The only sound in the boardroom is the faint ticking of a wall clock. The hospital CEO has just made an offer of employment to the top fund raising candidate.
She carefully reads through the document, then shakes her head. “Unfortunately, this isn’t adequate. You’re asking me to uproot my family, move to a strange city, assume an enormous amount of new responsibilities, all for only a 15 percent increase over what I’m currently making. It’s just not good enough.”
The CEO remains calm. “Sally, we want you on our team. I believe your experience, charisma and development savvy will help this organization take fund raising to a new level. Here’s my final offer: a 20 percent increase in salary, a $10,000 signing bonus, a no-interest loan of up to $50,000 to be used as a down payment on a house, as well as all the other perquisites of our senior staff members.”
Sally nods, but doesn’t yet agree. “Will you put that offer in a written contract?”
With a handshake, the fundraiser is hired.
Is this the way of the future? Will organizations have to be more creative and generous in their offers to obtain the services of senior development professionals?
“We’ve already seen that kind of thing,” commented Christopher Bryant, President and CEO of AST/BRYANT an executive search firm in Santa Monica, CA (www.astbryant.com). “The war for talent is a bidding war and prices are really being driven up because of the dearth of talent. Contracts, signing bonuses and creative compensation are going to become more common.”
Why more common? In today’s booming economy the experienced development professional is being asked to take a more active role in the management of the organization. Not only is the development professional required to raise money in the traditional sense, but she is also being asked to create programs that will raise money in cyberspace, develop e-commerce ventures and product lines. With so much riding on the shoulders of the development professional, organizations realize they must become more creative with compensation packages. Supply and Demand
Dozens of high-level development positions are going begging because of a dearth of qualified fundraisers. There are two major reasons why this is true according to Colette M. Murray, CFRE, CEO and President of Paschal-Murray Executive Search in San Diego (www.paschalmurray.com). “We have experienced an enormous growth in the not-for-profit sector over the past five years. It seems that new organizations are springing up daily. Not-for-profits traditionally did their fund raising by special events or direct mail. Because direct mail has gotten so costly and special events are not cost effective, all of a sudden everybody realizes the importance of major gifts or planned giving to build the asset base and endowment for the future. Everyone wants someone to do the job, but there simple aren’t enough trained development professional to go around. The second reason there are so many new positions available is in the past many not-for-profits were getting along just fine with either membership revenue or support from state or federal sources. However, those social programs have been cut way back so a lot more fund raising is needed. Also many organizations who are now looking for major gifts officers have had their United Way funds cut way back. So putting these two things together, there are just more jobs out there.”
Nelson Cover, President of the Sheridan Group in Arlington, VA is also seeing many development positions that aren’t being filled. “There’s an insufficient supply of qualified personnel for the positions that exist in today’s market. That’s one of the reasons why in some cases the senior development person is making more than the CEO of the organization. It’s a question of supply and demand.”
A fund development officer with a salary as much as the CEO? Although it seems improbable, some organizations are moving away from the egalitarian environment that has stifled hiring the very best qualified people. “Non-profit organizations tend to be very rigid and strict relatively to what they can pay for a given position,” explained Bryant. “Not so much what the markets dictate but what other positions at that level pay within the organization. For example when I tell a college President that he may be looking at $125,000 to find a Vice President of Development, it’s not unusual for the President to look and me and say, ‘I don’t even pay the chairman of my English Department that much.’ To which I would respond, ‘If we were recruiting for a chairman of your English Department we wouldn’t have to pay that much.’ What you pay your CFO and what you pay your chief academic officer, and what you pay the head of nursing services, has no material impact whatsoever on marketplace realities.”
David G. Phillips, President of Custom Development Solutions (CDS) a full-service consulting company located in Isle of Palm, South Carolina (www.cdsfunds.com) agrees that costs associated with hiring a top professional must be analyzed with the big picture in mind. “Never look at the cost side alone, look at the costs and benefits. Boards may say we don’t have it in the budget and fail to hire someone because there is a substantial cost involved. They need to look at the benefits of bringing in this individual, and if the benefits far outweigh the costs then you’re always better off to buy from the top shelf rather than purchasing something that’s just ordinary.”
What will lure the individual to your organization?
Nelson Cover believes that a compensation package is only one part of the lure to acquire a quality person. “Rather than just offering a big salary, the key to satisfying the baby boom generation is to provide a package that is sensitive to the needs of the whole family. These individuals are not only looking for a challenge in the work environment they are also looking for a work environment that matches their values and their family and children’s needs. Those become far more important in the total incentive package rather than just compensation. Try working in an environment where your spouse isn’t happy. It doesn’t matter what your compensation is. There’s no price you can pay for a happy spouse and happy kids.”
Cover continued, “I think an organization will be far better off in finding out who their lead candidate is as a person, what their family needs are, what they live and breath for, what are their values and how will they fit into your culture. Then offering a package that is sensitive to their needs. I believe that’s what’s going to be attractive to the candidate.”
What should the organization do before looking for a new development professional?
Because qualified development professionals are in such great demand, what should an organization do to better its chances of recruiting an individual who will successfully fit into its culture? “We have had a number of experiences where we were asked to conduct a search, but when we met with the organization we realized they were not ready for us or ready to conduct the search,” commented Colette Murray. “There is a mentality in this country that people who work for not-for-profits do it because they are mission orientated and big-hearted and don’t need to be paid as much — and that’s absolutely wrong. Organizations must be realistic and find out what the market is paying for similar jobs in the community.”
Murray listed the following suggestions to help an organization be better prepared in their new employee search. 1. Have a plan for the search. Whether you’re using a search firm or not you need to decide who is going to be on the search committee. 2. Keep the committee small to accelerate the recruiting and hiring process. Today with so many good jobs available you can’t drag out a search for three and four months. The best candidates probably have other options. 3. The organization needs to be prepared to bend over backwards to help a spouse or partner to find a job. Obviously they don’t have to guarantee a job but the organization can offer to open doors and help with introductions. 4 Think creatively in your methods of compensation.
David Phillips adds to this list, “Never be myopic. Look at your organization very carefully and decide on your long-range goals and your strategic plans for the next five to ten years. Are there one or more capital campaigns in your future? You want to get someone who is a seasoned development officer who has taken another organization through a capital campaign and will be there to lead your institution in the next capital campaign.”
What should the individual do before accepting a new position?
Although there are a plethora of outstanding positions waiting to be filled, the development professional must carefully evaluate those of particular interest. David Phillips suggested the following introspective actions prior to pursuing a new post. “I would ask the individual to look at their own lifestyle and decide what they like about it and to look at the time balance. Do they want more time with their family? Do they want some time that they can spend developing themselves professionally? Do they want to have time available for consulting? What other factors command their satisfaction? Once these questions have been answered then blend those with whatever compensation they determine will be in their best interest then take that package and try to see which organizations will be able to make a good match for them. There are a lot of institutions, who, in order to get the best person, are willing to be flexible, so you need to know what’s valuable to you before you go into that negotiation.”
In addition to looking at internal needs, the potential candidate should also spend time studying the recruiting organization. The smart development professional comes to the job interview with a long list of questions for the institution. Those questions would include: What is the history of this position? Why is it currently vacant? What is the budget for this position? What are the short and long range fund raising goals of the organization? Does the organization have an established strategic plan? How successful were past fund raising efforts? What kind of access will I have to the trustees? What support will I have on solicitations? Who is going to support my game plan? Is everybody going to accept responsibilities for solicitations? Will I be working hand-in-hand with the CEO of the institution or am I expected to solicit gifts by myself? The lure of a new, high-paying professional opportunity may cloud rational thinking. The old adage of “buyer bewares” applies to the workplace as well. Spending the time to evaluate the position, the organization and the community, may be the most important hours you can invest in your future.
Nelson Cover suggests, “First look at the turnover rate of the position. Then talk to the person who was previously in that position. Often the candidate will never think to do that just because they think it seems unacceptable or they’re prying. I would always want to talk to the person who had the job before me. And I’d want to talk to some people outside of the organization who would have an opinion about the organization. You have colleagues, use them, they can be very helpful. They can give you more depth and knowledge about the institution that you probably won’t get in the job interview.”
The downside of creative compensation
In fields other than fund development, creative compensation packages have been an industry standard for many decades. However, in the field of development lucrative signing bonuses, contracts and compensation related to performance are relatively new and can cause internal and external problems for the organization. Unfortunately, development officer are very often misunderstood by either faculty or staff within a particular institution. There are often misconception about the development staff and how hard they work and what they do. If you add a bonus or incentive fee, without offering it to other departments, you might run the risk of increasing misunderstanding, anger and jealously among other staff members.
“There is always the risk that someone will think it’s irresponsible that you’re spending so much money for this individual,” commented Phillips. “However, you need to view this position with a long term set of lenses. Usually this is an individual who has led other institutions from mediocrity to great change and a brighter future so they are not going to come unless you reward them.”
Enjoy the process
David Phillips believes that a new job opportunity can be an exciting and rewarding experience, but cautions against rushing through the process. “Many people come to the job search ill-prepared. Often times the individual just wants to get through the process and not really enjoy the process. I would say to anyone who is looking for a job — study the environment. See what kind of opportunities are available and take advantage of them rather than just saying I want to make a decent salary and I want a good job. There are many different creative and rewarding ways that you can enhance your job relationship.”
Examples of Creative Compensation Benefits
“Dangling money never hurts! I don’t care what anybody says,” quipped Colette Murray.
Contracts can help crystallize the understanding between the organization and the new employee. Should misunderstandings arise, generally the employee can depend on the contract to protect their interests. However, not everyone agrees that employment contracts are essential recruitment tools. “We’re not a big fan of contracts,” stated Christopher Bryant. “The only time that I would recommend a contract is when there is instability in a position. In a situation where the position has been vacated many times, who really knows what causes that kind of turnover. To provide a level of security for candidates to seriously look at that position, then it may be necessary to provide some type of assurances that if it doesn’t work out for whatever reasons, then they are not going to be cut loose on thirty days notice to find a job that may very well take up to a year to nail down.”
A Signing Bonus
Signing bonuses are becoming more common in the not-for-profit workplace as organizations strive to recruit and employ the very best people. A recent poll conducted for WorkSeek.com found that 41 percent of potential new employees would be more inclined to join an organization if a signing bonus were offered.
According to Bryant, another reason for a signing bonus may be to provide an inducement for someone to make a regional or national move. “If an individual is living in the Midwest in a five bedroom home with a finished basement and an acre of land, that property may sell for $250,000. However, if they move to Los Angeles they are now faced with purchasing a $400,000, two-bedroom bungalow on a fifty-foot frontage. So to help people with the down payment on a new home, a signing bonus might be something worth considering.”
To entice a development person to stay with an organization through the entire five years of a capital campaign, the organization may offer the individual some percentage of their salary to stay the whole five years. The organization agrees to pay X thousands of dollars if you stay for five years and will fund that bonus at 20 percent per year. If you leave at the end of four years you get nothing, if you stay through the fifth year then you get the whole amount. So it’s not just a lump sum, but a lump sum that has accrued interest over a period of time.
“In higher education sabbatical leaves for faculty is the norm,” stated Bryant. “What is not the norm is sabbatical leave for Chief Development Officers. If the capital campaign comes in on target and on budget, then the individual is given three months off to recharge their batteries.”
When people talk about cost of living they’re generally talking about cost of housing. Housing allowances, low interest loans for down payments, and no interest loans are becoming more commonplace. “I know of one organization that offered up to $50,000 housing allowance with no interest, payable when the employee left the organization,” commented Bryant. “I also have a client right now who is willing to offer 100 percent of the sale price of a home in the form of a low interest loan.”
Other benefits can include: increased vacation time, paid memberships to national organizations, a car allowance and bonus arrangements for reaching performance goals.
Bill J. Harrison, CFRE is the Director of Fund Development for Blood Systems in Scottsdale, Arizona. In this role he coordinates fund raising programs in 18 states. Bill has more than 25 years of fund raising experience. You may reach him at email@example.com or visit his website at www.billjharrison.com.
Custom Development Solutions, Inc. (CDS) is among the most sought after fundraising consulting firms specializing in the strategic planning and tactical execution of capital campaigns for non-profits throughout the United States and Canada. If you have a fundraising question, please call CDS at 800-761-3833 or send an email to firstname.lastname@example.org.