Charity CEO salary negotiation built on mutual understanding

Charity CEO salary negotiation can feel uncomfortable for candidates and boards alike. But it works best when both sides treat it as a chance to reach a shared understanding, rather than a conversation to win.

Many charity CEO candidates worry about when they should discuss remuneration and can also be concerned about seeming too focused on money.

Boards must consider affordability, internal fairness and how senior pay might be perceived publicly.

Handled well, discussing salary is part of creating a transparent, sustainable and accountable relationship between a CEO and their board.

Charity CEO pay should be judged on fairness

There is nothing inherently wrong with a charity CEO negotiating their salary.

A CEO carries significant responsibility. Depending on the organisation, this could include strategy, income generation, safeguarding, organisational culture, governance, partnerships, regulatory compliance and public trust.

Their salary should reflect the complexity of that responsibility while remaining appropriate to the charity’s size, income, location, values and wider pay structure.

Purpose isn’t a reason to undervalue leadership.

Equally, candidates should recognise that charities have a responsibility to use their resources carefully and be able to explain their decisions.

The strongest salary discussions start from evidence. That means moving past a candidate simply asking for ‘more,’ or a board defaulting to the lowest figure it thinks someone will accept.

Both sides need to be asking what is reasonable for this role and organisation. That conversation should be informed by:

• Salaries for comparable roles and organisations
• The size and complexity of the charity
• The organisation’s financial position
• Geography and working arrangements
• Internal pay levels and equity
• The experience and capabilities of the candidate
• The scale of the leadership challenge
• The outcomes the board expects the CEO to deliver

When should you talk about salary?

Charity CEO salary negotiations work best when raised early, but without dominating the first conversation.

Before exploring the detail, both sides need to properly understand the role and what the candidate could bring.

We strongly recommend that the employing charity set out a salary or range when advertising and that at the application stage, candidates should check that the advertised salary range is broadly workable. There is little benefit in progressing through a lengthy process if there is a significant and unresolvable gap.

If the advertised range doesn’t work for a candidate, it’s reasonable to raise this in the initial conversation and ask whether there’s flexibility, and what would influence it. Sometimes there’s scope to move, other times the figure is fixed, and knowing this early saves everyone’s time.

Negotiations are often about salary but increasingly are focused on flexibility (e.g. days worked at home, compressed hours, four-day week arrangements) but might also be about pension, notice period, probation, professional development and the support available from the chair and wider board.

I recommend that if you’re hoping for a package beyond the advertised range, you find out whether that’s viable as early as possible, ideally before you apply, and certainly before a time-consuming final stage selection.

Before accepting, the candidate might also wish to understand how their performance will be assessed and when their salary will next be reviewed.

Read more: Five reasons to show the salary in job adverts

Agree the expectations before agreeing the package

A CEO should not negotiate their package in isolation from the expectations attached to the role.

In my opinion, one of the most important elements of a charity CEO salary discussion that is often overlooked is understanding how progression and performance are rewarded.

A board might want a CEO to lead a turnaround, grow income significantly, rebuild culture, explore a merger, improve regulatory compliance or deliver a new strategy. Success in any of these could mean the CEO going on to lead a larger, more complex or fundamentally different organisation from the one they joined.

The scale of the challenge should inform both the salary and the support provided to the successful candidate.

Boards should be clear about whether a grading system is in place and how pay is appraised, whether annually or on another cycle. Clear objectives and key performance indicators make this easier to answer consistently. They create a shared understanding between the CEO and trustees and reduce the risk of future salary discussions becoming vague or overly subjective.

Depending on the organisation, objectives might cover:

• Financial sustainability and income diversification targets
• Staff engagement and organisational culture
• Governance and regulatory improvements
• Strategic outcomes and impact
• Partnership development

These measures must be realistic, balanced and within the CEO’s reasonable influence.

A new CEO should not be held personally responsible for resolving years of structural challenges.

The discussion should also consider what the CEO will need from the board. Leadership accountability works both ways. Trustees need to provide effective governance, timely decisions, constructive challenge and sufficient resources for the CEO to deliver what has been agreed.

Read more: How to get CEO and Chair succession planning right

Build in externally benchmarked salary reviews

A practical way to make future conversations less awkward is to agree the salary review process at the point of appointment.

Rather than relying on an informal promise to “look at the salary later”, the board and CEO should establish:

• When the salary will be reviewed
• Who will lead the review
• What evidence will be considered
• How performance will inform the discussion
• Who has the authority to approve any change

Ideally, the review should include external benchmarking from a credible salary survey, sector body, specialist adviser or independent remuneration review.

Over recent years, Peridot has built a specialism for carrying out salary surveys on behalf of our clients as we’ve been able to use our extensive, internal database to collect market pay data that enables boards to understand and agree CEO salaries using a shared evidence base.

External benchmarking also supports fairness and good governance, particularly when the board may need to explain its decision to staff, funders, regulators or the public.

Boards must also recognise the risks of underpaying, including restricted candidate pools, repeated recruitment costs, difficulties retaining strong leaders and increased burnout.

Read more: How can salary surveys help you attract and retain the best talent?

How to prepare for salary talks

Candidates should do their homework before entering a salary conversation. Look at comparable CEO roles, but make sure the comparisons are genuinely relevant. Income doesn’t tell the whole story. Complexity, regulation, staffing, geography and the nature of the organisation’s work all carry weight.

As a candidate, it’s helpful to:

• Discuss the whole package rather than salary alone
• Link your expectations to the responsibilities and mandate of the role
• Be honest if the advertised salary is below what you could accept
• Ask how the board reached its salary range
• Understand whether there is flexibility and what would justify it
• Agree future review arrangements in writing
• Keep the conversation professional and collaborative

Boards can prepare in similar ways. Having benchmarking data ready, being clear on flexibility within the budget and agreeing internally who can approve changes all help the conversation.

The aim is to establish an employment and leadership relationship that both sides believe is fair and sustainable.

Candidates should also recognise the financial context in which they are negotiating. Delivering a sustainable budget is likely to be one of the CEO’s own objectives, so any request should be realistic and evidence-led.

Common mistakes that undermine trust

There are also several approaches that can derail an otherwise constructive conversation.

For boards

• Using commitment to the cause as a reason to underpay: Boards should not assume that a strong candidate will accept an unfair package simply because they care deeply about the mission. Passion does not pay someone’s mortgage, and it should not be used as a substitute for fair remuneration.
• Making vague promises: A commitment to “review the salary after probation” has limited value unless the timing, criteria, process and decision-maker are clear. If progression is linked to particular outcomes, these should be documented.
• Creating unrealistic or one-dimensional KPIs: A CEO’s performance should not be reduced to income growth alone. Financial performance is important, but so are culture, governance, impact, safeguarding and organisational resilience. Measures should reflect the whole role and recognise factors outside the CEO’s control.
• Ignoring internal fairness: A CEO salary cannot be considered entirely separately from the pay and conditions of the wider workforce. Boards should think about how a decision compares with pay across the organisation, and whether it reflects the organisation’s values.

For candidates

• Waiting until the offer to say the salary won’t work: Candidates should not progress through an entire process only to reveal a much higher salary expectation after receiving an offer. If there is a firm minimum, communicate it respectfully and early.
• Bluffing: Inventing another offer or overstating a current package is risky and unnecessary. A strong, evidence-led case is much more persuasive than an attempt to create artificial pressure.

Fairness benefits everyone involved

When candidates and boards are honest about affordability, expectations, performance and future salary reviews, the conversation becomes less awkward and more accountable.

That gives the organisation a leader free to focus on its mission, supported by a relationship built on fairness.

If your board is preparing to recruit a new CEO and would value advice on salary benchmarking, role design or running a fair and effective appointment process, please get in touch with the team at Peridot Partners.

Bill Yuksel is our Head of SME Charities, with over 60 CEO appointments across England, Wales and Scotland. He has a true passion for social change and a drive to match motivated candidates with organisations where they can make a difference.