basis of what?
During the past five years the meter has scarcely
moved in compensation, despite the fact that the urgent need to find and
keep volunteers has literally gone off the scale. In fact, if you look at
the title charts in our salary surveys, the director of volunteers is paid
the least among ten positions we track. It is a sad commentary that the
one of the only hallmarks that makes nonprofits such a unique enterprise
in our country pay less to a position whose skill is greatest in demand.
AVA Response � Letter to the Editor
May 28, 2002
Paul Clolery, Editor-in-Chief
The Nonprofit
Times
120 Littleton Road, Suite 120
Parsippany, NJ 07054-1803
Dear Editor:
I was delighted to read John McIlquham�s Out on a
Limb column in the March 2002 issue, entitled �Payroll Roulette�. Thank
you for recognizing and acknowledging what many volunteer resources
management professionals have struggled with for years � the disconnect
between the irreplaceable, essential work of a well-qualified manager in
accomplishing the organization�s mission and the value the organization
assigns to that work as reflected in salary, organizational placement, and
leadership support.
Volunteers are a significant resource for
nonprofits to apply toward mission-related activities. And, like all
resources, they must be managed competently in order to yield sustained
and impactful results.
In spite of the inequity and lack of recognition
of the value of their work, volunteer resources managers continue to
develop their skills and strengthen the entire profession through
involvement in local and international professional associations.
Hopefully, your column will help the �powers that be� to understand that
our profession provides essential management of volunteer programs in
agencies and organizations; builds partnerships and collaborative networks
in the community; and positions agencies and organizations for greater
visibility and credibility in the community and with potential funders.
We look forward to continued work with our
like-minded colleagues. We are confident that inclusion of volunteer
resource management professionals in salary surveys and thoughtful
analysis like yours will be the start of a change of thought and action
that will correct this disconnect.
Gratefully,
Dennis J. Barnett
President, Association
for Volunteer Administration
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