As the 2005 IRS 990 forms begin to trickle in, the highest paid in associations took home seven figures last year: Donald G. Oglivie, former president and CEO, American Bankers Association, made $2.3 million; Joe Colvin, former president and CEO of the Nuclear Energy Institute, pocketed $3.3 million; E. Edward Kavanaugh, former president and CEO of the Cosmetic, Toiletry, and Fragrance Association, collected $13.2 million in salary and benefits.

Still, it’s a drop in the bucket compared to the gilded paychecks some for-profit CEOs make.  Compensation experts have knighted Barry Diller, chief executive of IAC/Interactive, the highest paid CEO in 2006, raking in about $295 million, including deferred compensation and stock options.

Considering the stakes and influence both groups of CEOs garner for their industries, some wonder, could a capable leader of a trade association lead a for-profit company too? Could their management experience and Washington influence have the same impact in the private sector?

And more compelling, is an association CEO worth more money in the private sector?

That’s the question David Poisson and several association leaders asked several years ago during a Committee of 100 meeting in Florida.  Lounging around a table in South Beach, Poisson, then the CEO of the Tire Association of North America, challenged his peers to see how the other side lives – run a for-profit company – and succeed.

“One of the executives at the table said, and I agreed, that we have very complex responsibilities and have to manage different constituencies and any one of us could run a company if given the challenge,” Poisson said.

“But those opportunities seldom come our way and the private sector doesn’t really believe we can do it.”

In fact, many companies won’t take a second glance at a CEO that has accumulated years of experience running a non-profit association.

Part of the reason, recruiters say, is that the job of an association CEO is misunderstood, if at all, by the private sector.

“[The private sector] thinks non-profit means non-business,” said James Abruzzo, managing director of the non-profit practice at DHR International Executive Search.

Recruiters say there’s a general perception in the private sector that associations aren’t as concerned with the bottom-line and aren’t as fiscally disciplined. Comparisons between associations and private companies are often uneven. A mid-sized trade association with a $35 million annual budget is often smaller than a single department in a private company.

“Certainly you need to be able to manage a budget and be able to manage people and that’s a completely transferable skill,” Abruzzo said. “But at the $30 million association level, they won’t go from there to running Nike. In comparison, it’s really not a large budget.”

“The fact is that in business, private sector value is measured by their ability to return value to shareholders and that’s different from an association,” said Pete Metzger, vice chairman of Christian & Timbers, an executive search firm. “That’s the difficulty – someone with deep association experience doesn’t translate well to the private sector. They are largely seen as Washington staff.”

But more associations are developing business acumen in their ranks and on their balance sheets. Business efficiencies and strategies, mostly propelled by for-profit members, are reshaping the ways that associations operate.

In most cases though, search committees in the private sector are looking for leaders with a track record of successfully running a for-profit company.

“I think there’s a concern in the for-profit sector that a non-profit executive isn’t rigorous enough to cut it in the for-profit world,” said Leslie Hortum, an executive recruiter who manages Spencer Stuart’s offices in Washington D.C.  “Companies want to know have they run anything. If so, have they done a good job?”

The typical resume of an association leader includes political or Capitol Hill experience, executive branch appointments and ascension up the ranks of several organizations. That may make former association CEOs better positioned for private lobbying positions or leadership in a law firm.

Without hard for-profit experience, many corporate search committees don’t find association CEOs compelling.

That makes it more challenging to determine, or even estimate, how much an association CEO could earn on the for-profit side.

In any case, it’s rare that an association CEO crosses over to the private sector. Recruiters say they’ve never heard of one taking the reins of a Fortune 500 company.

But there’s better news for those who don’t sit in the corner office.  Senior management in associations has a better crossover rate to the private side. Association executives with niche skills in communications, government relations and as legal counsel are often more appealing to hiring managers and search committees, looking to fill those exact jobs and specific skill-sets in their companies.

Executives in those jobs can also expect a pay bump, in some cases, up to 100 percent if they move over to the private sector.

Still, recruiters and compensation experts say, non-profit candidates who do want to transfer to the for-profit world have a handicap and a higher performance threshold.

“It’s a challenge to show how a candidate’s non-profit role is an indicator of success,” Metzger said. “The private sector has to take a leap of faith that the candidate can be effective in the for-profit sector.

Frankly, candidates have to demonstrate how they can make money.”

The Pay Package

Few benchmark surveys actually compare the pay gap between specialized positions in the non-profit and for-profit world.  But the few surveys that CEO Update obtained showed a significant gap in pay between associations and the private sector in some positions.

In one study, Compensation Resources, Inc., based in New Jersey, compared compensation in an association with an annual budget of $30 million to similar positions in a $100 million pharmaceutical company.

A government relations professional in the private sector makes on average 57 percent more than their counterparts who work for an association, according to the study.

A senior vice president of public relations in a for-profit company makes between $140,000 and $150,000, the survey said, a 56 percent bump in pay from the non-profit salary.

And an attorney in an association could take the biggest leap if they moved to the private sector, from $125,000 average annual salary in an association to more than $250,000 in a for-profit company, a 100 percent pay boost.

“We found a high level of compensation and perks for the jobs that can carry across the non-profit sector and even across industries,” said Paul Dorf, CEO of Compensation Resources Inc.

But those base salaries don’t include the bonuses, stock options, company equity and pay incentives that are standard fare for an executive package in the private sector. With that in mind, compensation consultants add that comparing pay scales in both sectors is akin to apples and oranges.

“In the non-profit world, what the president and CEO is paid during his watch is what he’s paid,” said Hugh Mallon, president and CEO of Executive Compensation Ltd, based in Baltimore, Md.  “In the for-profit world, he would have stock ownership that would be bought at some future date, but it would significantly change what his package really looks like and how much he’s really worth.”

Bridging the Gap

Preconceived notions of the skill-set and role of association execs may explain the apparent disconnect for private companies. The private sector often sees association leaders as generalists or managers without specific skills relevant to their companies.

Poisson, mentioned earlier, left the association world in 2000 to lead the Washington procurement office of RR Donnelly, a national printing firm. He demurs on details of his pay in associations or in the private sector, though he says both were comparable.

Though he had been CEO of an association prior, he managed only a $5 million budget in the private company, with 22 staff.

After the dot-com bust and 9/11, the company disbanded the program and Poisson left the firm. Today, he does consulting and legal work for large companies and is also counsel for a Washington law firm. 

The biggest difference in working in the two sectors: the risks, Poisson said.  “The only risk in an association is what members have on an annual basis when they pay their dues,” he said. “There is some truth to the argument that there are more real world consequences that flow from the decision making in the private sector.” 

Kate Sullivan Hare used the networks and alliances she formed as a healthcare policy advisor at the U.S. Chamber to land her next job with Wal-Mart. Her prior jobs included positions in health policy on Capitol Hill, in state government and with a Chicago-based hospital system.

Hare said her demonstrated contacts and experience in the healthcare industry help bridge the for-profit gap with Wal-Mart. “I bring contacts to Wal-Mart from outside of the corporate world, from healthcare and insurance and pharmacy executives, who all had memberships in the Chamber,” she said. 

“I had developed a lot of cordial and working relationships with some of Wal-Mart’s adversaries, who had been organizing and supporting some of the corporate campaigns against our company. I’m able to confidentially call them up and provide that kind of inroad the company could use to bridge that road.”

Garry Briese, the current CEO of the International Association of Fire Chiefs, will leave the position in February to join ICF International, a consulting firm with offices in Fairfax, Va. He’ll become a vice president for homeland security and defense, areas he worked closely on as head of IAFC.

Briese acknowledged that a lot of his pay would be predicated on bonuses, but that money was not a motivating factor for the switch.

No one would give exact figures on what they make now in the private sector, though it’s clear that former association CEOs often don’t carry the same weight or prestige. And association executives with core competencies may get a pass.  Recruiters say their specialized skill-set may provide the most coherent approaches for an association professional to make headway into the private sector.

And if it’s hard to put a price tag on association work, certainly, the true value of accumulated skills, experience and networks are equity in the future.

“What an association professional is worth in the private sector is a very complicated question,” said Abruzzo of DHR International.

“It’s what the market will bear.”