Wednesday, 18 December 2013

Good pay means good value for money!

I can think of better ways to spend the week before Christmas than appearing before the Commons Public Administration Select Committee on charity CEO pay, as I did yesterday!

I had wondered if we were in for a Daily Mail-style attack on professional pay in charities, but fortunately that proved wrong. Apart from some throw-away tabloid-style remarks about "big whack salaries" this was a thoughtful hearing. Good and pertinent questions from MPs and an excellent line up of 8 leaders from the sector. And we were all singing from the same hymn sheet. I was particularly impressed with the CEO of Mary's Meals, who explained about how they operate a "cap" on pay in their charity but this would not be sensible applied as a rule across the sector. 

I used as my example of how damaging a cap would be the work of Cancer Research UK. The charity employs 3,500 staff. It pays the salaries of 4,000 scientists. They have 41,000 volunteers and fundraised £460 million last year.

It’s the worlds largest cancer research body and provides the majority of cancer research in the UK. It does that through hiring the best scientists and researchers it can find. So yes, it does employ a range of people on salaries over £100k.

The donors and supporters of the cancer charities want to give because we (and I count myself as one of those) want a cure for cancer. We all need better treatment and better diagnostics. The idea you would prevent this body paying to get the best staff (though not paying excessive amounts) would horrify many of us who have been through the trauma of cancer.

Indeed there was zero support for the idea of a cap; and the mighty FT weighed in with a Leader article which dismissed the idea.

The median charity chief executive salary is around £60,000. This figure falls to £34,600 for charities turning over less than £150,000 a year, but exceeds the £100,000 threshold as charities reach an annual revenue of £25-50 million. Charity CEO salaries reflect the varying size and scale of charitable organisations as well as their ethos, values, and impact on the beneficiaries and causes they serve.

But the Hearing went well, and proved a good opportunity to get our arguments out in the open. I suspect we will all have to get used to more scrutiny and transparency about what we do. But if well-conducted and factual, this public debate will be useful and help shore up public trust in our sector.

I highlighted the importance of evaluating charities on their effectiveness rather than their pay, and that the diversity of the sector means that any talk of a cap would be ridiculous. I ended my contribution by praising the public’s ongoing support for our sector - such as the record results for this year’s Children in Need and the support for our work in Syria and the Philippines.

I also announced some rather exciting news: to assist and encourage informed discussion, we are publishing the 'ACEVO Good Pay Guide for Charities and Social Enterprises' this week. More details are on ACEVO’s website.

The guide outlines 5 key principles to help determine fair pay at the top of our sector. They are designed to make it clear to the public how pay is set. Clearly it is trustees who decide, not us. But as the charity leaders network we should be contributing to this debate, being entirely transparent about how pay is set and what terms it should be evaluated on.

We stress the importance of transparency and explaining the process we have in charity to determine pay. We argue that recruitment and retention matter but that there is also a balance with our mission and values and what we describe as "proportionality". And we say the bottom line is "value for money". So what matters is what we deliver. Our outcomes. Any organisation will only achieve high performance if it has strong leadership. The team at the top do make a difference. Ensuring professional pay is not about personal gain but organisational delivery.

It was good to see an article in the FT on Monday setting out some of my views on this in advance of the Hearing. This was followed by their good Leader, though it was a shame they did not balance this by pointing to the Guide we have produced.

Apart from that, not a lot of coverage. I was disappointed that Civil Society choose to adopt a "Sun" style approach to their own reporting of the event. It detracted from the good evidence and strong arguments made in the Hearing. But we must move on. Lessons to be learnt. We have to get better at explaining how pay is set and what, when set wisely, it can help charities to achieve.

We should be less coy and tell the story in full. It makes the case for impact reporting much stronger. There is nothing of be ashamed of in providing high salaries if they are needed to get good leaders and to deliver high performance. Sometimes I wonder if we all fall for the notion that sack cloth and ashes is the clothing of choice in our sector, and that not only should we work for charity but be poor and miserable ourselves? It was good that Martyn Lewis made the point that salaries in our sector overall are on one reckoning 45% lower than other sectors. So not excessive. 

Transparency about salaries must also be not just about numbers, but about thought processes. There is no shame in being open. So going into the New Year I shall continue to be robust in promoting our sector's leaders and explaining how their boards pay them. And as a sector, we must get better at telling the story. 

This morning, it was no rest for the wicked. Up early to do Today on R4 with Nick Hurd, about volunteering. As I reminded Nick and the nation, volunteering is not cost-free. I was due to do the prize 8.10 slot. But then Ronnie Biggs died, and Nick and I went on together. Such is life…

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