Jan 15 2009

The fleecing of idealism? Salaries in the nonprofit world

by at 4:54 pm under Sherry and Mark

I’ve been thinking for awhile about how I want to comment on this Nicholas Kristof blog post, as well as his preceding column, regarding money, salaries, and the international nonprofit world. There are a few different issues at work here: whether nonprofits should be run more like businesses; whether charity and profit can can happily (and morally) co-exist; and whether nonprofit and humanitarian organizations are too far removed from, or not concerned enough about, providing their staff competitive, liveable salaries and professional training and opportunities for career advancement.

As for the issue of “nonprofits being run like businesses,” like Kristoff and Charlie MacCormack, head of Save the Children and profiled in our book, I am ambivalent, probably because I don’t know enough about running a nonprofit to offer a solid opinion. If running a nonprofit like a business means the organization will be run more effectively and have more resources to accomplish its mission and spread the word about its work and pay its hard working employees better, well then, that seems like a good (if unrealistic) thing. If running a nonprofit like a business leads to lavishly paid executives and poor management, as Kristof points out has happened in many a business like Citigroup, well then, that seems like a bad thing. I know that Sherry has very specific opinions about this idea and I look forward to hearing them.

What I have very specific opinions about, as a young professional trying to build not only his career but financial house as well, is the third issue: nonprofit compensation and professional training. Kristof’s post dredged up in me a recurring frustration (that I know is shared by many young people) of how we can balance the desire for a career in international education, exchange, and development nonprofits (or any nonprofits, for that matter) and the desire for a respectable, living wage. This struggle is not new and has been chronicled, codified, and ultimately vented about. MacCormack cuts straight to the issue in his comments featured on Kristof’s blog post:

I am convinced that humanitarian organizations such as Save the Children are too far over in the opposite direction — our uncompetitive salaries make it almost impossible for people to develop real careers; our under-investment in staff development hampers performance.

It really can’t be reasonably argued that nonprofits are not severely lacking in the salaries (and often professional development) they provide their employees. Okay. So how can this be fixed? Kristof (and MacCormack) argue that a shift in the nonprofit mindset, especially when it comes to donors, is necessary. Currently there is too much scrutiny from donors on overhead—any funds not spent directly on the mission, but rather on results-oriented monitoring and evaluation or staff salary and development, is viewed negatively and tantamount to the cardinal sin of nonprofits, “mission-drift.” A realignment of the mindset held by donors (and management), and consequently the use of more resources on things like advertising and assessment and staff compensation, will lead to a more accountable and transparent (and self-aware) organization with a happier, well-taken care of staff, all of which undoubtedly will lead to better performance in pursuit of the mission.

All of this seems to be right on. However, I would argue that at least two other deeply embedded aspects of the nonprofit culture need to shift, in conjunction with what Kristof proposes, for things to really start getting better, especially us young people, the “successor generation.”

First, many nonprofits discourage employees from truly advocating for and pursuing what they are worth because of the lack of a clear advancement structure and salary hierarchy. Nothing exists to give employees a salary to shoot for and reasonable confidence that they can get that raise by illustrating they have accomplished x, y, and z, the benchmarks for reaching that next salary level. Instead, nonprofits often treat the very sensitive and important issue of compensation and financial advancement as something that is better done unstructured.

A common frustration I have heard then becomes knowing what salary to shoot for when asking for more. Everyone wants to try to get as much as they’re worth, but as in any salary negotiation it is important to start with a number that is reasonable to both sides. Try for too much and you’re bound to get laughed at. Try for too little and you’ve short-changed yourself. All of these issues come into play when negotiating salary and pay raises in a nonprofit, but the main problem is that it’s all a shot in the dark. At consulting firms and corporations, it’s all very clear what you need to do to reach the next pay scale. Achieve the necessary benchmarks and you will be rewarded. Fail to reach them and your compensation increase will be less—but at least you know what you failed to do, and what you need to improve upon in the future to get that desired raise. Some might argue that such a structured system is too confining and constrains you from moving up the ladder quickly and making big leaps in both responsibility and salary. While this may be true in some respects, I would argue that being constrained by a structured system that allows me to plan my performance and finances is vastly preferable to stumbling around in the dark with no direction. And on top of that, I have heard many stories of employees at consulting firms and businesses who have had exceptional performance rewarded with jumps up two or three grades in pay scale (my friend Karl, who works on international issues at Accenture, is a fine example—he worked his butt to show that his deliverables had far exceeded expectations and he was given a very hefty increase in salary, far beyond the “typical” one step up). And seriously, when’s the last time you heard of someone working for a nonprofit jumping any kind of salary steps with a significant raise? The lack of clear advancement structure and benchmarks in many nonprofits leaves young employees not only with no idea how much they should or could be getting paid, or what they need to do in order to reach the next salary level (or what that salary level even is!) but also with zero confidence that their employer will give them the raise that they want or deserve.

The second and much more serious problem is that nonprofits tend to stifle the above discussion entirely. A prevailing attitude that has infected nonprofits teaches all young idealists who come to work for them that the mission trumps all. And while dogged adherence to and passion for mission is a good thing in so many regards, it has made discussions of employee compensation and treatment not just taboo but something even worse—almost sacrilegious. It’s as if suggesting that you, as an individual, are hoping to better your own life situation while simultaneously serving the cause of the nonprofit is a sin unworthy of utterance. Asking for more detracts from the cause, and the cause is the only matter of importance! By suggesting that mission trumps all, nonprofits render it very difficult for young employees (or any employees, for that matter) to lead a balanced life.

In this way, nonprofits run the risk of fleecing the abundant idealism right out of young professionals. They do this by turning what should be business discussion and transaction into something personal. When you, as an employee, in any kind of organization, ask for a higher salary, it is not a personal thing. It is a business transaction. You are not asking for your boss to reach into her wallet and pay you from her own salary. Rather you are simply trying to put your performance and value into perspective, measure it with the needs of the organization, and come to a place where what your contributions are being compensated for properly. It is a discussion and negotiation, one in which both parties have every incentive to come to mutually agreeable terms. It’s like my father, an experienced corporate manager for more than 35 years, has always said: “I’d rather make an investment of a few extra thousand dollars in a great employee than lose them and have to bring in someone new. Not only have I lost a valued employee, but I’m also probably spending more—time and dollars—on training the new person and trying to make them as productive as the last one.”

Coming to mutually agreeable terms is better for the employee, as he gets the raise he wants and feels valued and will thusly work harder. It’s better for the employer because she retains a valued employee, isn’t forced to waste time and money hiring someone new, and, not insignificantly, comes across as a reasonable and caring manager, someone who is willing to listen and look out for the concerns of her employees.

It is not selfish to want to be compensated for what you are worth. It is not selfish to hope the job you work long hours at pays you enough so you don’t have to get a second one. It is not selfish to someday hope to buy a house and a car and support a family. Isn’t this what many people want, in some form? Why should nonprofit employees be any different?

This line of thinking also points to the fallacy that because nonprofiteers are in it for the mission, then everyone else is in it for the money. If you work for a nonprofit, you are doing good and helping to save the world, but if you work for a corporation you are rich and evil and going to hell. Where is the middle ground? It is very true that many people in the business world feel they are doing good and derive an immense amount of satisfaction from their work (my father being one of them), which helps them to be happy in their jobs. Why shouldn’t nonprofit employees then be able to feel they are being compensated for their work in a reasonable fashion?

It’s like Fayazul Choudhurying told me in an interview for our book : “You need to balance your passion with self-interest. I think most people derive their satisfaction from being good at what they do and feeling they are valued.” It’s very hard to feel valued, no matter how much you love the mission, when you aren’t being paid enough to make rent.

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