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Remuneration Matters

Renumeration TesseI highly recommend the report of the inquiry into charity senior executive pay and guidance for trustees on setting remuneration. The National Council for Voluntary Organisations (NCVO) set up this inquiry to explore the arguments about what are appropriate levels of pay for charity senior executives and how levels of payment should be arrived at. The guidance contains definitive guidelines for charity trustees, informed by a broad debate on the issues involved and what to take into account when setting salaries. The inquiry recommended full disclosure of pay in order to sustain public trust.

Key Principles
• The overall goal of a charity’s pay policy should be to offer fair pay to attract and keep appropriate qualified staff to lead, manage, support, and /or deliver charity’s aims.
• Trustees are ultimately responsible for setting remuneration levels for the charity’s senior staff.
• Informed judgements, as well as adherence to the charity’s governance and constitutional arrangements should be used to set the pay and rewards properly for these staff.
• Points for trustee to consider in deciding top levels of pay and rewards include –
(i) the current business plan of the charity and how implementation of this pay affects the number of senior staff the charity needs to employ,
(ii) the charity’s ability to pay,
(iii) the assessment of the senior staff’s performance against expectations in the short and long term,
(iv) information available on pay policies and practices in other organisations that can inform the decision on whether the level of pay is fair and reasonable,
(v) the nature of the wider employment offer,
(vi) the charity’s track record in attracting and retaining committed and motivated employees, the likely impact on the views of beneficiaries, donor, funders, volunteers and potential volunteers and (vii) the relationship between the policy and practice for the pay of senior staff and that of the charity’s whole workforce..

Factors that can be taken into account when setting salaries
• Pay should be determined by the charity’s budget, complexity, staff size, risk and location
• Charities must be able to justify pay levels morally and intellectually
• There should be increased comfort with greater levels of transparency.
• Remuneration levels should be right to attract the right people for the roles they perform.

Observations
Large charities are equivalent to some large charities and so there is a need to pay accordingly.
Chief Executives and senior staff should be paid according to the skills and expertise they bring.
The report of the inquiry into charity senior executive pay and guidance for trustees on setting remuneration can be downloaded from: http://www.ncvo.org.uk/images/documents/about_us/our-finances-and-pay/Executive_Pay_Report.pdf

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