When I first started recruiting executives to lead HIV/AIDS organizations 40 years ago, exceptional candidates were willing to take a substantial pay cut to lead these organizations because they were personally impacted by the disease. An HIV diagnosis or the sickness and death of family and friends was a powerful motivator to bring experience and talent to the table for these leadership opportunities. Emerging community-based organizations, and even some national organizations, had little or no public support and relatively small budgets, but many talented people stepped forward -- sometimes at great personal sacrifice-- to lead them.
Twenty years ago, LGBTQ advocacy and social service organizations were able to attract top leadership talent at below market rates because members of the community wanted to be their authentic selves at work and escape the discrimination or code of silence required even in many other progressive organizations and corporations.
Boards of Directors today may have a rude awakening when they discover that their compensation packages need to be competitive with other nonprofits of similar size with a similar focus in their high cost of living areas. This is especially true when they’ve had a long-time or founding CEO whose salary was set 10 or more years ago with only modest annual merit or cost-of-living increases. Whether the leadership transition is necessary because of retirement, voluntary departure or a need for new vision and direction, the salary of a new CEO can be substantially more.
We are often asked to advise on compensation before we even submit a proposal. For organizations seeking exceptional leadership, a review of the Guidestar Compensation Report is an important first step in deciding what to pay your next leader. Seeking a bargain is setting out to find someone who is earning below par for their experience. That’s not a formula for attracting top talent, and search committees or managers who ignore the data are setting themselves up for failure.
Equity and inclusion are a priority for many nonprofits today, especially those whose goal is to reflect the communities they serve. If the goal is to recruit a bilingual candidate, a person of color or a transgender leader, you are in competition with hundreds of other organizations seeking similar candidates, and you may find yourself in a bidding war. If you can attract an out-of-work candidate at less than they were earning in their previous position, what guarantee do you have that they won’t leave as soon as a better and more lucrative opportunity comes along?
As the compensation for CEO’s has steadily risen, so has the compensation for other nonprofit executives. Search consultants who give you sound advice that your compensation range is not competitive are not “making excuses” when real time data shows that you are expecting to be dazzled by the talent they bring to the table when your pay is under market.
Even when your mission is important to a candidate, you can’t buy a Bentley with a Buick budget. There are few saints and martyrs willing to work for less than they can earn elsewhere today, and setting out to find them is not a winning strategy.
Joe McCormack is the Founding Partner of McCormack+Kristel, the first gay-owned retained search firm in the U.S., with offices in New York, California and Washington, DC.