Human Resources Compensation Related Challenges

Human Resources

Compensation Related Challenges at the Non-Profit Organization Disabled American Veterans (DAV)

The Disabled American Veterans non-profit organization makes an interesting example of compensation-based issues that are challenging the company's ability to satisfy the company's internal and external stakeholders. The non-profit pays its CEO and several members of the board and other high level position with organization a very competitive compensation package. However, the organization has also had lackluster performance over the last few years and has been subject to much criticism regarding the compensation packages that the company is award its executives. For instance, the CEO's son is currently earning a salary that is estimated at roughly six figures. This organization is interesting to study the compensation structure because of the fact that it is non-profit and the compensation packages are fairly consistent with other organizations in the same industry. Yet the amount of negative publicity generated by the compensation is causing the organization some issues in the press and in special interest groups.

Company Background

The Disabled American Veterans (DAV) is located in Cold Spring, KY, and Washington DC and is dedicated to a single purpose: empowering veterans to lead high-quality lives with respect and dignity (DAV, N.d.). The company's operations are to ensure that veterans and their families can access the full range of benefits available to them. Some of the services they offer (DAV, N.d.):

Providing free, professional assistance to veterans and their families in obtaining benefits and services earned through military service and provided by the Department of Veterans Affairs (VA) and other agencies of government.

Providing outreach concerning its program services to the American people generally, and to disabled veterans and their families specifically.

Representing the interests of disabled veterans, their families, their widowed spouses and their orphans before Congress, the White House and the Judicial Branch, as well as state and local government.

Extending DAV's mission of hope into the communities where these veterans and their families live through a network of state-level Departments and local chapters.

Providing a structure through which disabled veterans can express their compassion for their fellow veterans through a variety of volunteer programs.

Since the organization does not publish its financial information, it is difficult to determine its financial position. However, the seeds of the organization can be traced back to the 1920s and the company seems to be in a solid financial position. It is primarily an advocate for veterans both in Washington as well as veterans' lives as it provides them a number of services.

Industry Background

The industry in which DAV operates is prone to unethical practices. There are many non-profits in this industry that are "copy-cats" and try to trick people into donate money to a cause that doesn't actually help anyone in need. The fake non-profits use the money generated to pay their executives rather to help the people that need it. For instance, there were two organizations that acted completely unethically by attempting to make their name sound like the more reputable organizations they were trying to mirror to acquire donations. Charity Watch attacked these sound-alike "charities:" Paralyzed American Veterans and Disabled Veterans of America; the two, according to Charity Watch, "conducted telemarketing campaigns from Jan. 2009 to April 2012 that collected over $100,000 from unwitting donors (Crudele, 2013)."

These acts of clearly unethical behavior tarnish the industries perception and make it even harder for legitimate companies like DAV to operate. However, even the more recognized organizations that are supposedly legitimate are not that much better according to many sources. DAV gets a D. rating from Charity Watch, as do Adoptaplatoon, Blinded Veterans Association, Vietnam Veterans Memorial Fund and a lot more; many receive an F (Crudele, 2013). These ratings are based on a range of different factors yet one of the main criteria is the percentages of the money that is collected through donations or other fundraising activities and the actual amount that goes to the cause.

Compensation Packages

The DAV's membership, with 1,248,150 members for the 2012-2013-year, makes it the largest charity of its kind; interestingly however, the DAV's membership rolls have been dropping precipitously since 2007 -- 2008, when 1,444,866 disabled vets were members, an almost 14% decline in five years (PR Newswire U.S., 2013). Despite the organization's poor performance and drop in collections and donation over the last few years, the company's top executives have continued to get an increase in compensation. DAV's Chief Executive Officer, Arthur Wilson, last year got $287,000 in compensation plus $72,994 in "other" pay from DAV or related organizations; General Counsel Christopher Clay $198,558, plus $144,331; and J. Marc Burgess, the executive director of the national headquarters, $163,483, plus another $122,532; Vice Chairman Larry Pozin seemed to get best deal, earning $107,240 for an average of just five hours of work a week in 2012 (Crudele, 2013).

There is some debate about whether the compensation is justified. Surely these individuals might earn a higher income in the private market. However, the compensation packages given to the executive staff have outraged some people to the extent that there is now an organized group with a website online that is called Veterans for DAV Reform. This group claims that "currently, the Disabled American Veterans is held captive by an opportunistic gang of charlatans only interested in their own gigantic incomes (Veterans for DAV Reform, N.d.). Other sites rate the organization more favorably and give the organization credit for being transparent but criticize the organization use of its assets (Charity Navigator, 2012). Within this organization, the board of directors is responsible for the compensation packages and the resulting issues that the raises have spun. Although the executive compensation is likely below that of their for-profit peers, they seem excessive to many of the external individual's that are trying to receive benefits from the company.

Figure 1 - City Navigator's DAV Rating (Charity Navigator, 2012)

Discussion

The not-for-profit industry has developed specific organizations, such as the DAV, to help the veterans who represented their country in the military. DAV is considered the industry leader in providing assistance for veterans and has been doing so for a long time with a rich and interesting history. However, the organization is currently having a problem with the compensation packages that are paid to the executive team to the extent that is has outraged some individuals who have collective organized to form a group and now there is now a website online that is called Veterans for DAV Reform.