Article: CEO pay in Not-For-Profits – It’s not about the money

The not-for-profit (NFP) sector in New Zealand contributes more than $7 billion to the country’s GDP, according to a study by BERL Economics. With this in mind, it’s important to understand how remuneration differs between not only industries in general, but the executive level in particular.

Given CEO pay levels in NFP organisations tend to be 30 per cent lower than in the Private Sector, Grant Thornton and Strategic Pay teamed up in researching what motivates executives in New Zealand’s NFP sector. Let’s take a look at what our investigation uncovered.

The motivating factors for NFP CEOs

Where monetary incentives, prestige and career enhancement may be the driving force behind executives in other sectors, research indicated that intrinsic factors are clear motivators for those working in NFP organisations. Instead of remuneration, ‘making a difference’ is the most satisfying aspect of the job for more than 70 per cent of CEOs.

Intellectual and emotional engagement levels are much higher on the priority list for executives that emphasise benefiting humanity over earning money.

“Working here is satisfying. I know where the efforts go and it does make a difference. You work with like-minded people who really do care and are enthusiastic and tend to be less cynical,” one CEO said in our research.

Remuneration in the NFP sector

At Strategic Pay, we have a database of over 160,000 individual roles across all of New Zealand’s sectors. This means we have specialist insight into the gaps and levels of senior management and CEO role remuneration.

Through this, we uncovered that while executives in the NFP space make about a third less than their counterparts in the Private Sector and 10 per cent less than those working in the Public Sector, the nature of the job means that CEOs are willing to accept less money due to the fact that they find their involvement satisfying. It is important to note that the gap between sectors diminishes at other staff levels.

“You are paid less in this sector and people accept less because they are working to make a difference and this is rewarding,” a respondent suggested.

“Our findings lead to the conclusion that the choice to be an executive within the NFP realm requires a strong urge to help society and humanity as a whole rather than emphasise personal gain. Because of this, executives in this sector tend to feel satisfied and accomplished in their roles, even though they earn considerably less than other C-Suite individuals in other businesses.

At Strategic Pay, we are experts in remuneration and benefit insights. This means we can help you assess, plan and implement effective solutions to improve productivity and satisfaction levels within your organisation.

For more information, or to review the full report ‘Passion and Purpose: what drives CEOs in the Not for Profit Sector (2013)’, contact our team today.

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