What is Best Practice When Reviewing Executive Pay in the Charity Sector?
As the world changes, you may find you come under pressure to be more open and transparent with your senior pay awards.
The BBC recently received much bad press for its unequal gender pay practices (something Reward Connected can help you with, should you have any concerns about the equality of your payroll) and many Charities have also suffered with extensive criticism. This sort of media scrutiny does more than just create a bad atmosphere within your organisation, it can also reduce trust in what you are trying to achieve.
“People won’t donate if they feel that charity pay is excessive. It’s important charity funds help the most vulnerable in our society. I am concerned that charity bosses still don’t get it.”
Charlie Elphicke, MP
To ensure you avoid any reputational damage, or a dip in donor support, we suggest it is best practice to review your executive pay. By being clear and transparent about what you pay your senior staff and offering up sound justifications for why they are entitled to this reward, you will place your organisation in a strong position with supporters.
In effect, by doing a senior pay review you are doing what Sir Stuart Etherington, Chief Executive of the National Council for Voluntary Organisations suggests i.e. you are “putting the power in donor’s hands.”
You will also understand exactly where you are in the marketplace, which can help you in the long-term with recruitment of the best talent for senior roles. Knowing exactly what to pay your organisation’s leaders can be difficult to judge, so below we detail some commonly held beliefs about high pay in charities.
1. Common Views On High Pay In Charities
These are the kind of arguments you will hear in discussions about pay for senior figures in the Charity sector.
– That pay for a small, elite tier of managers is acceptable provided as many people as possible are volunteers.
– That working for a charity is a vocation. The highest paid should accept far less than they would receive in the private sector.
– That charities should be run efficiently, with an aim to be profitable and if that means the top talent needs to be paid a 6 to 7 figure sum, then so be it.
– That nobody who works for a charity should ever be paid.
As you can see, an incredibly wide range of views! Dealing with these differing opinions means it is difficult to make a business decision about how you remunerate your leading staff. But knowing where you stand is a good first step to take – contact us for a review of your executive pay.
2. Our Recommendations For Reviewing Executive Pay
Transparency is key. It will future proof your reputation and we believe it breeds far greater goodwill for an organisation if they are clear with people about how they operate. Though it is not the law to review senior pay, it is recommended that charities with a gross income over half a million pounds should actively adopt this approach.
Knowing where you stand is important. After receiving your senior pay review, you will know how you compare and therefore adjust/justify the pay you are giving your senior executives. This knowledge is an invaluable tool for a Board of Trustees who may, should the organisation come under scrutiny in the future, wish to have in place their arguments for current pay practices.
Make your pay data publicly accessible – within two clicks of your homepage on your website, if possible. This openness will help breed goodwill amongst supporters. As you know, it is beneficial to turn supporters into evangelists of the work you do. Being transparent with how you go about your mission will help give supporters the tools and understanding they need to help you spread your word.
Contact us now to make sure that your pay is in line with your Charity’s values.
3. Principles For Setting Charity Remuneration
The goal of your pay policy should always be to offer a fair pay package that fits within the ethos of your organisation and your total reward offering. Consider how you will attract the best talent and retain them, in order to drive forward the organisational aims of your charity.
Get your trustees to identify and set the levels of senior staff pay. They must also be sure that the level of pay offered is justified and sustainable.
Before making a final decision, there must be an understanding of the impact on pay policy for all employees – senior pay is not to be looked at in isolation.
Also note that if there are other rewards that are available to senior staff (e.g. an employment offer that includes personal development and fulfillment) these may be highly attractive to an employee and may consequently reduce the cost of actual pay.
4. How You Will Receive The Data From Your Executive Pay Review
At Reward Connected, we do our best to keep these complex reviews incredibly simple.
You just have to let us know the job description and person specification for each of the senior roles. Then share with us your turnover, your location and your lowest paid individual.
We will then have everything we need to analyse where your organisation stands in the marketplace.
You will get our findings summarised in an easy to read report. We will then provide you with the recommended courses of action to make sure you are getting the building blocks of your organisation right. We are happy to attend a remuneration committee meeting so we can highlight exactly where you are at, with the people who matter when it comes to making the final decision.
As always, we are working with you to find the best solution for your organisation.
Don’t Leave The Review Of Your Executive Pay Until It REALLY Matters.