270 Human Resources Management for Public and Nonprofi t Organizations
civil service protection and serve at the discretion of elected offi cials. In
the nonprofi t sector, executives serve at the discretion of the board of
directors. Because in both sectors the positions lack security, executives
are likely to have negotiated employment contracts that specify the level
of compensation and benefi ts they will receive. Some common benefi ts
found in executive employment contracts are severance protection; moving
expenses; health, retirement, and disability insurance; professional associa-
tion memberships and dues; and paid conference registration and associ-
ated expenses such as travel and accommodations.
Executives are hired for their professional experience and expertise.
They must often make hard choices and unpopular decisions that run
counter to the wishes of the policymaking and governing body. Severance
protection allows executives to be free to make those decisions without
having to worrying about their fi nancial situation if they are terminated.
Severance protection usually includes a fi xed amount of salary and the
continuance of insurance benefi ts for a predetermined period of time.
Executives are typically recruited from the national labor market and
often relocate to accept a position. Organizations that pay for moving
expenses and in some cases provide a housing allowance in jurisdictions
where housing is expensive make it easier to attract key executives. Execu-
tives will be less likely to relocate if they will continue to lose equity in their
homes or if the costs associated with moving are prohibitive.
Because it is the responsibility of executives to guide as well as man-
age the organization, it is imperative that they have access to training
and development activities such as attending conferences and belonging
to professional associations. Organizations benefi t when their executives
are aware of the external forces affecting their agencies and changes in
industry standards and practices. Agencies that maintain their competitive
posture are led by proactive executives.
In both the public and nonprofi t sectors, salaries are determined by
surveying what relevant organizations in the external labor market pay for
executive positions (Albert, 2000; Stene, 1980). Albert recommends that
nonprofi t executive salaries should be at the median or above the median
of comparable organizations in the area. Board members should assess
the agency ’ s resources and offer the best salary and benefi ts package they
can afford.
Concerns about some of the high salaries paid to nonprofi t execu-
tives have been raised in the light of the fi nancial diffi culties facing many
nonprofi ts. However, nonprofi t offi cials and consultants believe that while
boards must be sensitive to public perception, they have an obligation