Exactly the same way a for-profit company does: assessing performance against an agreed set of deliverables. Non-profits have the same balance sheet, P&L, Board and compensation committee as for profits; a competent organization shouldn’t have a problem managing performance.
There’s this idea that running a multi-million dollar organization with well educated staff and highly invested stakeholders is easy because it’s non-profit. Add to that the fact that people have been educated to dislike the idea of their donation going to operating costs, and you have the current disparity between for-profit and non-profit pay.
The final, most insidious piece of nonsense is the idea that because it is a charity – the executive should work for much less than they’re worth – in effect donating their time and expertise to the very organization they’re running.
This is Madness.
My experience in life has been that overall you get what you pay for, and this is particularly true in human beings. I imagine that most people reading this have worked with excellence before and have seen how rapidly change can be effected in even complex environments when there is an effective leader.
I see non-profits as beneficiaries of the capitalist system – entities for social change that are the ultimate recipients of trickledown economics. With the gap between rich and poor getting ever wider and government being unable to fund the shortfall – it is the non-profit organizations that are going to fill in the gap.
So long as there is transparency and clear communication of deliverables I welcome an increase in seven figure salaried CEOs in the non-profit world. It’s about time.