Goodwill Omaha’s CEO Pay and Your Growth Mindset
Recent front page news in Omaha is the revelation that CEO Frank McGree has been bringing in an annual salary over $400,000 and received a onetime bonus in 2014 that put his pay over $900,000. (“No Culture of Thrift,” Omaha World Herald) It was brought up at a coffee this morning and we debated non-profit versus for-profit and whether or not highly paid executives were worth it.
The debate illustrates a particular mindset that it part of the work I do. Specifically, do you believe in MVPs or do you think that you’re only as strong as your Weakest-Link?
MVP vs Weakest-Link
Let me give you an example. In the world of sports, there are endeavors that are MVP oriented and others that are weakest link oriented. Last year’s NBA finals showed us that the game of basketball is MVP oriented. As a team owner, you can bring in a LeBron James and he can almost single-handedly win the championship. On the other hand, the current MLB championship suggests any single superstar player will only have so much impact. If your roster is tough top-to-bottom, you have a better chance at winning. That’s weakest-link oriented.
A highly compensated CEO represents an MVP mindset. There are few qualified to do the job and the right person will have an outsized influence on results. This mindset permeates the upper echelons of the corporate world. Hang around with this group long enough and you can see why. Highly paid executives are some of the most talented people you’ll ever meet: high-bandwidth, high-focus, and high-energy.
So what’s the issue? The Goodwill Omaha business is big and complex, $30MM in revenue and 600+ employees. It requires bandwidth, focus, and energy.
Non-profits are weakest link in nature
The issue is that non-profits, by their very nature, are weakest-link organizations. Think about it. If a for-profit endeavor is out to serve the interest of a few key stakeholders, specifically shareholders, the not-for-profit world, by contrast is aiming at serving the interests of multiple stakeholders. There are beneficiaries, donors, the community, employees, volunteers, and even the government, probably others.
Frank McGree’s compensation is incongruent with the nature of a non-profit.
So what?
“Great,” you think, “tell me something I don’t know. There are very few who can run an organization of that size and he’s done a bang up job over the last few decades.” You’re mindset is tilted to the MVP side.
“Great,” you think, “tell me something I don’t know. That money could have been used to keep struggling programs at Goodwill afloat and helped countless others.” Your mindset is tilted to the weakest-link side.
“Great,” both sides think, “what does that mean? What am I supposed to do with this information?”
That mindset goes into how I approach sales and marketing at your company. If you’re tendency is toward MVPs, we focus on making your best people even better. If you’re tendency is toward the weakest-link, we focus on bringing everyone on the team along. Suggesting the opposite approach to either mindset prevents improvements from taking place. MVPs don’t waste time with low-producers and weakest-links don’t put up with prima-donnas.
Both approaches work.
My upcoming book, Everybody Sells, is a weakest-link concept because that’s my bias and I think that companies under 150 employees are stronger when the weakest links are improved. Conversely, I think that larger organizations benefit greatly from nurturing their MVPs. Specifically, I think large organizations should shift more resources to their most valuable resources.
But, Greg, what do you think about Goodwill?
Where do I fall in relation to Frank McGree’s paychecks? Good question.
I think the problem is an unfortunate byproduct of large non-profits. We’re asking them to straddle two worlds and shouldn’t be surprised when one strays off course. The vast majority of non-profits don’t have this particular compensation issue. We’re dealing with an outlier. If the majority of Goodwill’s stakeholders think this is a problem, fix this instance and move on. If a majority doesn’t think it’s a problem and they’re willing to live with it, move on.