There are not many positions that escape the inevitable yearly review.  Whether you look forward to learning of your progress or anticipate areas of improvement, the review is an important part of management to ensure each employee is upholding the necessary functions of his or her role within the organization.

The chief executive of a nonprofit organization is no exception. Because of the important role of an executive director or CEO, the Chief Executive Assessment and Compensation standard requires a charity’s board of directors to be actively involved in overseeing the chief executive’s performance and compensation.  The board must set annual performance goals, which are then measured against a year-end assessment.  Doing this allows the board an opportunity to identify strengths and areas of opportunity in the organization’s leadership.

In addition to reviewing the chief executive’s performance, the board of directors must also decide on reasonable compensation. The process of determining the executive’s salary should be documented and involve only members of the board, or of a designated committee, that are free of conflicts of interests, to ensure the review is impartial. The members involved should then review compensation data for similar positions before settling on what is reasonable for their chief executive.  

To learn more about these standards or to download the complete list of Accountability Standards, click here.