Evaluatate of the problem of this case study through the following capacities: t

Question

Evaluatate of the problem of this case study through the following capacities: technical, adaptive, and leadership

Leadership Rationale A large, philanthropic, nonprofit organization based in the U.S. operates 1,300 agencies. The agencies raise funds, convene leaders, and provide technical assistance and training to local nonprofit organizations across the country. In the latest year, one of the agencies raised $43.5 million and provided support to 90 different local nonprofits. A problem came to light when this particular agency gave an excessive compensation package to its president and CEO in the amount of over $1.2 million. The compensation comprised of $365,000 in salary which included a one- time $90,000 bonus, a $35,000 expense allowance, and a one-time contribution of $822,507 to a retirement benefits plan. The CEO had worked for this specific agency for 14 years and was believed to be doing a great job, thus it was also believed that the compensation needed to be adjusted before retirement which was announced, but still some years away. Over these years, the CEO created a large board, effectively doubling the size of the board from 32 to 68 members. This created a board that consisted of two groups: an executive board and a non executive board. Though the idea of having a large board was to create influence within the community, it did have drawbacks such as convening meetings that everyone could attend, limited opportunity to have meaningful conversations, and less engaged members. With the CEO's coming retirement, a goal was put into place to draw 60 percent of the current salary when in retirement. This was in line with what other staff members in the organization receive. To do this, the executive board needed to compress retirement payments into the coming four years over what should have happened in the previous eight. The board knew beforehand that delivering a compensation package that provided a lump sum of money was going to raise some concerns. The reality was that the community was outraged, the media jumped all over the story and phone calls started coming in reducing contributions significantly greatly affecting the organization's mission. In the weeks and months that followed, the board members made a series of missteps when responding to media requests and community concerns It was communicated by the executive board that providing this sort of compensation came in the form of praise for the CEO's work over the years. The individual worked for a total of 14 years as CEO and had done a terrific job raising significant revenue. The executive board believed that the CEO was underpaid and this package made up for the perceived short payments over the years this individual presided as CEO of the organization. Other significant communication missteps were announced about how the compensation, such as who on the board knew about the compensation, how it was developed, and how some members heard about the compensation through the media

Explanation / Answer

The issue in the case is unclear HR policies of the organization regarding the compensation strategy and a failure to devise a unifrom compensation policy for its associate agencies. The absence of performance based incentives for the top management and other categories of employees who contributed through winning lucrative businesses led to a situation where the sudden decision leading to abrupt hike in compensation and retirement packages of CEO showed significant deviation from the industry norms, raising concerns from stakeholders.

The performance linked compensation policy would not only have brought unifromity and transparency wihin the organization, it would also have been a motivating factor for others to work harder. When the CEO was doing exemplary work for fourteen years, why it was not considered before. Gradual increase would not have raised such concerns.

Other issue is the absence of a communication policy, which led to communication missteps, inviting criticism from media and community and putting individual at fore rather than organization.

The leadership, while evaluating the quality of work of CEO should not have focussed on the monetary aspects only. It should have critically evaluated other tasks accomplished and the vital decisions taken by him and their strategic influences on the future prospects, culture, brand image, community outreach, employee morale, group decision making process ( and quality / success of the decisions made) and communication within the organization.

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