Dear Ask the Experts,
I am on the Board of a small NYC nonprofit with a total budget of less than $3 million. The executive director makes about $110,000. The deputy director, who has a masters in social work, has a salary of $68,000. We are looking for a chief financial officer/chief operating officer, hopefully with a master's degree.

The issue:

Our ED wants to hire a BA in psychology who has no finance or accounting experience on her resume. The ED states that the finance background came through in the interview. She wants to hire this person at $90,000. Please note that she is bypassing 3 other candidates, each of whom has extensive accounting and finance experience (5 to 20+ years).

The board is very, very uncomfortable with this hire; however, we have received extensive pushback from the ED.

1) How do we explain that the board does not feel this person is qualified and, essentially, reject this candidate without making the ED feel that we are "interfering with her ability to do her job," and

2) What process should we use to determine an appropriate salary for the CFO? I thought the same salary range as we have for the deputy director would be appropriate? Thank you.

S.

Dear S,
Thank you for your query. Interesting conundrum you have there! As a board member, you don't want to veer into management issues, yet you have reasons for concern.

You don't state in your email whether this is a new position for your organization and, if so, what prompted it. If you are talking about a new position and a structural change to your leadership team, it is more appropriate for the board to weigh in.

The board only has 2 real leverage points: when you approve the budget (and I don't know if this position was included when your annual budget was approved) and when you conduct the ED's annual performance evaluation.

Some things you should consider: Are there any conflicts of interest? Is there a job description for this position? Does the candidate fit the stated requirements? If not, has the ED historically hired outside existing job descriptions?

Frankly, you cannot prevent the ED from feeling as if you are interfering, although you may be able to lessen the feeling by the way in which you take action.

A few suggestions you might try:

1) Have your auditor interview the candidate to see if he/she can validate "the skills that came out in the interview." This would give you an independent and knowledgeable second opinion. The auditor can also give you some perspective regarding the proposed salary and whether it is competitive.

2) If you have no auditor to tap, ask the treasurer to interview the candidate. After all, the treasurer must work closely with the CFO, so such an interview is appropriate.

3) You can look at salary studies to determine an appropriate salary. NY Nonprofit Coordinating Committee routinely does a salary review. Agency associations often do salary studies of their membership's executives. You can use the website www.Guidestar.org to research executive-level salaries for agencies similar to your own. It lists the 990s for most nonprofit organizations.

But, at the end of the day, all you can do is put the ED on notice that she is accountable for her decision and that her performance will be evaluated accordingly.

Good luck,

Barbara Krasne
A Governance Matters Ask the Expert