Cafe Classic: Does Lack of Pay Lead to Lack of Discipline?

Editor's Note:  As we can always count on him to do, Jim Brennan raises an interesting, potentially uncomfortable but nonetheless important Classic question about the relationship between pay levels and behavior.  Do weigh in with your perspective.

Is pay required for professionalism? Despite the widely publicized excesses of the Wall Street crowd and the constant Hollywood demonization of capitalism, things seem to fly out of control faster when a Non-Profit is involved.  From the Papacy to Penn State and Boy Scouts of America, the shenanigans that occur in religions, schools, charities and other tax-exempt entities seem to show that NPs exhibit many Dark Side behaviors that would never be permitted at enterprises organized for crass amoral commercial purposes.  

Those who have served non-profit boards of directors know quite well what I’m talking about.  People who on their regular jobs would never think of doing something unprofessional will not hesitate to wield their power rashly from an unpaid management post.  A short list of sample misbehaviors includes:  
    •    Demanding special treatment for relatives or friends,
    •    Second-guessing vastly experienced subordinates,
    •    Playing with the careers of regular employees.

Those abuses seem less typical in corporations and businesses than they are in organizations run by volunteers.  Of course, my view could be jaundiced by the unique features of those I’ve closely encountered, but conversations with others even more experienced in the ways of non-profits have consistently confirmed these observations.   Maybe the lack of compensation gives rise to irresistible temptations to take your pleasure in other ways.  Perhaps workers need scorecards to keep track of the right and wrong of their actions.  Could it be that a salary tied to a clear quid pro quo like a job description or employment contract is necessary to supply a governor on the engine of motivation that might otherwise spin out of control? 

Is there something inherently healthy in the for-profit mode of operation?  Does a toxic seed grow when you don’t get paid for your efforts?  Researchers have identified behavioral differences in Social versus Commercial environments.  Standards and expectations are not the same in a social setting where people act without pay as a commercial motive.  Why is it that the lack of perceived “compensation” seems to inspire irrational behavior?  Well, maybe not irrational but at least irregular, when viewed thru the prism of conventional professional standards.  After all, “compensation” is literally that… something that satisfies you, received in exchange for your service. 

How, then, do you assure balance in the value proposition when work is done without pay?   I fear that, in the absence of formal rewards, volunteers create their own informal compensation programs to supply whatever consequences they find most satisfying to their personal motivations.  After all, everyone knows that anything of value not controlled by the organization will be controlled by its inmates workers, regardless of their volunteer or paid status.  That compensation may be in the form of money, the intrinsic satisfaction of creative or socially beneficial activities, the personal pride that results from public recognition before your peers, or the pleasure taken from the exercise of authority over others; but every contributor exerts themselves for somereason. 

The rewards taken by the unpaid people who rule over tax-exempt non-profits tend to be less visible than what shows up in a payroll record.  And that is not always a good thing.

What do you think?

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries.  After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.

Creative Commons image "Coins in High Saturation" by MoneyBlogNewz

Comments

[Joe Thompson]

It’s an interesting subject that cuts across entitlement behaviors, motivation theory, and compensation, among others.

My first reaction was “Should we include public-sector management posts in the category of Non-Profit?” I’ve certainly seen my share of head-scratching behaviors from Government managers. And, in those cases, the lack of a profit (or even revenue!) regulator certainly seems to strongly contribute to behaviors (misbehaviors?) that simply would not be tolerated in the private-sector.

My next reaction was, “Does a toxic seed grow when you don’t perceive that you were paid enough for your efforts?”

I wonder, too, if the issue is one of oversight. Private-sector boards of directors are often accountable to shareholders or investors, Federal regulators, and other entities. Do the non-profit boards of directors have the same expectation of external oversight?

[Eric Anderson]

Good article. It casts a light and perspective on why the NPs of late seem far less attractive than for-profit organizations.

Perhaps we can conceive of a "Moral Scorecard" that would be used in conjunction with a "Confidence Scorecard," filled out by the lower echelon of workers at the non-profit, to create an environment of accountability. Both of which could be made public record to help other non-profits avoid the migration of "irregularly behaved" executive volunteers.

[E. James (Jim) Brennan]

Joe:

a) Expect that most public sector pay results are already parsed into the appropriate non-profit surveys; but note that because some few NPs compete directly with commercial firms in their product or service, it seems right to leave them in the same competitive categories. Also, I've found that aberrant behaviors tend to cluster more at the non-paid volunteer and board levels where pay is minimal or absent.

b) While corporations driven by the profit motive are subject to intense regular scrutiny, non-profits and tax-exempt entities fly "under the radar" with virtually no outside review. Thus madness can incubate.

Eric:

A "moral scorecard" is a nice idea probably doomed in reality. Since NPs are inherently Good Moral Ventures (?), it is doubtful any outside forces would inflict more onerous reporting standards on those supposedly sanctified enterprises than on crassly commercial organizations.

Besides, where would politicians, professional athletes, media luminaries and TV/movie stars hide their otherwise taxable income, stash their worthless relatives and reward their faithful minions if charities and foundations became more transparently accountable?