Most nonprofits bundle the executive’s annual evaluation with the pay discussion. It’s common. It’s efficient. It's a historical practice. It’s also… not ideal.
Evaluation and compensation are connected, but they’re not the same kind of conversation. Treating them as one meeting blurs purpose, heightens defensiveness, and shortchanges both the leader and the board.
Separating them is a simple structural shift that improves fairness, clarity, and trust.
When these are split, each can do its job better. Research on motivation and performance supports this separation: tying feedback too closely to rewards can narrow focus, dampen intrinsic motivation, and reduce honest learning signals (self-determination theory; see Deci & Ryan). Put plainly: people grow more when feedback isn’t immediately tethered to a raise decision.
There’s no single calendar for this work — just good reasons to plan it with intention.
Both conversations deserve space, presence, and clarity.
Most boards tie the compensation discussion to the budget cycle — that’s good practice and ensures financial decisions are made in context.
But the evaluation doesn’t have to live there, too.
Many boards evaluate their executive in the fall before the end of the year – but fall is also peak nonprofit chaos: annual appeals, end-of-year reports, fundraising events, holiday programming, grant writing, and donor stewardship. Your executive is running at full speed and your board members are juggling full calendars of their own.
Consider aligning the executive evaluation with the anniversary of the leader’s hire or a mid-year checkpoint when reflection feels possible for everyone - or move the evaluation to a calmer season, when everyone can be fully present.
Different conversations, different lenses.
If they happen near each other, fine. If they don’t, even better — as long as they’re both done well.
The point isn’t to create distance for distance’s sake. It’s to create enough space for clarity, presence, and trust to do their work.
Opening the evalution:
“Today is about performance and learning—what worked, what was hard, and what we’ll support in the year ahead. Compensation is a separate discussion on [date]; we’ll use a consistent philosophy and market data there.”
When someone pivots to pay:
“I’m noting that for the compensation meeting. For now, let’s stay on the workplan and the support the executive needs from us.”
Opening compensation:
“We’re grounding this decision in our compensation philosophy, market data for the role, internal equity, and organizational sustainability. Today is not a referendum on last year’s performance—that work is already captured in the evaluation and workplan.”
“Isn’t this extra work?”
It’s extra intention, not extra meetings forever. Many boards keep the two items within the same month; the small buffer preserves psychological safety without adding bureaucracy. Research suggest the quality payoff is worth it.
“Corporate does it together.”
Many corporations are moving away from annual, pay-tethered reviews toward frequent coaching + separate pay processes for exactly these reasons—better performance conversations and less bias.
“Will we lose accountability?”
No—if anything, you gain it. The evaluation culminates in an agreed workplan and a cadence of check-ins; compensation follows a transparent philosophy and data.
Boards carry fiduciary and cultural stewardship. Splitting these conversations helps you do both well: evaluate leadership in service of mission, then steward pay decisions in service of sustainability and equity. It also aligns with modern performance-management guidance to make feedback ongoing and developmental rather than a once-a-year verdict wrapped around a raise.
Let the evaluation be honest, human, and forward-looking.
Let compensation be principled, data-informed, and sustainable.
Your executive—and your governance—will be stronger for it.
