VC: When setting the pay for any role, the three factors that any organisation is governed by are: the ability to pay; what the job and market command; and what the individual brings to the job. The added issue that plays a role is the culture of transparency and justification of pay levels because of the nature of their income and resources.
AM: From a trustee perspective, the critical question is whether this is the right person for the job. And one of the considerations - along with skills, knowledge, experience and personality - has to be how much they want to be paid. If that seems excessive, then they're almost certainly not the right person.
VC: You're right. It's a balancing act between making sure your package is competitive but is not at the same time excessive. You mention the vision and values of the charity: do you find that this plays a lesser part these days than it did, say, 10 years ago? Are skills, knowledge and experience the things for which you really have to find the money, and do you think you can still rely less on someone taking a lower rate because they are compensated by their belief in the cause?
AM: I'm not sure that people should have to take a lesser rate because of their belief in the cause. It's more about where the money comes from and what it should be used for. We have a responsibility to steward the money that we are given effectively and in an appropriate fashion. Do you find that many organisations take commitment to the cause into account when they are considering pay scales?
VC: I think it's still there to a certain degree, but definitely less than in the past. Charities are such complex organisations these days and you have to pay a fair salary to attract the right talent to do a professional job for you. More and more charity professionals are moving between the private, public and voluntary sectors. How often do you seek advice on what the market pays?
AM: We review market data every year when we consider the chief executive's remuneration. We look at what other charities are paying, take into account Acevo's information and get advice from an external consultancy. But it's not just about the level of pay - it's also about the level of transparency around it. It's interesting to see in the data published recently by Third Sector the relationship between turnover and pay. But that's not the only factor, as you said, so organisations should be open about why they pitch salaries at a certain level.
VC: What you describe there is very sound. It's important that when you look at other charities you don't look only at job adverts, but also at research into what people are actually paid. The issue of transparency is really a problem only when you get it wrong. It's important to be able to say that you've done your homework thoroughly and know what the market forces are. We've talked a lot about the base pay, but what's your view on performance pay and the benefits package?
AM: Performance is key, and it's entirely reasonable that someone should be rewarded for good performance. Because our money comes from voluntary donations and from the money people pay us to provide services, it's important that we use it wisely and respectfully. And of course, the way people are rewarded isn't just in terms of money, but in the whole benefit package. So it should always be about reward, not just about pay. Do you think the sector is good at offering a package of benefits?
VC: I think performance is recognised and rewarded in charities, but perhaps in a different way from the private sector. In charities it would come in the form of recognition or perhaps a slightly higher pay rise, but hardly ever in the form of a bonus. As for the benefits packages, these are generally fair, I feel, but the mix of benefits might be different from that in the private sector.
In charities, the emphasis is on factors such as pensions or flexible working - things that are valued by employees but don't have to cost a lot of money.
AM: A final point is the role of the board in this. It's our job to make sure the chief executive is well managed and supported.
Viv Copeland is head of reward at Croner, a company that provides workplace advice, and Alice Maynard is chair of the board of trustees at Scope and a member of the Association of Chairs