The HUD Challenge to Executive Compensation
Recently, HUD released compensation data from the 2013 Executive Compensation Survey, in which Public Housing Agencies (PHAs) were required to report salary information from their top 3 management officials and also document funds used for management above the $155,500 salary cap. HUD affirms that the purpose of the survey is to provide public transparency and monitoring compliance, but why are we actually so caught up with spotlighting this issue?
Looking at this issue from the lens of a human resources and compensation professional, it is troubling that HUD does not seem to be comparing the job responsibilities and compensation of PHA executives with comparable positions in the private or non-profit sector. Even among executives who receive federal funding, like hospitals, salaries are not capped in the same manner as PHAs.
When our company conducts compensation analyses of executives at public agencies, we always utilize compensation best practices to compare data from a variety of sources, including: 1) PHA compensation for comparable positions at similar agencies, in terms of size and region; 2) Municipal and non-profit organization compensation for comparable positions; and 3) Private sector compensation for comparable positions. The compiled data is then used in the compensation analysis process, which includes: 1) Ensuring the group of comparable titles and responsibilities is appropriate; 2) Conducting COLA adjustments to bring data within the salary range of the local market; 3) Reviewing all elements of total direct compensation; and 4) Determining the proper salary range spread associated with the position level. Often, the similarities in responsibility between top PHA executives and executives in organizations outside the industry may be more comparable than responsibilities within the industry. The accuracy of the comparison to comparable positions comes from the complexity of tasks and responsibility of the position, not from salary caps proposed based solely on the unit size of housing authorities.
With the current climate of funding cuts across agencies, PHA leaders have been frequently required to become more creative and more strategic to successfully run their programs, similar to leaders in the private sector. CEOs and Executive Directors of PHAs must continue to drive the message to HUD and Congress that statutory caps are not fully representative of the complexities of their work. Ultimately, in the name of transparency, isn’t it more reasonable to follow the data-driven process of compensation best practices than an arbitrary number?