Imagine a world in which high performing, high potential university graduates are recruited to work in Jewish communal institutions with the same attractive and compelling packages offered to their classmates going into finance or law or corporate work.
By Dr. Hal M. Lewis
That nagging little voice in my head kept begging me not to do this. “Don’t write it! It’s not worth the aggravation and the attacks that will follow.” I worried that penning this piece might, in fact, do more harm than good. As I contemplated the consequences of challenging the lieu commun regarding nonprofit executive compensation, I even considered pseudepigraphy for a moment, before rejecting it as too pusillanimous for my taste. It is not the personal opprobrium I was concerned about. I worried about the potential fallout publishing these thoughts might have on my institution, its trustees, faculty, and staff.
But in the end, it is for our students – those contemplating a career in the Jewish community, and those well on their way to positions of senior leadership – that I have chosen to set aside these concerns in order to raise questions about the all-too-commonplace bromide in Jewish life that executive salaries are too high. Driven in large measure by the Forward’s annual salary survey, the conventional wisdom now seems to be that too many nonprofit CEOs in the Jewish community are overpaid. The Forward appears to take great pride in outing those individuals whom they believe make too much money, based on a formula that considers only two factors: size of staff and size of budget. Writing in the Jewish Journal, Jared Sichal, describes reliance on such a simplistic approach as “questionable economics” that may, in fact, “not be fair.”
Significantly, the Forward is not alone. The recent statement of “Core Principles of Ethical Behavior,” assented to by more than 350 (mostly) rabbis and academics, proclaims, “The leaders of Jewish institutions and organizations should not receive excessive financial remuneration,” where the word “excessive” remains undefined.
Ironically, the concerns expressed in both the Forward and the “Core Principles” about CEO compensation obfuscate critically important issues in Jewish life that are screaming out for broad-based attention and action, including such things as gender inequity and the abuse of power by those in positions of leadership.
Underneath the accusatory tone and thinly veiled moralisms, lies the insinuation that Jewish communal professionals should by virtue of “serving” the Jewish people earn less than their for-profit analogues. Conflating excellent compensation with ethical infractions is destructive. Too many Jews have embraced what Dan Pallotta in Uncharitable brilliantly suggests is an inheritance from Puritanical and Calvinistic traditions. To wit, those who are compensated with “charitable” dollars must be remunerated at levels far below those found in other sectors.
There is a muckraking quality to these critiques, a kind of giant gotcha, mixed with just the right amount of sanctimony that is not only unseemly, but counter productive. “If you are a volunteer at one of these organizations, a client, a donor, an employer or an employee,” we are admonished, “you deserve this information.” As if boards, compensation committees, or anyone with a computer cannot already access the same data. When discussing those individuals whom they adjudge to be “underpaid,” the Forward sarcastically suggests that, perhaps, the less well compensated could improve their lot by aping the negotiating skills of those at the top of the list. The sardonic tone continues, “Or maybe those who are ‘underpaid’ are paid back by their work in ways beyond measure.”
While others are exceedingly vexed about high-earning CEOs in the Jewish community, I would suggest that such a consuming focus is the functional equivalent of Nero fiddling while Rome burns. We are living at a time of accelerated executive retirements, a dearth of talent, and a dramatic increase of young professionals leaving the field through the revolving door that leads right to the corporate world. If ever there were a case of misplaced priorities, this preoccupation with executive salaries seems the perfect example. [I am aware as I write this that some will dismiss these concerns because I too am a Jewish organizational CEO. So, full disclosure – my salary happens not to be listed in the Forward’s analysis, and if it were it would likely appear among the bottom 15-18 executives.]
To be clear, only a simpleton would suggest that search committees can magically find the most qualified candidate just by raising the compensation level. And any facile suggestion that non-competitive salaries are the only reason so many high-potential individuals are abandoning the Jewish employment market is feckless. But what is true – and I am sure of this because I hear it from my students and younger colleagues regularly – is that attempts to superimpose an expectation of limited earning capacity, couched in gently pietistic terms, turns off more talent than it attracts.
Today, to be the executive of a Jewish nonprofit organization, or even a senior-level professional, requires a variety of skill-sets, personality traits, aptitude, and artistry that are not readily obtainable, and certainly not available to the lowest bidder. Those who care deeply about the future of Jewish life, who recognize that we are confronted by challenges in our day that have never before been seen, should demand the highest quality professionals money can buy.
I understand, of course, that the linkage between salary and performance is not absolute, but in this rapidly changing Jewish world, where superior leadership matters more than ever, why would we suggest, as the signatories to the “Core Principles” have, that “Salary levels should correspond to a minimal portion of the budgets of those institutions?” (Curiously, though, perhaps to be expected, the phrase “minimal portion” is not defined.)
The mythology that social sector work is a zero sum game; that every dollar expended on salaries and benefits is a dollar not being spent on “services,” is fallacious and contrived. If the work that needs to be done requires, among many other things, raising enormous sums of money, and generating substantial revenue to enable the enterprise’s desired impact, how is it that anyone would recommend settling for less accomplished individuals, which is precisely what will happen if we adhere to the “minimal portion” stratagem? In our day, when even the most punctilious oversight bodies in American philanthropy have reexamined their positions on overhead, the rationale for clinging steadfastly to a vestige of the hoary past eludes me.
Nonprofit CEOs do not set their own salaries. This is the job of governance, whether a compensation committee, executive committee, search committee, or board. This is a process that organizational donors and volunteer leaders, those who know the organization best, take quite seriously. They study comps, understand the realities of their institution’s budget, establish metrics for evaluation, and more. I fail to understand how anyone with little knowledge of an enterprise beyond what they read on a Form 990, would feel entitled to determine fair compensation for that organization’s executive. Even the Forward’s advisor from Wharton has acknowledged (the hardly controversial notion) that, “Talent and skill have a sizeable effect on salary.”
Consider the devastating impact these self-righteous messages about salary levels are having on today’s enthusiastic and impassioned communal employees and those contemplating entering the field. The “minimal” salary proponents would have us recruit with the enchantingly pernicious phrase, “Come to work for the Jewish community, where salaries are low, and uninformed scrutiny predominates.” What we should be telling young talent is that as you rise through the organization, as your performance improves and your knowledge grows, you will receive new opportunities, and your salary will increase commensurate with the value you create. And no one, least of all self-appointed guardians of remunerative appropriateness from the outside, will have the power to impose or even insinuate artificial salary strictures. Imagine a world in which high performing, high potential university graduates are recruited to work in Jewish communal institutions with the same attractive and compelling packages offered to their classmates going into finance or law or corporate work.
For years our sanctuaries and boardrooms have resounded with the oft-heard complaint, ”We should run this place more like a business.” While not always what we’ve wanted to hear, and occasionally, just plain wrong, the reality is that increasing numbers of organizations have come to understand that they need executives with expanded repertoires, excellent fundraising skills, and increased sophistication in matters of finance, management and leadership in order to inspire trust among their manifold constituencies and funders. It is disingenuous for so many Jewish organizational critics, often the very first to demand the highest level of business acumen from their professionals, to persist in the belief that salaries should be limited in order to comport with some arbitrary notion of nonprofit propriety. This is hardly “running things like a business.”
As I suggest at the outset, there are a number of significant related issues embedded in the calls for restricted compensation that deserve the attention of thoughtful and capable leaders, women and men who can have an impact, who can build consensus, take risks, and lead change. But we will never make the progress we need to make if, out of some idyllic worldview, we excoriate, however furtively, a system that affirms the linkages between compensation and excellence.
Dr. Hal M. Lewis is the President and Chief Executive Officer of Spertus Institute for Jewish Learning and Leadership in Chicago. A recognized expert on Jewish leadership, he has published widely in the scholarly and popular press. His books include, “Models and Meanings in the History of Jewish Leadership” and “From Sanctuary to Boardroom: A Jewish Approach to Leadership.” He can be reached at president@spertus.edu.
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As the daughter of a retired public and religious school teacher (my Dad, not my Mother), the idea that work itself is the reward that should augment its lacking financial compensation compared with higher paying professions has always been an issue of contention for me. I agree with Dr. Lewis that we should pay our staff members on par with other professions to attract and keep the best and the brightest. But the point missing from here is the one written a year ago by Brenda Gevertz, not that the leadership staff is paid too well but that the line staff is paid too little. http://ejewishphilanthropy.com/paying-it-forward/?utm_source=Tue+Feb+4&utm_campaign=Tue+Feb+4&utm_medium=email. Most of the staff is invisible to the public. Their salaries are numbers and position titles on a balance sheet. They have the commitment, the passion for the Jewish community and often work countless hours behind the scenes. If we knew our staff members as well as we do our CEOs, we would surely see this issue differently. The Jewish community is always in the vanguard on social justice issues, on education, on fairness, on parity. We need to do more than keep up with other parts of the nonprofit sector. Rather we should take a leadership role and set the bar higher so that all staff are recognized for their contributions to the profession and the community and compensated equitably.
I am largely in agreement with the thoughts in this piece. But I do want to reiterate that, to my mind, the issue of compensation has never been about the few overpaid CEO’s but about the huge number of underpaid workers at the bottom of the scale. [I never write or speak about the Jewish non profit sector, about which I have become an outsider, but about the total non-profit sector.] I have written, and argued, that the 990 does a disservice – it only asks about the 5 highest salaries – I want to know the bottom 5. I want to know what the turnover rate is among them, the fringes they do or don’t get at that level, and what kind of support and training they receive. To my mind, if those throughout the workforce are being treated fairly and equitably, and are paid respectably, I couldn’t care less about the salaries at the top of the pyramid.
Let’s get real here and admit the majority of donors have no problem paying a fair and competitive salary to CEO’s of Jewish non-profits when they deliver their agreed benchmarks or targets. I do have a major beef when these excessive salaries and perks are hidden from donors and are not transparent. My gut tells me no CEO of a Jewish non-profits should be making a half million dollars annually and benefit by being a non-profit. The Forward does the Jewish community a real mitzvah by shedding light on this issue.
Thank you! The issue isn’t CEO salaries are too high – many are on par. The issue is that other salaries is too low!
As “young” professional – I personally hate the term because it boxes us in a category and often times senior staff write us off – I find the Jewish communal field so rewarding, yet also very frustrating. What they don’t realize is that without cultivating our skills and talent and allowing us to use what we learned we are leaving the field in droves. I am ready for growth and thrive on a challenge. I’ve experienced job growth and do supervise other employees. But still in mid-management, the salary is insulting. I am getting ready to begin a job search and frankly I am trying to switch to a corporation. The number one reason is salary. I cannot live off of such a low salary. I cannot start my family with my partner off of such a low salary. It hardly makes my two graduate degrees worth attaining just to earn such a low salary. So I am taking my MBA, high potential as a future leader, and passion for my work to the highest bidder with the best benefits.
Having enjoyed a long and satisfying career in Jewish communal service, I’m mainly concerned with the salaries and career expectations of entry-level employees. I appreciate Hal’s focus on them. As a hiring manager, only rarely have I encountered a serious applicant who is anything less than very bright, well-educated (meaning they approached learning with passion), and excited to serve the Jewish people. Only at our collective peril do we penalize such hires with low wages, treat them as “indentured volunteers”, and expect them to accept glacial growth. That said, non-profits must demonstrate their value proposition, leading donors and others to see fair compensation as a just reward for good performance.
I could not agree more with Carol Gliksman. Additionally, I noticed the irony of employing an excessive number of SAT words (lieu commun, pusillanimous, pseudepigraphy, etc…) while noting that the Forward did not define the word “excessive”. Complex words do not a complex argument make. If anything, they obfuscate it. Respectfully yours,
It should be noted that the huge difference in compensation between leadership and line staff is not limited to Jewish organizations or even just the nonprofit world– the private sector is no different in leveraging the “cheap” front line workforce to either save or generate revenue, directing funds to the shareholders or C-suite. The purpose of for-profit is to maximize profit, but in the Jewish not-for-profit world we purport to create a meaningful impact and work according to Jewish values. I think the compensation gap runs afoul of those values– and the impact to the front line staff is far more detrimental than most leaders care to realize.
Dr. Lewis states, “Imagine a world in which high performing, high potential university graduates are recruited to work in Jewish communal institutions with the same attractive and compelling packages offered to their classmates going into finance or law or corporate work.” One problem I have with this notion is, “high performing, high potential” candidates for the Jewish non-profit world will likely possess a markedly different moral, ethical, social-emotional profile than those deemed most suitable for for-profit financial, legal, or corporate work, where the main criterion is enhancing the bottom line regardless of collateral damage to others. I respect those who make a decision to dedicate their talents to serving others, even if that means not earning as much as they might make where profit predominates. Those who work in the non-profit sector, especially when they depend on private individuals to support their agency and help pay their wages, should expect to be able to make a decent living, but should not expect to live a privileged, extravagant lifestyle.I give you the recent allegations regarding The Wounded Warrior Project, to illustrate my point.
Thank you, Dr. Lewis, for sharing this side of the issue. The research is clear, Jewish NPOs are failing in attracting the leaders of the future and one major reason is that there is this artificial notion that when someone works in the nonprofit sector, they shouldn’t be paid what a counterpart in a corporate job would make in a similar role. The Jewish community is losing our best and brightest to the for-profit sector who are willing to pay for talent.
The Leadership Pipelines Initiative identified one of several reasons in their 2014 report.
“THEME 2: Many Jewish organizations don’t have the value proposition to attract and retain the leaders they need. In the endeavor to attract new talent, traditional Jewish organizations are also struggling. Interviewees noted that many of the next generation of leaders are not choosing to work in the sector altogether. They pointed to issues such as steep hierarchies and bureaucratic cultures, little autonomy for junior and mid-level staff to take risks and feel ownership over their work, limited career advancement opportunities, and low salary levels compared to jobs outside the sector. A major concern shared was the stark gender inequality across the field: Of the largest
North American Federations, only three have hired female CEOs in recent years (and one of these has recently resigned). This is woefully few compared to many other fields in the nonprofit sector.
“These challenges underscore an overarching theme: the importance of organizational culture as a critical contributor to, and inhibitor of, talent cultivation. Not only does the field need to invest more in its leaders, but it also needs to invest in its organizations to ensure they are great places to work and grow for the next generation of Jewish professional leaders.”
I often also provide the link to Dan Pallotta’s Ted Talk where he “calls out the double standard that drives our broken relationship to charities. Too many nonprofits, he says, are rewarded for how little they spend — not for what they get done. Instead of equating frugality with morality, he asks us to start rewarding charities for their big goals and big accomplishments (even if that comes with big expenses). In this bold talk, he says: Let’s change the way we think about changing the world.” Asking a NPO to make an impact on the world without spending money on talented staff is so counterintuitive, it is laughable. Volunteers are necessary and play an integral role in the success of any organization, but a reliable, talented staff is what makes any NPO great.
Want to change the world? Then it is time to change the culture of the Jewish community and offer salaries and benefits that attract the best at every level of an organization.
I agree with Hal wholeheartedly. But there’s a missing element. Presumably, one of the purposes of publishing this information is to help donors decide which organizations are better stewards of their charitable investment. If that’s the case, then CEO compensation is both simplistic and misleading as an evaluation tool. What donors need to know is the magnitude of the impact their charitable dollar is producing, and executive compensation of course tells us nothing about that. See https://hbr.org/2010/08/we-need-to-rethink-fundraising.html.
Thank you to all who took the time to read and comment on this article. I appreciate both the support and the critiques. A few thoughts in response.
I agree that limiting the discussion to executive salaries does not tell the whole story. While my article was intended to respond to the Forward and the “Core Principles of Ethical Behavior,” both of which focus exclusively on CEO compensation, I absolutely concur that paying more attention to salaries for “line staff” and “the bottom 5” is very much in order, particularly as we contemplate the future of the Jewish communal profession.
Executive compensation and staff salaries are two sides of the same coin; they are not mutually exclusive. Respondents who suggest that we must also pay attention to lower-level remuneration are correct. But, as at least one of the comments suggests (channeling the groundbreaking work of Dan Pallotta), until we rethink our approach to “overhead” generally, we will fail to make sufficient progress in this area. The preoccupation with overpaid CEOs is indicative of a general reticence to take on this issue at all levels of an organization.
I find the suggestion that dedicating one’s talents “to serving others … means not earning as much …” to be a striking example of the fallacy of false alternatives. I, for one, am not prepared to accept such a notion, and I know for certain, based on real data that talented individuals with the capacity to make real changes in Jewish life, are not either. Hence the revolving door that sends so many skilled professionals to the corporate arena. It is time to reject the notion that nonprofit work is a zero sum game.
Finally, I agree completely with the comment that “complex words do not a complex argument make.” For this reason I would suggest that in this era of online dictionaries it is a sad commentary if we are prepared to indict an argument because of the presence of “an excessive amount of SAT words.” I am sure that most readers understand my argument was not that the word “excessive” requires a literal definition, but that the very suggestion that salaries are “excessive” demands both context and clarification. And just to be clear, it is not, as the comment says, the Forward who uses that word (they prefer “overpaid”), but rather the authors of the “Core Principles of Ethical Behavior.”
Has nobody noticed that of the top 20, there is but one woman?
The salary gap between top five and bottom five contributes to 99%-1% culture. Often NPO staff earn barely more than the clients they serve. Single parents may qualify for public food subsidies and other benefits based on their salary. My brilliant and diligent former co-worker got off public benefits when she left our NPO for a similar public sector position.
Would we expect newly minted, young male professionals to subsist on such modest salaries?
Our board members and donors are largely insulated from economic struggle. The majority of our staff are not. The most valued employees bring in donors, or are donors themselves. Our services are now valued more for their ability to inspire donations, than to relieve suffering.
That is the reality of the business based NPO but it is not unique to our community. Its continued success depends on quashing comparisons between survival wages and the one percent.