Question

You are a member of the Board of Directors for a non-profit organization. A new executive director has just been hired. The previous executive director received a salary and no variable pay. Several Board members have indicated they would like the new executive director to be paid based in part on the organization’s achieving its goals. What might be some other options for variable pay for this executive? Should the Board go ahead with some sort of variable pay? Why or why not? Because this non-profit has only 60 employees, there is not an HR person on staff. The payroll is outsourced and the administrative assistant to the executive director has handled all other HR-related issues. Although the employer requirements of the Affordable Care Act for employers with 50-99 employees have been extended until 2016, the new executive director will need to evaluate current health insurance coverage policies and determine what changes need to be made in order to comply with the employer mandate. What are the key things the new director needs to review?

Answer 1

While hiring the Executive director, the various options which are related to the variable compensations which can be considered by the board are given as below:-

Employee satisfaction,

Learning and development

Customer satisfaction,

Productivity,

Market share, and

Quality

All the above-mentioned factors can lead to the performance-based reward system.

If these factors are evaluated on the real parameters rather than just for the formalities, then the desired results can be obtained. No rewards should be paid to the executive if they are an increased laying off a number of employees as this can be seen as a manipulation in order to show the better performance of the organization in order to get a significant bonus.

When we talk about the Executives, they are almost all the time on-job as they have to respond to a number of calls, emails, emergency meetings and various situations where the attention of these executives is required for taking an effective decision. Due to these long working hours, and 24*7 environment of accountability, it can exert a lot of mental and moral pressure on these executive and it can result in demolished executives causing the incorrect or inefficient business decisions and low productivity.

If we look the level of stress and the pressure under which an Executive or CEO operates, and the level of significance of the decision made by them on the success of the company, it will be justified to provide these individuals with a higher level of compensation along with various deferred compensation, company cars, private jets, chauffeur services, and annual bonuses.

In order to avoid any kind of manipulation of the results for having greater incentives, the best solution could be to implement the compensation plan on the basis of organization’s achievements and reviewing the metrics of the company on various factors and dimensions

While selecting a beneficial vendor contract for health care, the below-mentioned factors must be considered by the new director:-

• To have the close examination of the contract and ti understand the terms and conditions for estimating the best deal.
• Ensuring the protection of vendors and organization from any kind of mistakes committed by any party which is termed as mutual indemnification
• Fixing the short term prices for the plans
• Determining and negotiating the various services offered by the vendors.
• Having all the terms and conditions and promises made by the vendors in writing.
• To control the excess fee paid by the employees to the vendors.
• Try to have a termination clause in the contract and to be very cautious of understanding these clauses

Apart from this, the below mentioned legal benefits must be provided to the employees

• COBRA and HIPAA provisions
• PPACA
• Medical plans
• Medicare