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Nonprofit CEOs are commanding higher salaries in what executive search consultants say is a tighter market given a less robust pipeline of leaders, the push for diverse candidates, and increasing competition with the for-profit sector for talent, which is leading to more national searches. Long term, those trends will push the CEO salaries at even the smallest human services agencies up.
Smaller organizations tend to have more discretionary bonus programs, where larger, more complex organizations are putting in place more formal bonus programs with target opportunities based on stipulated performance and financial metrics, said Tim Dupuis, a Detroit-based vice president for compensation firm Pearl Meyer.
That makes sense, given that complex and large nonprofits are increasingly competing with for-profit companies for CEOs, Dupuis said. "When we talk with boards, CEOs, and CFOs ... there's been a common understanding they want the top talent from anywhere, and it's not just limited to other not-for-profit organizations."
There is a new recognition that nonprofits are getting more complex, and therefore, they need top talent, Dupuis said. "In order to find top talent, (boards) have a newer understanding that during their recruiting process they need to look at candidates from all types of organizations, not just other nonprofit(s)."
Pearl Meyer is consulting with 30-40 larger nonprofits that are looking at both comparably sized nonprofits and for-profits, with the idea that if they needed to replace a senior management level-position, their search would likely encompass both, Dupuis said. "The labor market is getting very competitive."