Sunday, October 20, 2013

Association boards should know that salary and compensation are not the same

Last week, the local paper ran a story on foreclosures of Habitat for Humanity homes and included a sidebar on Habitat’s “well paid CEO.”  

“With a total compensation package of $179,073, records show Katherine “Kitty” Green is one of the highest paid leaders of a Habitat for Humanity affiliate in the U.S.” 

My problem with this story is that about 95% of journalists do not know the difference between salary and compensation! And, the public level of knowledge isn’t much better.

Here’s the total compensation my association management company paid its staff members:
  • Salary (or hourly wage)
  • Health insurance premiums (100% for the employee)
  • Required state & federal taxes (FICA, FUTA, SUTA, etc.)
  • Contribution to the employee’s retirement fund
  • 10 paid holidays
  • 15 paid time off days (vacation, sick leave, etc.)
The “non salary” parts of the compensation package were one to one and a half times salary.

So, when I see stories like this one, I recognize that most people have no clue about their total compensation. So, newspaper readers are likely to think this total compensation figure is a direct comparison with the salary they are paid. They don’t think to include the cost of health care, paid vacations, paid holidays, retirement plans or other parts of their compensation.

So, when the media report the total compensation of an association executive, nearly all of the public (and association members) compare that to their salary.

In reality, it is likely that your association board members don’t stop to think about the difference between salary and total compensation when they see a list of your employee compensation numbers.

To help communicate this to my staff, each year I created and shared a “components of total compensation” chart so they could see what a $30,000 a year staff member cost the company. 

This might be something association executives should do for their staffs and association boards.

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