Museum CEO – Lowest Full-time Staff Salaries: Is the Ratio a Question of Numbers or Ethics?

bigstock-wealth-85345043Leadership Matters writes a lot about salaries, and this week a question on Facebook deserves a closer look. Our colleague, Franklin Vagnone, President and CEO of Old Salem Museum and Gardens in Winston Salem, NC, asked a group of museum colleagues if they knew anything about the ratio between nonprofit CEO pay and staff salaries. Because it’s Facebook, Frank got a lot of comments, but no definitive answers.

Considering that salaries in general, and CEO salaries in particular, are not the stuff of social media conversations, Frank’s question was about as transparent as it comes. In short, he wanted to know what the ratio is between a CEO’s salary and the lowest paid staff member. The numbers for the corporate world are available courtesy of Bloomberg, and range from a frightening 1,205 to 1 to a more modest, yet still dynamic, 133 to 1. But Google the same question for nonprofits and you discover a hot mess. Not to mention, again, no real answers.  You’ll find the average ED pay for a US nonprofit hovers between $64,999 to 88,000, but nothing about the salary relationship between leader and staff.

Among the 300 million hits from Google, none of the first three pages offered any answers. There are cautionary articles about making sure nonprofits meet their state’s minimum wage laws, and/or using living wage calculators to set salaries. There are also articles about nonprofit CEO pay and how much might be too much. But neither I nor Vagnone could find anything about adjusting a leader’s salary to make the ratio more equitable.

At Old Salem Museum and Gardens Vagnone and his board have spent the last two years in an equity initiative, making sure all staff receive a living wage as determined for Forsyth County, NC. It’s important to note that a living wage in Forsyth County, North Carolina is NOT a living wage in New York City or San Francisco or Allegany County, Maryland. Living wages reflect, among other things, cost of living, thus locations with high rent, taxes, food costs, and transportation by necessity have a higher living wage than places where the cost of living is lower.

“My goal is not to put my thumb on other people, and keep their pay low. It’s the opposite,” Vagnone said. “Nonprofits are collaborative entities, and we all should be able to be equitably compensated based on experience and skill.” Vagnone and his board use various comparables such as the AAM National Museum Salary Survey along with salary information from similar North Carolina sites, but these don’t confront the issue of CEO pay versus the lowest FT employee ratio. “Nonprofit boards are usually populated with corporate executives,” Vagnone said. “They come to nonprofit pay from the for-profit perspective. In some cases, boards are not always in tune with organizations they manage,” Vagnone added.

After talking through the problem, here is a mash-up of Vagnone’s and my take-aways:

  1. Someone needs to do some research on this for the museum world and make it available.
  2. Solving this isn’t an entirely numeric issue. It’s also an ethical issue.
  3. Boards and CEO’s need to make sure they’ve dealt with the living wage/equitable wage problem for all staff.
  4. CEO’s/ED’s salaries need to have an ethical and reasonable relationship to staff’s. Those numbers will differ based on a huge number of variables including museum location, operating budget, availability and size of endowment(s), number of staff, and museum discipline, but boards and leaders should be intentional about the ratio.
  5. It’s important that boards and executive directors work staff salaries in an ethical direction.

Has your organization tackled this problem? If so, what was the result?

Joan Baldwin

 

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4 Comments on “Museum CEO – Lowest Full-time Staff Salaries: Is the Ratio a Question of Numbers or Ethics?”

  1. Jessica B. Phillips says:

    Some non-profit cultural institutions pay low wages but offer great benefits. I often wonder if employees would rather higher wages and lesser benefits? Of course, one size does not fit all.

  2. Michael Holland says:

    I can’t say I’m terribly surprised to learn that data on this ratio is not very clear. I’m a big believer in identifying and quantifying our challenges, so I’d like to see this information get collected. While I would expect that having those statistics would be beneficial, it will be important to focus on the real effects of these highest/lowest pay ratios and not get too lost in the numbers.

    A very modest pay ratio that looks favorable (especially compared to the corporate sector’s embarrassing disparities) can still leave many museum professionals struggling financially. A pay ratio of 4 to 1 seems entirely reasonable (downright dreamy, even), but if the lower number is too low, the ratio doesn’t really matter.

    A Microsoft employee earning $300,000/year doesn’t have to care that their CEO earns $25 million per year, because they themselves aren’t hurting financially. But if the ED of a museum earns $200,000/year and the lowest paid employee (LPE) earns $25,000/year, that creates some very stark differences in the economic realities of those two people. The ED can (in most localities, anyway) afford a home (or at least to rent one without taking on room mates), afford to have a child, build significant education or retirement savings, and spend their vacation days somewhere other than their living room. The LPE cannot realistically expect any of those things in their paycheck-to-paycheck life. How does my salary compare to that of the ED and is it enough to realize financial security are different questions.

    This is why #2 and #3 on Joan and Franklin’s list are so important.

    Thanks for keeping this issue at the forefront!

  3. David Porter says:

    I am very glad to see this conversation. In our organization the ratio is about 1.8 to 1. The ratio has improved because we have made an organizational commitment over the past three years to bring the bottom end up. Part of our reason for doing this has been pragmatic. In the current economy, we can’t hire the quality of employees we need if our wages are below what is being paid in the marketplace. Part of the reason has been our larger community discussion regarding societal impacts of not paying a living wage–not just for the individual wage earner and their family but also consequences from not being able to afford health care, good nutrition, transportation, schooling etc. We made the choice that we should lead as a community organization to the extent our resources allow. We hope to continue with that philosophy.

  4. James Bryant says:

    At the risk of getting “lost in the numbers”, I feel the museum profession – and all non-profits, for that matter – should thoroughly investigate best practices in executive compensation as well as pay equity. The ethical risk of having very, very highly compensated executives at museums and non-profits lies in the probability that the raising of funds for such compensation will be seen as protected in some way by non-profit status. Surely there is no reason to wait for academic and public administration sectors to get their respective houses in order regarding exorbitant levels of executive compensation. One need look no further than today’s news to see that the standard argument that “competitive compensation levels equals access to talent” doesn’t wash.


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