I grow tired of these comparison articles that look at pay for positions based on the median. It is almost impossible to compare roles across companies, markets, industries, etc. However, there is always one position within a company that takes the main blow…CEO. I’ve been fortunate to work with quite a few highly-skilled CEO’s and been provided the opportunity to see their typical day. The CEO position is extremely difficult even in the “easiest” of positions.
So here comes Salary.com with The 8 Most Overpaid & Underpaid Jobs. And, of course, CEO’s are one of the overpaid positions.
A good CEO helps an organization meet its goals, improves profits, makes shareholders happy, and is worth his or her weight in gold. Unfortunately, bad CEOs seem to be worth their weight in gold too. And the really, really bad ones are paid astronomical amounts for the inconvenience of being fired. With this sky-high median salary, it doesn’t seem unreasonable to expect pay-for-performance.
Really? Pay-for-performance isn’t in play for CEO’s? How about news anchors on failing networks? Or movie actors involved in multiple flops? Those are huge salaries for people who do not head up companies that employ 10’s, 100’s or thousands of people. Most are adept at what they do and are handsomely compensated for it. I’m not sure why that is a stumbling block for so many people.
I can attest to the findings referenced in this Manpower survey:
Just last week, ManpowerGroup released the results of its sixth-annual Talent Shortage Survey.
The survey included almost 40,000 employers across 39 countries and territories. Globally, 34 percent of employers say they are having difficulty filling positions. The three most challenging occupations are Technicians, Sales Representatives, and Skilled Trades. The reasons most often cited are lack of experience, lack of available applicants and lack of technical skills. In the US, there is the added reason that candidates looking (sic.) for more pay than is offered.
Don’t you find that last line interesting? Candidates are negotiating the compensation plans. In sales, this is rather common even in an employer’s market like the present one we are experiencing. Still, I do find it interesting that many companies are experiencing candidates who wish to negotiate the comp package.
Imagine, if they are willing to negotiate in this market, what will they do when hiring truly picks up and the pendulum swings back to the candidate side? (at least as much as possible – employers are always the in the ultimate control).
I had this thought when talking to a customer – he has an employee to whom he pays a set wage (hourly pay, but same number of hours every pay period). Week in and week out, there is no discernable, tangible output of work from this employee. Does this fact make this employee’s pay infinite per hour?
Just a thought.
Great article from Yahoo Finance. I think I have worked with some salespeople in the past who had this same compensation program:
Anthony Armatys is facing up to six years in prison for his dumb move. But he’s not the only dummy in this story.
Armatys accepted a job in 2002 with telecom equipment maker Avaya but then changed his mind before he started. He was already in the payroll system however, and the company started depositing his six-figure salary into his checking account.
For five years, Armatys did not notify Avaya of its error, but his attempt to make an early withdrawal from his 401(k) prompted an investigation that led to his arrest.
In October Armatys pleaded guilty to theft and was ordered to repay the $470,995.53 in compensation he received. He faces full sentencing in January.
The Herman Trend Alert has a surprising report on a survey looking at employee perks for 2008. The economy may be tanking, but employers are aware of the need to retain talent.
In spite of the drastic effects of the economy on the labor market with announced workforce reductions up 30 percent, a surprising majority of companies (66.7 percent) have chosen to preserve their employee perks. Ten percent of those employers said they had considered trimming perks, but decided to leave them at current levels.
Despite their need to reduce their expenses, almost 55 percent still plan to distribute year-end bonus checks this year (2008). Only 20 percent of the companies surveyed said they had cut or eliminated perks to contain costs. At the same time, 35 percent reported they had to cut these extras to save jobs.
The destabilized economy has led to major reductions in force. According to Challenger’s estimates, through September 2008, employers have announced plans to cut a total of over 750,000 jobs. Yet in spite of the softer economy, another survey conducted by a business research firm in Arlington, Virginia and ADP, the payroll provider, found that 34 percent of their respondents reported “recruitment and retention” as their top priority.
Looking at the findings from both of these studies, we can infer that a large percentage of employers understand the value talented workers provide to the organization. They know that if they do not take care of their employees during this difficult time, when the economy improves, those employees might leave.
Wise employers will hunker down and engage their associates to help them streamline processes, market smarter, and cut expenses. They will continue to resist reducing bonuses and perks, because they know the future dangers and choose to think long-term.
Remember Clark Griswold in Christmas Vacation receiving his Christmas bonus of a one-year membership in the jelly-of-the-month club? I guess that would not be a good option in this instance.
ManageSmarter has a good article that provides 10 ways that you can help your employees through the economic crisis. There are some simple ideas on the list that a manager should do regardless of the economy. What better way to retain your employees than to show your appreciation for their efforts?
- Shortening the work week to four days with extended work hours will increase productivity and give a welcome break for people.
- Consider giving turkeys to employees for Thanksgiving and accompany the gift with a card expressing appreciation for what everyone is doing.
- Facilitate a car pool, coordinating rides or give a gas cards.
- Hold regular one-on-one meetings with employees to learn of their financial situation and their stress levels.
- Giving employees movie passes or restaurant certificates for excellent work.
- Boost morale by having senior leaders conduct regular communication meetings with all employees to share what is going on with the company and to solicit ideas on how to help each other deal with economic uncertainties.
- Bring in childcare services or set up a day care opportunity close to the office to lessen child care travel time and expenses for employees.
- Make exercise programs and gym equipment available so they can stay trim and fit without paying monthly membership fees.
Work with your downtown business association to see what after-hours shopping discounts can be arranged to assist employees with saving money.
- Take some time now to write an individual thank-you card to each employee expressing sincere gratitude and appreciation for sticking with the company and thank them for their contributions.
I know, lame title, but I couldn’t resist. ManageSmarter.com offers up this article – Compensation Complexity Hinders Sales – regarding current compensation plans. Here are some numbers they quote within the article (my editing):
Only 41% of sales leaders were satisfied with their current compensation plans (down from 59% two years prior), and only 46% believed their plans were promoting the correct behaviors for sales success.
Nearly half (46%) of sales force leaders believe their sales compensation programs have become more complex since 2006.
I always found the compensation plans to be more “complex” when I wasn’t at quota. Successful selling definitely alleviates many problems.
But there is this:
The survey points out that many companies are making strides toward more effective compensation plans. Among the productive steps forward are companies using three or fewer measures of performance (73%), conducting a plan review at least annually (77%) and changing metrics less often than before (58%).
Those are 3 excellent points regarding sales compensation plans. Companies that shift the commission structure around mid-term (weekly, monthly, quarterly, etc.) are generally demotivating their sales team. Consistency is the best policy here. Try to change it only at preset intervals (annually).
Measuring too much can also be a demotivator. Simple, straight-forward commission plans work best. We are proponents of providing commission based on gross margin in as many situations as possible. This approach keeps the salesperson honest when it comes to discounting. If they discount, they lose money themselves – a very good structure for money-driven salespeople.
The more companies we work with, the more we see communication breakdowns being the root of most problems. Our work with our clients spans more than just recruiting. We assist them in onramping their new salesperson. This function places us in the unique position of working with both the salesperson and the sales manager.
One of the more dysfunctional situations we encounter is a communication breakdown between the manager and salesperson. One manager complained that the salesperson wasn’t doing what he asked, but he never confronted the salesperson. Another time we had a salesperson who would not submit his weekly call report. Ever. Yes, he was let go (even we so-called experts miss on occasion).
Those experiences led me to this Selling Power article about compensation – a recurring theme on The Hire Sense this week. The opening statistics are shocking (my emphasis):
According to a recent WorldatWork survey of compensation practitioners and HR managers, 76 percent of organizations report revising their sales plans every year as a matter of course. However, the same survey found that only 58 percent of organizations communicate these changes directly to the frontline sales manager.
Makes me wonder with whom do they communicate the change? The article continues with an excellent point:
Since frontline sales managers are the people doing the hiring, their ability to understand the incentive plan is really critical to making the right hire and putting together the right recruiting message, says Stoeckmann. If they fully understand the compensation and incentive program and are kept up-to-date, they can be very effective recruiters.
As a recruiter, it is difficult for us to have a full understanding of the compensation (especially commission) plan. One thing sales candidates always want to know is how “real” is the plan? How many people make quota? I can’t imagine a situation where a sales manager didn’t know those details. That would be a tremendous red flag for a candidate.
According to a Workforce Management article the buzz at the SHRM conference inolved rising gas prices and the wide-ranging effects it is having. In fact, the conference’s opening press event highlighted its recent poll showing how companies are trying to assist their workers. The two most noted solutions were flexible schedules and telecommuting. Some of the other ways they are helping are four-day weeks, gas cards and car-pooling.
John Challenger, CEO of Challenger, Gray & Christmas made a great comment (my bold):
These are more than short-term fixes, Challenger says. They are the beginning of a revolution in the office that will result in productivity being the central value of work, rather the number of hours logged by employees. They also dovetail with other trends like globalization and a 24-hour view of the workday that accommodates all time zones—Asia, Europe and the United States.
“The idea of a set workday or a five-day workweek doesn’t make sense,” Challenger says. “It’s not about the time you put in. It’s about the work you do.”
Businesses often get stuck in a rut. Some managers find micromanagement to be intoxicating. These managers tend to veer away from solutions that would give freedom to our people and relinquish perceived control. I think Challenger is correct – these “old-school” approaches are in for a major overhaul.
My wife once took classes to become a court reporter. She even bought her own stenograph (is that what they are called?) for the training. Unfortunately, she never completed the training due to other circumstances.
Unfortunate because court reporters earn an average salary of $59,970.
CNN.com reports this number in their article Five surprising salaries:
Surprising salary: $59,970*. You might not have thought typing could earn you so much money, but once you realize court reporters can’t miss a word — often in fast-talking situations — it makes more sense.
Here is the other end of the surprising salaries spectrum:
Surprising salary: $27,070. Seeing as paramedics have high stress jobs that require them to be on call and ready to save lives at a moment’s notice, you might expect their mean annual salary to be higher.
*Mean annual salary information based on data from the Bureau of Labor Statistics (BLS).