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The Nail That Sticks Out

 

There’s an old Japanese proverb that says “the nail that sticks out is hammered down.” The proverb says something about the Japanese culture and the value it places on conformity over individuality. The perspective is a bit jarring for a man raised in the American culture with its own values on individualism and over-achieving.

This East meets West culture clash offers a lesson for the nonprofit leader in terms of executive compensation. A few examples will prove the point:

  • The Boys and Girls Clubs of America. The organization reported compensation of $988,591 for CEO Roxanne Spillet in its 2008 Form 990. Spillet was subsequently hammered by Senators Grassley, Coburn, Kyl and Cornyn, as the Huffington Post reported. These Senators essentially placed a hold on federal funds that were intended for the organization by questioning whether the “top heavy” organization was diverting federal dollars that were intended to support needs kids.
  • Dismas Charities. The organization reported compensation of $600,546 for CEO Ray Weis in its 2008 Form 990. The charity that helps prisoners re-enter society raised more than eyebrows when it leased luxury suites (to the tune of approximately $137,000) at local Louisville, Kentucky, sports arenas, per the Courier-Journal. Executive compensation and entertainment expenses are now the focus of state investigations into the charity. “Perception is everything,” as one compensation consultant aptly summarizes.
  • YMCA of Greater Houston. The organization reported compensation of $661,634 for President and CEO Clark Baker in its 2008 Form 990. In an interesting turn of events, Charity Navigator rated the YMCA as one of its top four star charities and then turned around and ranked its CEO as having the highest compensation for a human services organization in the country. “This doesn’t pass the smell test,” Charity Navigator’s CEO Ken Berger is quoted as saying in the Houston Chronicle.

These nails were sticking out. And they got hammered. What’s a nonprofit leader to do?

Jan Masaoka, editor of online magazine Blue Avocado, takes on this subject in a recent article, “How Much to Pay the Executive Director.” Jan writes, “It’s maddening and ironic that the press focuses on the extremely rare cases of high salaries for nonprofit executives, when salaries in nonprofits are typically 20% – 40% less than their counterparts in foundations, local government, and the business sector.”

Jan goes on to give advice to nonprofit leaders in setting compensation for your nonprofit executive. In summary:

1) Be competitive.

2) Be fair internally.

3) Future-looking.

4) Send a message.

5) Don’t over pay.

6) Within a budget.

7) Consider other forms of compensation.

You can read these tips in more detail at www.BlueAvocado.org.

Jan also highlights the role that GuideStar plays in providing free access to IRS Forms 990 and to our industry-leading survey on executive compensation. In fact, the 2010 GuideStar Nonprofit Compensation Report is just out. You can read more about the findings of the report on our website, or purchase the complete report to begin benchmarking your own organization’s compensation levels at www.guidestar.org/compensationreport.

lindsay-nichols.jpgThe preceding is a blog post writen by Lindsay Nichols, Vice President of Marketing and Communications at America’s Charities, the leader in workplace giving and philanthropy. As a member of the organization’s senior leadership team, Lindsay guides and oversees the strategy and execution of all marketing and communications efforts with a major emphasis on strategy and tactics that support increased growth for the organization. Lindsay has been quoted in the New York Times, Wall Street Journal, Chronicle of Philanthropy, NonProfit Times, St. Louis Post-Dispatch, St. Louis Public Radio, Dallas Morning News, and more.

Topics: Senior Executive Issues Nonprofit
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