Editor’s Note: This week, TLNT is counting down the most popular posts of 2010. This is No. 10 in our Top 25. We’ll continue to do this through New Year’s Eve. Our regular content will return on Monday January 3, 2011.
Shortly before the Society for Human Resources 62nd Annual Conference and Exhibition in San Diego this past June, the SHRM Board of Directors quietly voted to increase the amount of the “honorarium” the organization pays each of them annually for their service, according to sources familiar with the workings of the SHRM Board.
The increases were was follows:
- From $25,000 to $35,000 per year for the SHRM Board chair (currently held by Robb Van Cleave, the Chief Talent and Strategy Officer at Columbia Gorge Community College in The Dalles, Oregon);
- From $15,000 to $25,000 per year for SHRM Board members who serve as committee chairs;
- From $10,000 to $15,000 per year for regular SHRM Board members.
Few people besides the SHRM Board and a handful of staff members know of the increased “honorarium” the Board voted for themselves. That’s because a summary of SHRM Board meetings that used to be sent to the organization’s volunteer leaders, past Board chairs, and regularly published on the SHRM website, is no longer posted on SHRM.org or made available to SHRM’s 250,000 plus members and the public at large.
Questions about lack of openness and transparency
This is the first time the Board has voted to increase the amount of the “honorarium,” and close observers of SHRM who spoke on the condition that they not be publicly quoted on-the-record, say that the reason the Board has never voted itself an increase is because of the concern over how such a hike in Board compensation might appear to the membership.
There is nothing illegal about the SHRM Board voting itself a raise. Under Ohio law, where SHRM is incorporated, it is perfectly legal for them to do so.
However, the decision to secretly increase the amount of the “honorarium” in June raises questions about why the SHRM Board decided to vote for an increase now given the ongoing economic downturn that has impacted so many SHRM members, and, following 2009 when SHRM’s annual revenues dropped to $95.84 million (from $109.45 million) and the organization was forced to implement a hiring freeze.
It also raises questions about why the SHRM Board opted to not make their vote to raise the “honorarium” public and transparent to both SHRM members and the public at large.
Longtime observers of the SHRM Board say that this focus on secrecy was not the case in the past, when the attitude was that SHRM members deserved to know what Board members were getting in exchange for their service, but grew during Johnny Taylor’s time as Board chair in 2005. Taylor, many close observers of the Board say, brought a highly political attitude to the SHRM Board during his term as Chair, and that included a strong push to be highly confidential and less than transparent about SHRM Board meetings.
The June decision by the SHRM Board vote to increase the “honorarium” and keep the action secret from the membership has deeply troubled many close followers of SHRM who say that it shows that the Board has lost its way with such secretive behavior, and perhaps, lost sight of the fact that the Society for Human Resource Management is a not-for-profit professional organization dedicated to the betterment of the human resources profession.
SHRM “doesn’t want to be part of the story you’re doing”
TLNT, working through SHRM’s public affairs staff, asked the SHRM Board of Directors and Chair Robb Van Cleave for comment and reaction to this story last week, including e-mailing a list of a half-dozen specific questions about the Board’s recent actions.
A SHRM spokesperson responded two days later, saying that SHRM “doesn’t want to be part of the story you are doing,” and that no one from SHRM would answer any specific questions or take part in an interview to discuss the reasons behind the secret “honorarium” vote and lack of transparency and openness by the Board about it.
A number of SHRM members have expressed concern and surprise at the Board actions, although many of them contacted for comment on this story do not want to be quoted on the record because of their concern for the impact public statements might have on their relationship with SHRM and their ongoing work with the organization.
Those who did agree to be publicly quoted, however, seemed to sum up the feelings and concerns of many other SHRM members and close observers who spoke privately to TLNT.
An expectation to be transparent and a role model
“I’m surprised and disappointed by the lack of transparency in this process,” said Jason Lauritsen, a SHRM member and Vice President and Director of Human Resources at Union Bank & Trust in Lincoln, Nebraska.
“As a leader in human resources, I have the expectation of SHRM to be a role model for our profession. Trust is fragile and in today’s business environment, leaders have to be transparent about their decisions and practices — particularly when they could be interpreted as controversial,” he said. “ I’m not sure that this is a great example to set for the thousands of HR professionals who look to SHRM for leadership.”
Another HR professional – Kris Dunn, a well-known HR blogger and Vice President for People at software-maker Daxko in Birmingham, Alabama – had a similar reaction.
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“As a SHRM member, when it comes to the Board of Directors at SHRM being paid, I can’t say that I’m against it. I haven’t looked at it enough to understand if the compensation is above market, below market, or in between. If it’s customary and reasonable, I say play on,” he said.
“However, when it comes to them giving themselves a raise in a very down economy, that’s questionable, especially if you throw in zero disclosure. Regardless of what’s required legally in a non-profit, I think it’s fair to say they haven’t met the expectation their membership would have of them in that area.”
A philosophical difference on board pay
Paying members of not-for-profit boards is a somewhat controversial topic, especially because some board members, although they volunteer their service, may get reimbursed in part or in whole by their regular employer for time off for board work, and sometimes, for travel and other expenses as well.
In addition, members of non-for-profit organizations (like SHRM) often have a philosophical disagreement on this topic, with many believing that a non-profit board should not be paying itself for service to a largely volunteer organization. Some even make the case that because the board is there to serve members, it should not be doing anything that members might think is unethical – such as voting to pay themselves.
Although it is not unheard of for a not-for-profit Board to pay itself, consultants who work closely with not-for-profit organizations say it is a fairly uncommon practice – especially for associations like SHRM with a large percentage of volunteers.
This philosophical debate over paying or not paying the board was apparent when the SHRM Board first voted to pay themselves an “honorarium” in 2005, when Johnny Taylor was serving as Board chair.
Close observers of SHRM who are familiar with the workings of the Board during that time say that some Board members who were in favor of the “honorarium” then argued that they were doing a great deal for the organization and that they should get something for their many hours of service to SHRM and the Board. In addition, some felt that an annual “honorarium” would help Board members to pay for their spouses to travel with them when they were attending SHRM events, something that had been an issue for many Board members in past years.
Last Board summary published 18 months ago
Although the Board eventually voted for the annual “honorarium,” those Board members opposed to paying the Board argued for and eventually received assurances that the SHRM Board would also make sure that the “honorarium” vote and any subsequent Board actions would be made public and transparent to all. As part of this, a summary of each Board meeting would be sent to the organization’s volunteer leaders, past Board chairs, and regularly published on the SHRM website (www.shrm.org).
The last summary of a SHRM Board meeting was published on SHRM.org some 18 months ago, in February 2009. Close observers of the Board say that it has largely stopped communicating publicly about what is going on at SHRM Board meetings.
As a practical matter, the information about the Board’s action to increase the “honorarium” will eventually come out when SHRM files IRS Form 990, the tax document that tax-exempt non profit and not-for-profit organizations file each year with the IRS. The 990 allows the IRS and the public to evaluate non profits and how they operate.
Of course, it’s common practice for organizations to get extensions and to file the 990 form in November of the year following the year being reported on – something that SHRM does regularly. In other words, the increase in board compensation probably won’t be filed in public documents by SHRM until November of 2011 — nearly a year and a half after the Board vote.