Thursday, January 30, 2014

Non-profit pay?

I am sure some people will object to this blog, but so what. I would like to discuss executive pay at some non-profit institutions.

Higher education has evolved a lot in the last decade, partly because the makeup of the students is changing. You have folks going back to school after a 15 year break, some going to school for the first time, and of course military students using their benefits. That is a lot of money waiting to flow into an institution.

One of the big ‘selling points’ of working at a non-profit institution versus a for-profit institution  is that “there is not as much pressure to enroll students” or “the money the school makes is put back into the school”. Please name me one school that does not want full seats at all times, and is ok with losing money?  The myth of less pressure is just that, a myth. Remember, not all for-profit schools are bad or unethical. For-profit schools do tend to be up front about metric goals, and what rewards you will gain by hitting those goals because they tend to operate more like a business.

A good number of the larger non-profit institutions (especially the non-traditional ones) are operating like for profits, using the same training, expecting the same metrics, but not compensating their frontline employees. Recognition is great, but a real pay raise tied to recognition goes further. It is not uncommon for non-profit employees to move to for-profit schools after a only short period of time because of pay (they have the same training), and then the manager has to scramble to find, train, and try and retain a new crop of employees. That is stressful for a manager.

I am getting to my point in a moment, and I need to clarify that I am simply producing facts based upon my experience and I am not taking sides, ultimately it is about the individual institution not the type of institution.

Executive pay (not middle manager) however, seems to be very good at some of these non-profit institutions: and guess what? Your frontline employees can read, they know what the execs are being paid (people talk) and it makes them mad because the frontline are the revenue generators and they are often not well compensated.

“The Last $5M Payday?”

“Brandeis University paid its former president, Jehuda Reinharz, $4.9 million on Jan. 2, three weeks before it announced an overhaul of its executive compensation policies.”

“Reinharz, who quit his post as one of the nation’s highest-paid college presidents in 2010 on a sour note, gradually won the payout through deferred compensation over his 17 years as president. This month’s massive payment — perhaps one of the largest ever by a nonprofit to an individual – included $4.1 million in deferred compensation and $811,000 for untaken sabbatical.”

This kind of reading can actually be painful for your employees to read, especially those who have been struggling for 20 years with no significant pay raise.

Institutions please say what you are and be what you say you are. You can be ethical about it.

Dr Flavius A B Akerele III

The ETeam

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