Setting senior remuneration policy

This month I was invited to speak at the Honorary Treasurers Forum Summer Symposium hosted by UBS. The issue at hand was dealing with the tricky subject of how the Honorary Treasurer balances the tension of overseeing the setting of remuneration policy which will both attract the best talent whilst protecting the charity’s reputation as delivering impact and value for money for services. Whilst 91% of charities have no paid staff at all, remuneration is a contentious subject that evokes strong reactions from the public, media and beneficiaries alike.

I spoke alongside Vicky Browning, CEO of ACEVO, who offered some practical suggestions, some of which I thought would be helpful to share here.

  1. Transparency – public trust is volatile and people often think emotionally. It is therefore more important than ever for charities to follow NCVO’s guidance and adopt a transparent process to setting senior remuneration and recording this in the annual report and accounts.
  2. Proportionality – just comparing charity salaries fails to give the true perspective on salary levels. It is sensible to compare sector salaries including pay ratios; this process puts charity salaries in context.
  3. Performance – it is important that leaders are rewarded for doing the job in hand. However the recent Pay & Equalities Survey produced by ACEVO and sponsored by Russam highlighted that a third of charity CEOs are not appraised annually which means that it is difficult to measure whether the level of reward is correct.
  4. Recruitment and retention – recruitment is expensive and time consuming and the cost of getting it wrong often incalculable given the damage it can do. It is important therefore to recruit according to values as this is likely to lead to more success. It will also lead to greater retention as it keeps staff motivated.
  5. Process – it is vital that any recruitment process is thorough, involves the right stakeholder group and that information is shared about the process with the right people in a timely manner. At the most basic level, having a terms of reference for the remuneration committee is important.

Setting remuneration correctly is always important but charities are held to a higher account. Implementing some practical steps, as outlined above, will enable you to go a long way in both protecting your organisation and attracting the best talent.

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