Though non-profit organizations do not seek profits like their for-profit counterparts, they are increasingly giving their executives competitive compensation packages. Nonprofit organization that operate like for-profit organizations have implemented business practices such as carrying out market research, employing MBAs, advertising, and eradicating unproductive activities. These organizations that adopt business like practices end up with increased revenues, programs, and outreach that enables them to realize their mandate (Johnson, 2011) . Non-profit organizations that pay its executives similarly to for-profit organizations benefit from several advantages.
One benefit of providing competitive compensation just like for-profit organization is the ability to attract the best talent. Compensation is one of the factors that influence the decision to take up employment in any organization (Johnson, 2011) . Due to competition for the best talent in the industry, organizations that pay more are more likely to attract and maintain the best talent. As the non-profit sector adopt business-like practices, it has become market and organizations that offer the best compensation packages attract the best talent.
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Providing executives with competitive compensation packages benefit non-profit organizations through well run and efficient organizations. Non-profit organizations that generate high incomes usually have high-performing executives who deserve to be given competitive pay. These executives have vast experience in fundraising activities, marketing, and efficient business management practices, which translate to high incomes. If non-profit organizations desire to be managed well, they must find the right people for the job, and paring the competitive salaries and benefits is one way of attracting them (Bryce, 2017) . Furthermore well run non-profit organizations are able to attain their missions due to efficient management practices and high revenues. Thus, competitive executive pay in the non-profit industry directly influences the realization of its mandate.
Motivating employees is a big challenge for many organizations regardless of whether they are for-profit or non-profit. Paying employees competitive salaries and benefits that reflect their performance is one way of motivating them. As non-profit organizations adopt business practices such as benchmarking, competitive compensation packages are necessary because they tie payment with performance (Agard, (2011) . Highly motivated executives who perceive that their efforts are being recognized by the organization through competitive packages are more likely to increase their performance and productivity compared to those who perceive that their efforts are being recognized. Increased employee performance and productivity translates to higher earnings and the realization of the organization’s mission (Johnson, 2011) .
There are various disadvantages of expecting executives to work for less in a non-profit organizations than they would in a comparable position in a for-profit organization. One of the disadvantages is poor performance of the executives because they will not be focused on their current job, they will be constantly looking for better opportunities in the for-profit sector where their talents would be recognized through competitive salaries and benefits (Bryce, 2017) . Poor performances will lead to lower earnings because the executives will not be motivated to implement practices that generate more earnings for the organizations.
The other disadvantage of paying executives less compared to for-profit organizations is high turnover. Both for-profit and non-profit organizations compete for the best talent, and if an organizations is not rewarding its executives competitively, they are more likely to seek better employees elsewhere. High employee turnover is disadvantageous to an organization because it must recruit new executives all the time to replace departing ones (Agard, 2011) . The changes in the organization’s leadership introduce instability that affect its performance and the attainment of its mandate. Therefore, non-profit organizations that pay their executives competitive compensation similarly to for-profit organizations reap important benefits.
References
Agard, K. A. (2011). Leadership in nonprofit organizations: A reference handbook . Los Angeles [Calif.: SAGE.
Bryce, H. J. (2017). Financial and strategic management for nonprofit organizations . Boston; Berlin: Walter de Gruyter Inc.
Johnson, C. E. (2011). Nonprofit Executive Compensation: How Much is Too Much? In Organizational ethics: A practical approach (2nd ed., pp. 12–14). Los Angeles: SAGE Publications, Inc. ISBN: 9781412987967.
