renewing employment contract

December 6, 2005 5:06 PM

I am on a volunteer board that is renewing the executive director's contract. When renewing a contract (non profit organization) is it traditional to give a big bump in base pay, expand fringe benefits, etc. We are looking for advice. Is the raise close to what the annual raise is normally ie: 4-5% or different.
posted by lag to work & money (5 comments total)

4-5% is a cost of living adjustment. In practical terms, her earnings have remained essentially unchanged if that's the only bump she's been getting each year.

Consider what it would cost to recruit a new ED. Factor in lost productivity while her position were vacant, and while the board were distracted with this executive search. Factor in what it would cost to bring any new hire up to this current ED's level of knowledge of and *trust from* your staff, donors, volunteers. Then factor in the value she's brought to the organizational mission so far, plus the value you expect her to bring during the new contact's term.

Balance that against what someone of her accomplishments would be offered as enticement to accept a job elsewhere.

Then give the lady a raise.
posted by nakedcodemonkey at 5:25 PM on December 6, 2005

Depends on the following: is the slary competitive with similar organizations, how was the persons performance, what size increases were awarded to other staff, what is the financial condition of the organization. I have been an Executive Director of non profits for over 30 years. My personal philosohy has been to insist that my salary increase (%) be no more than the average (%) received by the line staff. Largest salary increases went to midlevel supervisors and managers as they represent the heart, soul, core values and day to day operational strength of the organization. If the organization was unusually financially successful or there were truly some performance breakthroughs I would ask for, and negotiate, a specific bonus.
posted by rmhsinc at 5:27 PM on December 6, 2005

Check out Board Source's advice to non-profit board members in considering salary and retention guidelines for their executive directors.
posted by ericb at 5:41 PM on December 6, 2005

Well, "traditionally" Executive Directors (especially founders) are grossly underpaid to such an extent that the entire board goes into shock when they realize they'll have to pay double to attract someone of the same quality to the position. So, as rmhsinc says, make sure what the ED's salary is at roughly the same level as at similar organizations -- because you're going to be paying that much eventually.
posted by zanni at 6:58 PM on December 6, 2005

What zanni said. Our ED didn't even collect a salary until this year.
posted by Ironmouth at 7:29 PM on December 6, 2005