The Truth about Money

There has been an interesting conversation on ASAE & The Center's Executive Management listserver about bonus plans. It all started when Jennifer put up the following post:

I am working with an organization that has 4 full-time staff, an annual operating budget of $600,000, and a membership of 1,200.  The organization is interested in creating a staff bonus plan/program.  If you are of a similar size, would you be willing to share your bonus criteria, financial formula, and time lines?

The responses were all over the map! Some hate bonuses, others think they work, others think they work sometimes, others think we should just get a salary and be happy with it, others say it varies by individual, others say generational differences are involved, others say corporate and nonprofit are totally different, others disagree. Sheesh!

And a couple of times people got a bit testy about it. It's always hard to tell the emotional tone of an email conversation, but it felt a bit charged to me.

And that shouldn't surprise anyone: we were talking about money! Personally, I think our whole society is a bit pathological about money. We don't really know how to relate to it, yet we don't often admit that. It's like we're all going around pretending that we know exactly what we're doing when we decide to pay people what we do, and further: we're pretending that we're not pretending.

So I will admit that I'm pretending. I really don't know how best to pay people or motivate them. But now that I've admitted that I am (we all are) pretending when it comes to salaries, etc., let me lob out a few grenades on the topic. Remember, I've already admitted that I don't know what I'm talking about:

1. Pay people more. In general, we should pay people more than we are paying them right now--particularly the people on the lower end of the pay scale. If you say you can't afford it, then cut other things. Do less. This "doing more with less" thing is not sustainable. There is too much burnout and inefficiency (particularly in the nonprofit arena) in having people work really hard yet feel they are not being paid enough. If you can't produce a great organization based on good salaries, then go do something else. Because once you DO create a great organization on great salaries…it will become greater. I don’t believe there is real growth in paying people less.

2. Be completely transparent. Publish everyone's salary for everyone else to see. What is the value in keeping all this a secret? Really. Who benefits from this? The only reason I see for keeping salary information secret is because you are paying people unjustified amounts (either too low or too high) and you don't want to have to defend it (back to the whole pretending we’re not pretending thing).

3. Make people happy. The money thing is important and all, but if you put HALF the effort you put into figuring out your bonus plan into efforts to help your people feel more engaged, fulfilled, and happy at work, you'd probably get double the performance without spending another dime. Money might be a part of it, but imagine if they totally LOVED their job. They LOVED coming to work every day. They knew how they were making a difference and they felt supported. Why aren’t we focused on that?

Comments

[Matt Baehr]

I think Scott Briscoe talked about publishing salaries a while back. As a former HR manager, I must say I think it is one of those things that sounds good in theory, but would be a debacle in practice. Who gets paid more? The person with the most education, experience, or performance? We would want to say performance, but when someone new comes on board, they don't have a performance yet to judge.

[David M. Patt, CAE]

Publishing salaries can create a big morale problem on your staff. A lower-paid person may resent being asked to work extra hours by a higher-paid person. The unspoken thought is, "you're paid the big bucks, you work!"

Lower paid people resent the fact that the market places higher value on other positions - and there's nothing they can do about it.

As a CEO, I do not share salary information with anybody - and I don't list individual salaries in budget documents.

[Jamie Notter]

Matt and David: It "may" be a debacle and it "can" create problems on staff. But does it? I admit my post is all theory, but where is the practice here? Where are the examples of times when salary information was public and things went to hell in a handbasket. THen we can look at why, because it may have more to do with how people talk about these tough things than it does the truth about the salaries.

[David M. Patt, CAE]

If things went "to hell in a handbasket" they went too far.

What is the positive side of publicizing salaries? Lower paid employees don't accept the lower market value of their positions - especially when they are paid substantially less than the CEO (I agree with Jamie - pay them more).

But there are resentments about perceived salary inequities that show themselves in petty bickering, resistance to additional work demands, and displays of "attitude," all of which a CEO needs to be aware of and stop before things go "to hell in a handbasket."

The real issue is paying people fairer salaries. Publishing salaries doesn't address that.