The Ethicist: Should a Nonprofit Splurge on Management?

December 9, 2018 by Joshua
in Ethicist

My series answering the New York Times’ Ethicist column with an active, leadership approach instead of an analytical, philosophical perspective continues with “Should a Nonprofit Splurge on Management?”.

I work at a nonprofit that advocates for consumer rights and financial literacy, a mission I have been proud to serve.

We recently suffered a financial crisis of our own. Due to changing federal policies, among other factors, we lost a chunk of our annual budget. Management decided to cut about a quarter of the staff to protect our long-term future.

I was of course saddened by what happened, but I understood that there were no good options. Then a staff member who was laid off (and quickly found a new job) told me that senior managers’ salaries made up nearly a quarter of the budget and that we were paying for a “company car” for our president. In addition, a former manager is paid an exorbitant hourly rate for consulting.

All of this hurt to hear. Our leaders sacrificed dozens of direct-service jobs that impact our clients’ lives but seemingly not their own relatively large salaries and fringe benefits. I am considering quitting in protest. (I am sure that the board is aware of the pay structure, so I doubt they will be of help.) I have also considered informing the media, but I don’t know what the ethical response is to what I see as an injustice to our fired colleagues and a violation of our mission. Name Withheld

My response: We’ve all experienced trying to help someone only to find what we meant to help got the other person angry, frustrated, or the like. We’ve also all experienced someone trying to help us who only made things worse.

I usually respond to letters with no questions by saying something like, “Thank you for sharing your story,” and not giving advice or commenting much more. Not commenting may sound like an easy way out of more thoughtful and helpful writing, but I’ve learned many times in coaching, teaching, and friendships that helping people who haven’t asked for it is a recipe for disaster.

My starting point for why is that what different people consider “helping” depends on their values, views, goals, and other factors that you, giving unasked advice, don’t know. For example, offering potential solutions to someone who just wants to be heard often leads to exasperation, frustration, and feeling devalued. But just listening to someone who wants advice can lead to impatience, frustration, and other emotions neither party wants.

However obvious you consider your interpretation of what the letter-writer wants, dozens of other interpretations exist, any of which the writer may have meant, or not. Acting on unchecked assumptions risks imposing your values on others, which usually provokes responses you wish you hadn’t from others.

I’ve found the best policy to keep neutral until the person clarifies what they want so I know what “help” means to them in that situation.

The New York Times response:

Our economy is warmly solicitous toward people at the top of the income hierarchy, icily indifferent toward those in the middle and at the bottom. The Economic Policy Institute says that last year the C.E.O.s of the largest 350 companies in the United States were paid on average 300 times as much as their average employee. And the nonprofit sector, given that it competes for talent with the for-profit sector, isn’t going to be entirely exempt from the trend.

Your organization is obliged to serve its mission as well as it can with the resources it can muster. To do so, it needs good staff and good management — which requires it to be mindful of what the market rate is for people with the skills it needs. (Nonprofits typically do comparative analyses of salaries in their sector when considering raises for top management.) At the same time, income is just one factor that draws employees; often staff members will work for less when they find the work genuinely rewarding.

Especially given the particular mission of your nonprofit, the situation sounds worrisome, and it might indeed have been a good idea to appeal to those at the top to accept cuts in salary in order to reduce the number of frontline employees who were let go. It might also have been better to end a consulting contract than to fire a permanent employee. Both would be harder than layoffs at the bottom, because board members are likely to be personally closer to senior managers (and former managers) than to other employees. Still, it’s their responsibility to weigh such options.

None of these considerations, however, prove that the leadership made the wrong decision. When the budget shrinks, personnel decisions have to take account of the employment market. Suppose cutting your president’s perks or pay would incline her to take a job elsewhere. (Though that car sounds like something most places wouldn’t offer.) The cost to your organization of finding a new one, especially during a rocky period, might mean that it wasn’t worth the risk. A fixed, across-the-board reduction in salary, defined in percentage terms, might simply produce an organization full of disgruntled people waiting for a better opportunity. It’s conceivable, too, that the core competences of the organization lie in the best-paid people and that the less well paid would be easier to replace if and when funds return. You should feel free to talk to the media if you’ve determined that a nonprofit devoted to financial literacy has made bad financial decisions. But to know that, you would have to be privy to the details. Are you? You say that senior managers “seemingly” didn’t cut their own earnings — which makes it sound as if you might not be.

The inequality in rewards between top and bottom is ultimately a structural problem that requires structural solutions. Several countries in Europe have chosen to deal with it by having higher taxes and more generous transfers to the less well off than we do, ensuring that their income inequality is much less than ours. Those lower-paid people laid off by your organization would have better unemployment insurance there, too. My point here is that the issues you raise aren’t really local to your organization. If we want to do something about them, resigning in protest from your nonprofit probably isn’t the answer.

I was on a three-month study-abroad program for about a month before I changed my ticket to leave within a week.

My partner’s mother was diagnosed with an aggressive form of brain cancer a few weeks before I left for my trip. The treatment did not appear to be working, and the cancer continued to spread.

My partner and I have been together for three years, and before I left, I promised that if things got worse, I would come home. I made good on that promise, but I feel incredibly guilty. I feel guilty for leaving my program early because my parents paid for it, and I am unlikely to get a refund. My partner’s mother was also upset that I came home early, but I felt a responsibility to support my partner and make her my priority. I feel like I let my professors and parents down, that I was playing into the stereotype of a young adult making hasty decisions. My father was incredibly supportive, but I still feel anxious. I know I could never have enjoyed myself there with the worry and sadness I was feeling for my significant other. Did I do the right thing? Name Withheld

My response: There is no book in the sky or other measure of absolute right, wrong, good, bad, or evil that 7.6 billion people will agree to. If there were, you would have consulted it, gotten your answer and wouldn’t have had to write here. There isn’t, so you did. Since everyone has different values, you’ll just get a label that not everyone agrees on. I suggest you want not a label but a practical plan to resolve your situation as best you can by your values and the values of others affected as best you can tell using empathy and projecting possible outcomes.

You’re asking how to lead people, meaning you want to improve your leadership. If you’ll allow me a quick analogy, if you want to learn to create art, taking academic classes in art appreciation may help you appreciate art others made but not to create it. You have to practice, starting with the basics.

Nearly every resource I’ve seen on leadership is leadership appreciation—that is, books on principles and such that help you appreciate others’ leadership but not to lead. To learn to lead you have to practice, starting with basics.

To answer your question on how to lead people, I recommend my book, Leadership Step by Step, which gives you exercises to practice the skills of leadership, not just to appreciate others’ practice. You have to do the work of the exercises, not just passively read it, but what expressive or performance-based practice can you learn without work?

I’m not just plugging my book. I wrote it because nothing existed to give you experience and skills, not just appreciation.

Unit 4 covers what you want, though I’d start at the beginning and do the exercises in order.

Besides the problem you describe, you say you feel guilty and emotions you don’t like. You can manage your emotional response—through, for example, choosing your environment, beliefs, and behavior (unit 3 of my book)—and I’ve never seen a benefit to suffering or being miserable. I recommend developing the emotional skills to manage your emotions. You’ll make yourself more effective in achieving your goals and feel emotions you prefer, which I call a better life.

The New York Times response:

Love is a mode of care, the philosopher Harry Frankfurt has argued, that shapes your preferences and guides your conduct via “a practical concern for what is good for the beloved.” To feel love for someone is to take his or her interests as your own. It doesn’t answer to reasons; rather, in Frankfurt’s formula, “it generates reasons.” The moral nature of love, accordingly, may require sacrifices. Even if — as realism requires me to point out — your partner may not end up permanently in your life, such calculations are going to be alien to who you are as a loving person. Yes, the human and financial costs to you and your family will be substantial, but nothing you are doing involves irreversible loss. Your partner’s mother, who is perhaps feeling guilty for derailing your studies, may second-guess you. But your father hasn’t. And neither will I.

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