August 10, 2017

Why salary compensation transparency can counteract equity

In The 360 Group’s work as executive search consultants to foundations and nonprofits, we know that transparency around compensation is a perennially thorny issue, especially for observers outside the sector. I thought I would share some thoughts about how we approach compensation transparency, particularly in light of our efforts to make diversity and equity a priority in our work.

For a bit of background: I launched The 360 Group 13 years ago, specifically with an eye on making the sector more diverse, more contemporary, and better prepared to address a whole new set of challenges in this complicated era. Our view is that more diverse teams — and more diversity in leadership — maximize the variety of perspectives that organizations need to be successful and effective. Countless studies have demonstrated the power of diversity in groups and teams, only emboldening our firm’s mission and theory of change. Diversity in groups can also make what can be challenging work a hell of a lot more fun.

Beyond compensation, then, our goal is to extend our reach and that of our clients’ to identify people from all backgrounds and walks of life for leadership opportunities. To do that, we want to reduce barriers for candidates, rather than build them up (and those barriers can be completely artificial). Our charge is to understand organizations well and identify candidates who can lead them and have the desire to do so with passion, heart and values.

At The 360 Group, our decisions about compensation for a given position are guided by market comparables and the skills and value of a candidate. We do not tie executive compensation to salary history. We know that women and people of color are represented in just a fraction of leadership roles — across every sector. To build that leadership bank, especially in senior positions, we seek out candidate pools of devoted (and often underpaid) nonprofit professionals as well as highly-paid executives. The salary one has earned shouldn’t dictate the salary one may earn. That is our philosophy and commitment in this work.

Sometimes, we field the question: why not post a salary range for the CEO role? Our answer comes from the heart: we don’t want otherwise fabulous people to self-select out. To be truly committed to equity (which we are), creating even the perception of obstacles runs at cross-purposes to acting in equity. For better or worse, in the philanthropic field, salaries and compensation packages are all over the map. That is why we rely on independent market analyses and our compensation expert colleagues to inform ranges for our client organizations. So if a role is valued at between, say, $300,000 and $500,000, the person who is ultimately selected will be compensated in that range — regardless of whether they have earned a fraction of that amount or orders of magnitude more. That is equity in compensation, a practice we have relied on from the inception of our firm, and just one important ingredient in our efforts to bring diversity and equity to our sector.

— Vincent