Yesterday, Kari Dunn Saratovsky wrote on the new Case Foundation Blog about ranking nonprofits based on how good of a place they are to work:
Young people have become in many ways disillusioned with the top-down hierarchical approaches that are so often found in traditional nonprofit organizations. Instead they embrace a leadership style that has emerged from growing up immersed in a technology-driven world that empowers people from many different backgrounds to come together to solve problems — and to do so quickly, efficiently, and at little to no cost. It’s this style that favors collaboration and team work that often goes against the norm within the sector – but how do you measure that?
If I had the opportunity to develop my own criteria for ranking the nonprofit sector – I’d take a look at how nonprofit organizations are adapting and changing with the times. Rather than stifling new talent, how are individuals able to grow and be challenged in their roles at nonprofits? How does this compare to their peers in the for profit community? How does the organization embrace diversity, work-life balance, and for goodness sake, does it have a Twitter feed?
This reminded me of studies that show that the stocks of corporations included on the annual list of 100 Best Companies to Work for in America have outperformed the market over time. I’ve been talking about the need for nonprofits to pay market rate salaries to their employees and for funders to support this use of their donations. I think a broader point would be that nonprofits should operate in a way that attracts great employees. Salary certainly isn’t the only element of satisfaction, but it is impossible for me to believe that an industry that systematically underpays employees can ever attract the top talent (just to be totally clear, I’m talking about the total talent pool. Obviously, there are many, many talented people who have chosen to work in the nonprofit field despite the lower compensation).
Some people have made the case that nonprofit employees “deserve” to be paid the market rate. Other people have challenged my argument by saying that high paid people in the for-profit sector should make less. My point in all of this is that paying higher salaries will result in more impact. So if you think about your giving as the impact per dollar that you can achieve, you should be insisting that your grantees compensate employees well and be willing to let them spend your grant funding on these higher salaries.
However, it is important to note that being the best place to work is about more than just pay. It is also about meaning. So the nonprofit field has a massive advantage over the for-profit field. But let’s not cede that advantage by offsetting it through low salaries.
I could write a book about this from the inside, Sean. Maybe, as the old guard steps down and new leaders emerge, the issue of wages and workplace development will change but in the meantime it seems my generation will constantly bump against those who’ve come before me and are unwilling to see the writing on the wall.
Sean, great post. Just one thought, though. You write “My point in all of this is that paying higher salaries will result in more impact.”
I’d suggest restating something along the lines of “paying more has to be part of the arsenal in attracting and maintaining the best and brightest.” To paraphrase what you said in another part of the post, systematically underpaying cannot be the best strategy. But this isn’t the same thing as saying “paying more will make things better.”
The 1:1 of higher salaries = more productivity isn’t right. You need to wrap around the right work environment, incentive pay, differentiation, the works.
Good clarification Sasha. I was trying to say that my point in arguing for higher salaries is to produce higher impact. I’m trying to make clear that the reason I’m talking about this is as a way to increase impact. I’m not talking about fairness or what’s “right”.
But I don’t think that throwing money at people is magic. So that’s for your comment.
I’m always glad to see these issues getting play.
I must say that I am disappointed, however, when the focus is so heavy on compensation. While I do not believe that nonprofit workers should settle for lower pay in exchange for working for a ‘great cause’, I also believe that high salaries are no replacement for a workplace where “individuals are able to grow and be challenged in their roles at nonprofits”.
I might choose, given the chance, job satisfaction over salary. Or maybe we can have both?
C.P.M I think your point is really important and maybe the best argument against me pushing the compensation issue. Most people do not seek the highest paying job, they seek the “best” job with “best” being defined in many unique ways.
However, I think that many for-profit companies already offer very satisfactory job conditions in addition to paying well. Ask people at Google if they feel like the are “making a difference” and they’ll tell you yes.
My focus is on compensation because I think that many, many, many of the best and brightest would choose to work for a nonprofit if you held everything else constant and just changed compensation.
Wow, I really enjoyed reading this. As a hard working person who is determined to be of service to others this really hit home for me.
Good luck with your new blog!