A Primer In Executive Compensation In Not-For-Profits

Written by Paul R. Dorf, Ph. D., APD

Continued from page 1

Similarly,repparttar use of long-term goals must relate torepparttar 151014 objectives that are more strategic in nature, and related to financial growth projections overrepparttar 151015 next three to five years. It is at this point that more creativity is needed inrepparttar 151016 plan design, since NFPs obviously do not haverepparttar 151017 ability to share wealth or grant equity with members of its senior management team. The award that best fitsrepparttar 151018 requirements should take some form of capital accumulation. The specific design features may vary, butrepparttar 151019 basics arerepparttar 151020 same: long-term performance goals are established and monitored. Ifrepparttar 151021 performance goals are achieved withinrepparttar 151022 specified period, funds will be set aside into a Rabbi Trust or similar vehicle, which conforms to IRC §457f and 409A. These plans allow monies to be accumulated forrepparttar 151023 executive until retirement. Althoughrepparttar 151024 amounts accumulated under this type of long-term incentive plan will probably not equalrepparttar 151025 potential value of stock-based plans, it may actually be more consistent with long-term compensation programs in privately owned For Profits, and will certainly go a long way to makingrepparttar 151026 NFP’s executive compensation package more competitive.

What challenges exist in evaluatingrepparttar 151027 NFP executive compensation package for determining reasonableness? An interesting aspect ofrepparttar 151028 difference between evaluation ofrepparttar 151029 NFP compensation package is that elements such as health care benefits, contributions to retirement plans and evenrepparttar 151030 prorated cost of Directors & Officers (D&O) insurance coverage is considered part ofrepparttar 151031 reportable NFP total compensation package, even if it is not taxable torepparttar 151032 individual. Among For Profit public companies,repparttar 151033 amount and makeup ofrepparttar 151034 executive compensation package is generally available inrepparttar 151035 various government filings includingrepparttar 151036 proxy reports. Even though SEC regulations require specific items to be reported, preparing these proxies continues to be an art form unto itself; which often masksrepparttar 151037 true value ofrepparttar 151038 compensation and appears to go out of its way to make reading and interpretingrepparttar 151039 data difficult, at best. Similarly, disclosure ofrepparttar 151040 comparable required compensation data for NFPs is shown onrepparttar 151041 IRS Form 990, but is far less definitive and should be carefully scrutinized. The bottom line is that it is much more difficult to accurately make comparisons with other NFPs, which isrepparttar 151042 main area for judgingrepparttar 151043 reasonableness ofrepparttar 151044 overall compensation package. The regulations currently allow For Profit compensation data to be used when determiningrepparttar 151045 competitive market; this is certainly appropriate since many ofrepparttar 151046 NFP positions are interchangeable betweenrepparttar 151047 NFP and For Profit groups. A cautionary note: there are groups in Congress who believe that this “liberal” approach should be curtailed, and only want to allowrepparttar 151048 use of NFP data inrepparttar 151049 evaluation of pay.

Why is a Compensation Philosophy important for NFPs? Inrepparttar 151050 world of large For Profits, most have a well-documented Compensation Philosophy that statesrepparttar 151051 company’s intentions vis-à-vis how executives will be paid. This typically includes a discussion of what peers they will use for comparison purposes,repparttar 151052 level of competitiveness,repparttar 151053 basis for making awards, andrepparttar 151054 elements to be contained inrepparttar 151055 executive compensation package. Many mid-sized and smaller For Profits have not yet takenrepparttar 151056 necessary steps to formalize their pay strategy; this unfortunately is alsorepparttar 151057 case with many NFPs. It is not only important from a business standpoint, but is required inrepparttar 151058 regulations. One point that needs to be carefully examined isrepparttar 151059 level of competitiveness thatrepparttar 151060 organization establishes. The most common level forrepparttar 151061 majority of compensation philosophies andrepparttar 151062 one that most NFPs strive for isrepparttar 151063 50th percentile, or “middle ofrepparttar 151064 pack”. It is assumed that this is a safe place to be, and therefore,repparttar 151065 easiest to justify. This may be true, but there is nothing that precludesrepparttar 151066 NFP Board from selecting a higher or lower baseline, particularly if it is consistent with their philosophy, and justified byrepparttar 151067 overall performance ofrepparttar 151068 organization. In other words, good performance should earn executives fair and competitive pay, while outstanding performance should earn them above market levels of compensation. It all goes back to setting appropriate expectations and standards, and holdingrepparttar 151069 executives accountable for results; and rewarding them accordingly.

Compensation Resources, Inc. provides compensation and human resource consulting to mid-size and Fortune 500 clients as well as public, private, family-owned and emerging companies. CRI specializes in Executive Compensation, Salary Administration, Performance Management, Sales Compensation, and expert witness services. Our reference library boasts over 4,800 surveys.

Entrepreneurial Business Plan The Down And Dirty Way

Written by Suzan Fiskin

Continued from page 1

4. How will you market your business?

Study your competition. What’s working for them? Model their success. Improve it. Think outsiderepparttar box. Where does your niche hang out? Will you network, place ads in local papers, or do some PR? How about using Google pay per clicks?

5. Why you?

Why will your potential customers go to you instead ofrepparttar 150976 competition? What makes you uniquely qualified to solve their problem(s)? Is there a specific solution you have that they don’t? Can you be more cost effective and/or efficient? Is your service unparalleled? If you don’t know why they’d choose you, your market won’t know why either!

So there you have it - your Down and Dirty Business Plan™. Feel free to revisit your answers and tweak them as you take in new information and experiences.

Take care of business and remember to have fun! Suz

Since 1992, Suzan Fiskin has loved being a Master Coach for ADD-ish entrepreneurs (and most entrepreneurs are ADD-ish!) as well as a motivational speaker. She served onrepparttar 150977 Boards ofrepparttar 150978 Forum of Women Entrepreneurs, Association of Women in Technology andrepparttar 150979 Professional Coaches and Mentors Association. She has a free online assessment, bi-weekly teleconference calls and a number of other resources for ADD-ish entrepreneurs on her website http://www.ADD-ish.com.

I’ve been coaching ADD-ish entrepreneurs since 1992. I’m a lifelong entrepreneur with a degree in communications from UCLA. I am Master Certified in NLP, a certified hypnotherapist and ADD to beat the band. I've spent many years building the skills & strategies to help those of us whose brains are wired differently. It's my life's work.

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