Executive compensation in the social sector has come under increased scrutiny in recent years, and rightfully so. Though it's unlikely there will be a scandal about excessive compensation in seminaries any time soon, the market nevertheless applies pressure to nonprofit boards considering the compensation packages of their chief administrators (and what presidents, deans and rectors should expect).
A recent piece in the Harvard Business Review examines concerns over executive compensation as a cultural phenomenon. The author asks: Why is it socially acceptable for the symphony director in a major city to make a million dollars while the head of the neighborhood charity is expected to make a pittance? The answer, the author concludes, is the "curse of proximity."
In the public eye, the closer a nonprofit is to the neediest among us -- the homeless, the infirm, the hungry -- the less those who lead those organizations should make. In judging an appropriate salary for such leaders, we usually allow our values and emotions to muddy the waters. The author above suggests that guilt often drives disparate determinations between the social sectors (such as the arts and social services). But too often, these values and emotions go unexamined and can lead to poor governance decisions.
When considering the compensation of their chief administrators, the boards of theological schools should pay attention to the emotions and values with which they deliberate and make their decision. Boards might consider the following five questions:
- What do we value in our chief executive? What does he or she bring to our institution?
- What values are driving our deliberations about how to compensate our chief executive?
- What external factors exert pressure on discussions about the dollar amount?
- What value can be added to the compensation package -- memberships, subscriptions, a pass to the local gym -- that will reinforce the board's values in the leader?
- Why do we feel good, or bad, about the final decision?
Additionally, if compensation is locked in through a previous formula or ecclessial mandate, the governing board should examine whether that system still meets the needs of the president in today's marketplace.
A quick process of values clarification, such as the one above, can do wonders for the theological school board that will eventually wrestle with this important decision. This small investment of time will pay dividends for years to come.