SIOP Finances Q&A Part 3 with President Wang and Financial Officer/Secretary Heggestad

The SIOP Executive Board met on January 20-21, 2023, for its triannual meeting. To provide transparent updates to the SIOP membership, the Executive Board will select one or more major activities post-meeting to report on via a SIOP Source article. For this edition, we conclude the conversation on SIOP finances between President Mo Wang and Financial Officer/Secretary Eric Heggestad. Read our October 2022 article and May 2022 article for more.

President Mo Wang:
Hey Eric! Here we meet yet again to discuss SIOP finances.

Financial Officer/Secretary Eric Heggestad:
Happy to keep this conversation going, President Mo!

Wang:
It was great to see you in person at the SIOP Executive Board (EB) meeting!

Before we launch into the topic, I want to comment specifically on something special about that meeting. Being mindful of stewarding SIOP member dollars with care, we made some thoughtful planning decisions around travel, venue, accommodations, and food and beverage for the board members that had budgetary impact. Can you comment on that?

Heggestad:
Absolutely. Although virtual meeting technology is valuable, it is important to get the EB together in person. We have complex issues to address, and I think that the quality of our discussions, especially with the number of people we have, are just better in person. And, building cohesion among board members is also essential for our success, which is also better accomplished through in-person contexts. But, of course, in person meetings can be expensive. By intentionally and creatively scaling back our meeting accommodations, we were able to save around $5,000 for SIOP! Effective meeting, cheaper cost, seems like a win-win.

Wang:
That is great news! I am sure our members will appreciate that we are always looking to do the work of SIOP more efficiently.

On that front, can you tell the SIOP community here about the project that you and a subset of the board and staff recently worked on to change the framework for how SIOP considers its finances?

Heggestad:
Sure, it would be my pleasure, because I am excited about it, the board really rallied behind it at our meeting, AND it gave me the chance to have fun with spreadsheets (and you know that I like my spreadsheets!)

So, this group of about half of the board and I worked together to develop a more sensible framework for conceptualizing and organizing SIOP’s finances. Although there are lots of different data sources that get pulled into it, SIOP had been reporting out to the board its budgets and income-expenses on one spreadsheet, which I affectionally call the Big Giant Spreadsheet (or BGS for short). The BGS lists all of our sources of income and all of our expenses, and there is one big bottom line. We thought it would be more informative to break this up a bit. Specifically, we looked at all of SIOP’s methods of earning revenue and sources of expense and consolidated those into a few “buckets,” if you will. This allows us to match certain sources of income with associated expenses, which is useful for seeing how we are doing in certain specific operational areas. Critically, we also considered expense related to staff resources, and allocated those expenses across the buckets, which, as you can imagine, can dramatically impact the bottom line for each bucket.

We also talked high level about principles for how SIOP should be funded, financial diversification (particularly now that our major meetings may not be the reliable go-to sources of net income they once were), the importance of aiming for better than break even each year to invest in strategic reserves, and the cadence by which funding decisions should be made.

Wang:
Sounds like you covered a lot of ground! Your group proposed four buckets for SIOP finances. One of those buckets is designated as “Membership Services.” Can you talk about this bucket?

Heggestad:
As we have talked about in prior columns, SIOP is always trying to do more and better for our members. We believe our membership community has myriad needs on which we should deliver. We aim to be the premier organization advancing science and practice that transforms work and improves worker well-being around the world, while also serving as the welcoming, professional home base for the I-O psychology community.

To this end, the membership services bucket captures the expenses associated with the operation of the Society. Although most of us don’t experience it as such, SIOP is a business and, as a business, SIOP has expenses. Some of the key expenses include:

• Technology to run the SIOP membership database and website
• Subscriptions to Zoom, SurveyMonkey, LinkedIn, EurekaAlert, Canva, Tableau, and other vendors to facilitate the work of the staff and committees
• Accounting, legal, and other business services to maintain SIOP’s good standing with the IRS, protect our intellectual property, and more
• Contracts with organizations or individuals that augment our productivity or increase our impact, such as SIOP’s relationship with Lewis-Burke Associates for government relations and advocacy
• Travel to bring together various SIOP leaders and groups, including the Executive Board, but also select committees, and to support and sustain relationships such as with the EEOC, APA, APS, and other key partners
• Increasingly competitive salaries and benefits for professional staff with expertise in membership services, marketing, events, and more to manage the operations of the organization and provide expertise and guidance to volunteer leaders
• And much more...

Wang:
That is a long list! And I imagine, like everything else in this world, we would expect the cost for any number of these expenses to increase each year, correct?

Heggestad:
Yes, and I think this is super important to talk about. Having been a SIOP member for many years now, it’s easy for me to get warm fuzzies thinking about SIOP as an amazing professional community where I can connect with people who share my work interests and might be my next research project collaborators, etc., but it’s harder to realize that SIOP is a business. It has expenses. It wants to make improvements. It needs to be a fair and supportive employer (it would be particularly troubling for us as I-Os not to pay attention to this one). It is subject to the same market and economic forces like inflation and supply chain pressure and other issues. And so, to deliver my SIOP membership experience, or your SIOP membership experience, Mo, there is real and legitimate cost that must be covered.

Wang:
This makes good sense, Eric. What conclusions did the group come to after looking at SIOP finances in this new, more sensible framework?

Heggestad:
The are a few sources of income associated with the membership services bucket, but far and away the largest of those income sources is membership dues. When we looked at our income and expenses in this category over the last five years, we found that we were consistently running a notable deficit. Unfortunately, this analyses clearly indicated that our dues revenue is insufficient to fund our membership services function.

These deficits are not sustainable. So, we have two choices - reduce expenses or increase income. Throughout this budget cycle, and frankly throughout the years, SIOP staff and volunteer leaders have been ever mindful of expenses, continuously cutting, trimming, and reconsidering wherever possible. It is very clear that we can’t fix this deficit through cost cutting measures without negatively impacting member experience.

To ensure continued member service quality and, importantly, to position SIOP in a way that ensures this function is funded responsibly into the future (instead of perennially playing catch-up), our group agreed that we need to address this deficit primarily with an increase in income. Bluntly, we need to increase dues. We don’t like having to do that, but our financial data tell us it is the right thing to do for the long-term success of the organization and for returning value to our members.

Wang:
I know that you and the team put a great deal of thought into this and didn’t come at the decision lightly. I hope that that fact is reassuring to SIOP members; it is to me, even though nobody ever likes to pay more for things.

Heggestad:
Of course. But even with an increase on the horizon, SIOP dues remain among the lowest cost compared to the professional organizations that we consider our peers.

Wang:
That’s amazing, really. So, give me the bottom line, Eric. What does this mean for SIOP members?

Heggestad:
The bottom line is that to support SIOP’s solvency now and for the future, the Executive Board voted to increase professional membership dues to $199 and student/retired membership dues to $59. These new rates will go into effect on March 1, 2023.

Wang:
That seems sensible to me, Eric. Do you expect the board will increase dues every year from now on?

Heggestad:
We didn’t think it made sense to set a plan now for how much and how frequently dues might be raised in the future. Rather, we committed as a board to evaluating dues annually during our budget process, in the same way we think about pricing for every other revenue item. We will then be able to think about how much it will cost to deliver membership services and whether we can do so through expense mindfulness alone or whether a dues increase is warranted. We would expect to keep the cadence of any voted-upon dues increase taking effect on March 1 of that budget year.

Wang:
Thank you, Eric, for explaining this in such a straightforward way and helping me remain transparent and informative for our SIOP membership community.

Heggestad:
Anytime, Mo. Thanks for making it a priority to communicate financial matters with our members.