There are few water cooler topics that are guaranteed to generate passionate debates; CEO pay is one of them. As sure as the changing seasons, every year the public is informed through newspaper editorials and think-tanks about the tremendous pay differential between the top job and the rest of jobs in the private sector. According to one estimate, Canadian CEOs earn 159 times that of the average worker. Ironically, there is very little policy or public interest around pay in the non-for-profit (NP) sector even though taxpayers disproportionately fund the vast majority of NP organizations.
Question 1 – Do you know what the pay quantum is between an ED role and the average worker in the NP sector?
Based on historical compensation management practices, it’s unlikely that we will see any significant increases in ED pay – or most jobs in this sector for that matter. Through our advisory work in this area of human resource management, it’s not uncommon to see significant pay inequities at the ED level within the same sub sectors, such as healthcare, holding other variables constant (i.e. geography, employee count, operating budget size). At a broader level, the social stigma that these jobs are more purpose driven than their private sector counter-parts also play an influential role in setting ED pay levels.
Question 2 – So against the backdrop of unlikely pay increases, what can be done within the context of ED remuneration to attract and retain leadership talent in the NP sector?
Take the doctor’s advice and pray
There is some precedent in terms of how the public influences the remuneration of other roles that tug at our moral or religious strings. Doctors in the province of Ontario receive preferential tax treatment as part of an initiative to address supply and demand of labour. This approach which essentially incentivises them to provide their services through a professional corporation seems to make sense as a balanced consideration of pay since the value of their work continues to be a topic of much public and policy debate. From a moral vantage, it’s difficult to allow market principles to trump social value so the happy medium, in lieu of significant pay raises, is to provide favorable tax treatment as an incentive to stay and practice medicine.
A similar logic exists for clergy remuneration. One can easily see the hesitation of applying supply and demand logic to compensation for heads of church. Which role should be compensated more, an Anglican or Presbyterian priest? Similar to the good doctors, we provide favorable tax (e.g. federal, property) treatment for clergy roles. In essence, if you can’t pay more because such a decision would raise the public eyebrow or cause funder migraines then create a tax environment which enables those job incumbents to keep more of what they earn.
Question 3 – Could a similar tax treatment logic work for ED pay?
By Dave Nanderam, Senior Associate Consultant at ASSOCIUM.
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