Any candidate worth to become a board member is in high demand. They have special skills for being on the table.
As the appointing authority, you must find some form of remuneration for your board members.
Generally, organization pay board members as follows:
- Sitting allowances – members received about the US $50 to US $200 dollars per sitting depending on the size of the organization. Not for profit usually, provide transport refund of about US $50 per sitting. However, as not for profits (NPFs) strive to diversify revenues to increase unrestricted income, board members with business acumen are increasingly being sought. As unrestricted incomes go past 10%, board members should be paid better preferably a monthly retainer since they are expected to support resource mobilization and profitable venture selection and monitoring.
- Monthly retainer – many for-profit organizations especially financial institutions now pay monthly retainers on top of the sitting allowances to their members. The net monthly retainer depends on the size of the company ranging from the US $1,000 for the non-executive member, to the US $2,500 for members with specific board roles like committee chair or Board chairperson. The justification is simple: if executive board members like the CEO or CFO, earn in six or seven figures, why not the peers on the board who provide oversight on their performance.
And indeed, a poor board member is bad news. You need a board member who is financially independent. However, rich your board members may be, no one hates additional income.
Most busy people tend to value their time and priorities. Paying a board member is a sign that you value their time.
However, having adequate compensation for their time is one of the ways to demonstrate how you value their expertise.
If you are considering board appointments, speak to the board members of your expectations. If you don’t have money, have some form of sitting allowance. Be clear upfront before they accept the appointment. This helps manage expectations. However, once the organization starts making an improvement, start renumerating your board members well.
It is not good to pay executives through the roof. And starve your topmost experts – your board members.
Copyright 2019. Mustapha B Mugisa, All rights reserved.