For Many Executive Directors, an Unwarranted Lump of Coal

It’s that time of year again.

I’m not talking about the holidays. I mean it’s the time of year when many boards conduct the executive director’s annual performance review and set the executive’s salary for the following year.

For many boards and executive directors, it’s not a festive moment.

The problems often start with lack of forethought on the part of the board. Wherever it falls on the calendar (some reviews and salary adjustments are linked to employment anniversaries or fiscal years that differ from the calendar year), every board knows at least in theory that it needs to annually review the executive’s performance and consider a salary adjustment.

But boards forget. Or remember at the last minute. Or put it off until they can get better information about comparable salaries.

If executive directors behaved in similar ways—walking into board meetings in November or December, for example, and announcing that they had just remembered that they needed to do a budget for next year but that putting one together was going to take time and the board shouldn’t expect to see anything until March or April—boards would question their competence.

But perhaps because they are composed of volunteers, or maybe because they’re ultimately in charge but not really accountable to anyone, boards are able to get away with being sloppy and disorganized about reviewing performance and giving raises.

As a result, some executive directors go for years without getting raises or meaningful feedback on their performance. These executives often feel under-appreciated and demoralized.

As we near the end of the holiday season and prepare for a new year, here’s some advice to help nonprofit boards be less Grinchlike in 2011:

• Pay attention! The board is in charge of reviewing performance and setting the executive director’s salary. Even though it may seem like the board just conducted a review and discussed salary a few months ago, a year can go by faster than you think. (For more discussion of boards and their distorted sense of time, see the previous post, “How to Stop the Board Time Warp.”)
• Plan ahead. If you know the board needs to make a salary decision in December, its members probably need to start making plans and gathering information several months in advance. If year-end financial statements are going to be such an important factor in decision-making that the board can’t move forward without them, let the executive director know that as well as when a decision will be made.
• If you have positive feedback, give it. A common complaint of executive directors is that they don’t get a lot of feedback from either staff or board, and performance reviews sometimes focus on areas that need improvement rather than celebrating strengths and accomplishments. A personal holiday card is a good opportunity to provide a word or two of praise and encouragement.
• Imagine yourself in the executive director’s position. For executive directors, it’s incredibly awkward to have to remind the board that you haven’t had a raise in two years or that your performance review is months late. How would you feel if your supervisor acknowledged that you were overdue for a raise but that he or she just couldn’t get to it for a few more months? Don’t treat your executive director in ways that you wouldn’t like to be treated.

The board’s stewardship role is most often discussed in the context of finances, and sometimes fund raising.

However, the board is responsible for exercising stewardship over all the organization’s assets, including its human capital.

A committed and talented leader is one of the most important assets an organization can have, and boards should be careful not to mess up their annual opportunity to reward performance and celebrate the accomplishments of an effective leader.