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Executive compensation in associations and nonprofits is influenced by five major organizational characteristics: size, industry, membership type, activity and location. To benchmark compensation accurately requires identifying similar groups based on those critical, linked characteristics.
CEO Update’s 2022 Salary Guide is the only resource putting powerful benchmarking tools in your own hands by reporting actual salaries of more than 8,000 executives in associations and nonprofits as well as revealing the financial details of organizations, which can help build a list of comparable organizations.
While no two groups are exactly alike, building a list of comparables to benchmark executive compensation requires finding other groups that share similar structural and financial characteristics.
The most accurate dataset will include 15 to 20 organizations of similar size (by revenue), representing similar industries with the same membership type (individual or corporate), that share similar priorities (advocacy, education, meetings, public policy) and are located in the same geographic region.
An explanation of the five organizational characteristics with the greatest influence on executive compensation:
An organization’s size—measured by revenue—is the biggest contributor to executive pay. The larger and more complex the organization, the bigger the paycheck. Comparable organizations should be within +/- 20 percent of your group’s revenue.
For the best benchmarking results, identify organizations representing similar industries or professions in the same sector. If the dataset is too small, look to different industries or professions, if they have similar goals or organizational priorities.
Associations fall into two categories: trade associations and professional societies. Executive pay in standard-setting groups is more closely aligned with those in professional societies. As a general rule, trade groups tend to pay better than professional societies. When benchmarking pay, it’s advisable to compare only similar types of associations.
What does the association do for the industry or profession, such as standard setting, advocacy, continuing education or acting as the public face for the industry? Of course, many associations have multiple activities, but when benchmarking compensation, find organizations involved in similar activities with similar emphasis in those activities.
Cost of living differences across the U.S. do influence pay, but the Washington, D.C. region does have two special circumstances that move compensation even higher. The concentration of associations in the D.C. metro region drives up competition for talented executives. Also, a Capitol-area location usually means the organization is involved in advocacy or public policy in some way, which also significantly influences pay.
Where does your salary fit in with the dataset?
Once a dataset has been created of similar organizations, it’s not enough to find just the median or average in that dataset. Thoughtful consideration should be given to the level at which executive pay should fall in line with the dataset. Should pay be right in the middle? A bit higher than the median? Or at the 75th percentile?
This is a question that can only be answered by the executive and the organization, but there are salient factors to be considered:
— The executive’s contribution toward the association’s goals.
— The organization’s vision for the next five or ten years.
— The importance of continuity and retention of leadership in the organization.
(For instance, if an organization chooses to pay its executive in the middle of a pay range of similar groups, that executive may be lured away for a higher compensation package.
CEO Update can benchmark your pay for you.
CEO Update’s Customized Salary Report can provide you and your organization a detailed report on comparable CEO pay at similar organizations. Please contact Mark Graham at graham@CEOupdate.com for more details.
The Salary Guide is the only resource for association and nonprofit executives that provides actual salary data of thousands of CEOs and senior staffers to put you in control of creating your very own compensation analysis. Order the Salary Guide
CEO Update’s Salary Guide reports the actual pay details for more than 8,000 executives in associations nonprofits, not medians or averages. Learn how to benchmark you salary
Each record of the more than 2,100 organizations in this Guide includes CEO compensation figures and compensation for up to five senior staffers. CEO pay details include take-home pay, base pay, bonuses, and other compensation, which is usually the result of retirement or severance payouts. The Guide also identifies deferred compensation and the value of nontaxable benefits. See a sample page
MORE ANALYSIS, MORE DETAILS, MORE RESEARCH, MORE SALARIES
The top salary guide in the association and nonprofit community is even better for 2020.
- A fourth new salary benchmark is introduced, the combination of base, bonus and deferred compensation, which represented the total annual compensation package.
- Seven-year salary trends
- More analysis on bonus pay by organization type and size.
- Major association activities are now reported to assist in the benchmarking process.
- More accurate data on annual revenue by including revenue from affiliates
- And of course the latest pay details of more than 9,000 executives
The Guide looks at national associations and nonprofits with at least $1.7 million in revenue. See a full list of organizations included in the Guide
Critical to any compensation benchmarking is identifying comparable organizations, based on size, location, type, sector and activity. The 2022 Salary Guide provides all this information so you can easily identify associations and nonprofits that are similiar to your own. The Guide is divided into 12 sectors and provides an analysis of pay trends of each sector. See a sample page
The 2022 Salary Guide is the comprehensive tool to benchmark your own compensation.
Job candidates for association C-suite seek more options to work away from office
Compensation levels for top association staff are rising, but so are expectations among job candidates to work remotely, two recruitment and compensation experts said during a CEO Update webinar on executive pay.
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Recruiter Leslie Hortum of Spencer Stuart and compensation expert Charlie Quatt of Quatt Associates joined CEO Update Managing Director Mark Graham on Nov. 3 for an hour-long discussion on the compensation and recruitment outlook for association C-suite positions. One common theme: The COVID-19 pandemic has left a deep mark on the association landscape, with job candidates demanding more flexibility on remote work and less emphasis on incentive pay.
“We’re going to start seeing pressure for people to move incentive compensation to base salaries because they won’t trust any longer that the incentive compensation will be rewarded,” Quatt said.
That deemphasis on incentive pay comes after nearly two years of associations missing performance marks because of the economic headaches created by the pandemic. At the same time, the disaster had caused many workers to reevaluate their career priorities, leading to employee churn at organizations at all levels.
“People are leaving (their jobs) because this has been a time of making interesting choices about their lives: Where and how they spend their time, where they want to live, what kind of flexibility they want to have,” Hortum said. “There is an awful lot of churn. We’re turning work down all the time because we cannot keep up with demand for our services.”
Executive compensation is rising because demand for talent is high and employees have a lot of leverage at the moment, Quatt said. At the same time, women and people of color are pushing to ensure they are not paid less than the executives who preceded them. The association C-suite has historically been very white and very male.
Organizations “are being asked to invest in two ways,” Quatt said. “They’re being asked to invest in keeping their talent and they’re also being asked to invest in making sure that people are accurately paid. And both of those can cost money.”
Many associations have boosted their diversity, equity and inclusion efforts in recent years, especially since the 2020 Black Lives Matter protests sparked by the killing of George Floyd by Minneapolis police officers. That focus has carried over to CEO-level job searches, with search committees demanding a demonstrable history of action, according to Hortum.
“What search committees are asking candidates is not just how do you feel about it, but what have you done about it?” she said. “How have you shifted the makeup of your board to be more inclusive? How diverse is your senior leadership team? How about one level below that? They’re getting very granular and specific: not just do you think this is a good idea, but what have you done to impact the results?”
Work away from work
Compensation is important to job candidates, but so is an organization’s culture and mission, according to Quatt. Still, the most in-demand job perk at the moment is the ability to work remotely.
“We’re finding that the No. 1 issue is flexibility,” Quatt said. “People will accept more readily that they be at work a full week if they’re able to balance it with the personal schedules they have.”
“When people know that there’s a certain amount of flexibility, and this goes into customization of the compensation plan, that can go a long way in letting people fit their personal lives and preferences into the fact that they’re being required to come to work,” he added.
One example Quatt cited was a client that started paying its employees a monthly stipend to offset the cost of driving to work instead of using public transportation. “In other words, we may start seeing people actually getting money for coming to work on a regular basis and not getting it if they don’t,” he said.
One benefit of flexibility is associations can draw on a much larger pool of job candidates for top positions, according to Hortum. The downside, particularly for CEOs, is how do executives build a workplace culture if they rarely see their employees in person?
“A lot of people who fail in their jobs don’t fail because they’re not smart, hardworking people. They fail because it’s a bad culture fit,” Hortum said. “And so driving a culture that that is about inclusion and engagement and people feeling that they were aligned in the mission is really important. So how do we do that if people aren’t in the office?”
Still, there is no denying the popularity of the perk in attracting talent, she noted.
“What I have heard anecdotally is that those who are mandating back-to-office full time, people don’t want it, they’re not ready for it,” Hortum said. “Will we all feel differently a year from now? I don’t know, but right now, the mandate idea is not playing very well.”