Vault's Careers Blog

Career advice and job search strategies for the modern careerist

Archive for the ‘Salary’ Category

Vault’ s Careers Blog is Moving

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An announcement: after almost a year on WordPress, we’re discontinuing Vault’s Careers Blog on WordPress. But don’t worry: you’ll still be able to get your fill of career information and advice on Vault.com–where our blogs are going from strength to strength.

Our full blog lineup on Vault.com is as follows:

Vault’s Careers Blog
Vault’s Law Blog
Consult THIS: Consulting Careers, News and Views
In Good Company: Vault’s CSR blog
In the Black: Vault’s Finance Careers Blog
Admit One: Vault’s MBA, Law School and College Blog
Insider Career Advice from SixFigureStart
Innovate with Influence: Global High Tech

Thanks for reading us on WordPress.

We hope to see you over on Vault.com soon!

–The Vault Editorial Team

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When Top Talent Should Be Allowed to Leave

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Consider the following management scenario: you’re the leader of a highly successful team, but one that has recently had to tighten its belt financially. While you are committed to training and building success long-term future, your current reputation and success rests heavily on one or two key members. And one of them just announced that he wants to leave.

Worse, he’s come out and criticized the organization publicly, stating that the fiscal constraints have hampered your organization’s ability to attract the top talent it needs to ensure a successful future—and he isn’t prepared to waste his time at any organization that isn’t meeting his level of ambition.

(Privately, you suspect that his real concern with “fiscal restraint” is much closer to home: despite being your highest-paid employee, he knows he could make more elsewhere.)

So what do you do?

Those with even a passing acquaintance with the world of English soccer may have recognized that the above scenario bears more than a little resemblance to a situation that played itself out in the public eye last week: the Wayne Rooney contract saga.

Wayne Rooney

AP Photo / Jon Super

For those unfamiliar, Rooney–pictured left–is the star player at Manchester United. At the start of this season, he was pulling in a salary of around 90,000 pounds per week, on a contract set to expire in two years. In August, he announced to the club that he wanted to leave at the end of his contract period—and the information became public last week. When pressed to justify his reasoning, Rooney issued a statement that essentially expressed his belief that the club is in terminal decline.

Two days later, he signed a new five-year contract—rumored to double his previous salary—with United manager Sir Alex Ferguson praising Rooney because “he has accepted the challenge to guide the younger players and establish himself as one of United’s great players. It shows character and belief in what we stand for.”

PR spin aside, the saga reflects just how dangerous it can be for any organization to become too reliant on a handful of key operators. Whatever happens for Rooney now, he has damaged both his own and his team’s brand—and while he has secured a better deal for himself, nothing else he mentioned has changed. The club that he believed to be in decline—in part because they can’t afford to match the astronomical salaries being paid elsewhere—is actually in a less competitive position now that they’ve tied up a much more significant portion of their revenue in his wages than before.

There are many who believe that the management at Manchester United did the right thing under the circumstances. But there are some cases where retaining your top talent is less important than upholding the values of your organization. This should have been one of them. Quite apart from the fact that the deal agreed with Rooney is enough to pay at least two high-caliber players, management has now set up a situation where other players may feel emboldened to do the same

There’s an old cliché in sport that says that no one player is bigger than the team. In this case, that has proved that to be untrue. Whether the fix pays off in the short term or not, it’s hard to escape the notion that it sets up a situation in the long term where the club is regarded as something of a cash cow for top talent, rather than an organization known for its excellence. And once you’ve got to the point where the only incentive you can offer is financial reward, you really are in trouble.

–Phil Stott, Vault.com

 

Is it a Rat Race, or a Battle of the Bulge?

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Furthering today’s salary statistics, a new study shows that earnings disparities extend beyond just the gender gap—it goes across waistlines as well.

The Wall Street Journal’s Juggle blog reports on a study published in the Journal of Applied Psychology, which indicates a correlation between one’s weight and one’s paycheck. Among separate pools of 12,686 Americans and 11,253 Germans, the study measured subjects’ relative weight and salaries. The findings would seem to mirror the basis for a number of sitcom marriages: Husky men and skinny women pull in the most, while skinny men and heavier women get the shaft.

Seems far-fetched? The numbers don’t lie: In the study from the University of Florida’s Timothy A. Judge, the female respondent group reported that the size of their income was inversely proportionate to their dress size. Women 25 pounds below the median group weight reported markedly higher earnings, to the tune of $15,572 on average. And it gets worse from there:

Women continued to experience a pay penalty as their weight increased above average levels, although a smaller one — presumably because they had already violated social norms for the ideal female appearance. A woman who gained 25 pounds above the average weight earned an average $13,847 less than an average-weight female.

Meanwhile, men are rewarded for packing on the pounds—in moderation, that is. In relation to the group average, skinny men earn $8,437 less. Fitness-oriented males may want to set their new target weight is 207 pounds; at that point, the study finds, men reported the highest average pay. Once they reached obesity, however, the respondents’ salary gains tapered off. Which is a shame, as they could surely use the extra cash for a gym membership.

But before anyone cries foul, remember that there are more factors involved. What the report does not appear to address is the additional variables among respondents; rather, men and women were each gauged as a whole. So how do both males and females specifically fare when matched among those in their age ranges and professional levels? The study, as seen in the Journal, gives no answer.

Furthermore, nothing directly indicates that these pay levels were set at the respondents’ current weight levels. One can gain or lose weight at various points in their careers. Top-earning men may become complacent and let themselves go, while top-earning women may use their professional success as a springboard into increased physical fitness. In the end, it depends on the individual and their circumstances.

However, it clearly raises questions about the relation of weight and physical attractiveness to one’s career. Have you ever been discriminated against due to your weight or body type? We welcome any stories that you have regarding the subject. Comment below, or share your thoughts with us on Twitter, at @VaultCareers.

Written by A.A. Somebody

October 8, 2010 at 9:45 am

Women’s Salaries Rising Faster than Men’s

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Is the salary gap between men and women starting to narrow? It certainly appears to be at the higher end of the salary scale: the number of women earning salaries in excess of six figures has jumped 14 percent in the last two years, while the number of men in that category rose just 4 percent over the same period. (Even better news: apparently people got raises over the last two years: who’d a thunk?)

However welcome that news may be, census figures—reported by The Washington Post–suggest that there’s still a long way to go to equalize salaries, especially in light of the fact that women are now more likely to hold an advanced degree than men.

As the Post points out, just “one in 18 women working full time earned $100,000 or more in 2009,” compared to one in seven men. In case you’re wondering, that works out to around “2.4 million working women and 7.9 million men” in the six figure (or better) category.

A couple of other points worth noting about the data:

First, it seems like it wasn’t all that long ago we were reading stories that, for the first time in history, the number of men and women in the workforce was roughly equal. While that had come largely as a result of the fact the recession hit male-dominated industries much harder than female-dominated ones, it turns out that it’s also nowhere near the truth when you factor out part-time employees. As the Post reports “[t]he full-time workforce remains predominantly male, with 56 million men and 42 million women.”

And, second, the most likely place for women to secure a decent salary is in Washington, D.C.—the capital “had the highest median pay among all full-time working women,” while ranking second on the scale for the number of women making six figures or higher. Apparently one in six Washington women currently pull down a minimum of $100,000, second only to San Jose, CA.

U.S. Companies are More Likely to Lay Off Employees

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It wasn’t your imagination: almost every company was laying off over the last couple of years. According to a recent report from HR consultancy Towers Watson, some 74 percent of U.S. companies initiated layoffs, redundancies or RIFs as a means of reducing costs during the recession. That figure also happens to be higher than in any other employment market in the world.

Whether it’s a reflection of cultural differences, evidence that U.S. companies were more bloated and inefficient than their international counterparts, or just a reflection that the recession affected the U.S. economy more deeply than anywhere else, the Towers Watson report contains a couple of startling insights for those interested in the wider employment picture.

First is that U.S. companies were more likely to reduce their headcount than to take any other action to cut costs—while 74 percent of companies shed workers, just 66 percent froze hiring, with 61 percent freezing salaries.* In each of the six other geographic areas in which the survey was conducted (generating responses from 1,176 HR professionals), companies were more likely to freeze hiring, salaries or both than they were to reduce headcount.

Additionally, U.S. companies also took a higher number of cost-cutting actions—a mean of 4.5—than those in any other region

Towers Watson stats on company cost cutting in the recession

Source: Towers Watson 2010 Global Talent Management and Rewards Study

Whether all that leaves U.S. companies in a more competitive position than those overseas remains to be seen. As does evidence on whether U.S. companies cut too deeply and have a scramble for talent ahead of them as the economy recovers. But the report does have one more set of insights as to what the future may hold for companies, job seekers and careerists alike.

When asked what actions they were considering in the event of either having to further cut costs or spend additional funds on labor costs, movement on salary topped both lists. That is, a majority of HR professionals (78 percent) said they’d be most likely to reduce pay increases as a means of cutting costs, while 69 percent said they’d be most likely to increase the salary budget if they had extra cash on hand. **

Unfortunately, the figures on likely layoffs versus hires seem to reflect the current uncertainty in the market: while only 41 percent of respondents said they’d be likely to lay off employees in the event of a downturn, only 54 percent said they were prepared to hire more people if more cash became available.

So there you have it: your future paychecks are definitely dependent on the performance of the economy as a whole. The ability of the economy to create jobs, however, seems to depend on a shift in confidence among the people tasked with making the hiring decisions. And that’s a lot harder to predict.

* There’s no separate stat in the report about companies that reduced salaries: I’m left to assume that this figure encompasses both.
** These figures are global: the report doesn’t break them down by region.

Poll: Lying About Salary is Common. Why Aren’t We All Doing It?

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I wrote last week about the concept of gaining a salary bump by lying about your current/previous earnings when applying for a new job. I didn’t attempt to draw any conclusions about the practice in the piece–other than to point out that it’s technically illegal—but I still suspected that it was pretty widespread, especially given the slim chance of getting caught.

With all that in mind, there’s good news and bad news. The good news? That I now have some numbers suggesting just how widespread salary inflation is. The bad news, meanwhile, really depends on whether you’re an employer or not. The reason? Only 38 percent of respondents ruled out ever inflating their salary during a future hiring process. Leaving companies open, presumably, to a potential deluge of false salary information on which to base their offers—assuming, of course, that some of the 37 percent who describe themselves as “tempted” by the possibility get over their fear of getting caught.*

salary inflation poll results

I’m left wondering if this is something that we should lament or just accept as a necessary part of the job hunting process. I’m also curious about where it leaves us: if everyone’s doing it, they’re effectively creating an unsustainable bubble as companies struggle to keep up with ever-inflating wage demands, whereas if not everyone is doing it, the honest folks stand a greater chance of losing out. Hmm. Creating bubbles and profiting from dishonesty. Where have we heard that before? Oh, never mind.

Perhaps the biggest issue for all of us here is the issue of trust. Clearly employees have realized that there’s a disconnect between performance and salary, and that employers in many cases will pay as little as they can get away with. With that mentality on both sides, it’s little wonder that salary negotiations often end up as a battleground—and can cause negative feelings on both sides before an employee even shows up for their first day. And, in an age where salary information is often just a click of the mouse away, it can cause ill feeling among existing employees to learn that someone they work alongside gets paid more simply because they bargained a little harder.

So where does that leave us? Publicly available salary data? Lockstep compensation models? Let me know your thoughts: is lying about salary information inevitable, or are there steps companies or government can/should take to try and cut down on it?

* NB: I’m aware that the poll results don’t add up to 100 percent. It’s a rounding thing.

Written by Phil Stott

June 22, 2010 at 3:00 pm

Interviewing: Should You Lie About Your Salary?

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It’s a moment most of us will experience at some point throughout our careers. The point where, when seeking a new position, you get through the interview stage and all the way to the point where the company wants to make you an offer. And the question comes: “What’s your current/most recent salary?” While there are many ways to avoid answering this question until you’ve had a chance to establish a rapport with the company, at some point most interviewees give in and blurt out a number.

It can be tempting, as you’re pondering the answer in your head, to tack a little extra on to the figure you were recently/are currently making. After all, the offer stage is a negotiation, so it can’t hurt to give yourself a little extra leverage, right?

That’s clearly what Ellen O’Hara, a New York-based book editor thought when she penned a post on the value of little white lies in salary negotiations for Daily Worth.

Reporting that she’d lied about her current salary in a job interview and then held out for more when given an offer that merely matched the inflated figure she’d given, O’Hara offered the following “lesson” from her experience:

“Needless to say, I learned that it pays, literally, to be strong and assertive when it comes to money. My only regret is that I’d been such a wimp about it for so long.”

As it turns out, not being “a wimp” may have placed O’Hara on the wrong side of the law: the post attracted a significant amount of attention for the ethical dilemma it raised, and among the responses was advice from HR professionals that suggested candidates have a legal obligation to tell the truth when divulging salary information (if, of course, they choose to divulge that information at all).

(The Daily Worth post—and the subsequent furor it generated—came to our attention via The New York Times, by the way.)

The end result in this case doesn’t seem to have affected anyone too adversely: there have been no reports of O’Hara getting into any kind of legal fix (at least as far as we’re aware at this point), and the worst of it seems to have been that the Daily Worth retracted the post—leading the Times to comment on it, and presumably drive its traffic numbers through the roof. Not the worst deal imaginable

It does raise an interesting ethical dilemma, though. Assuming that the worst that would happen if you were caught inflating your salary is that you wouldn’t be offered a job, would you take the risk? And, if you would, what would it take to put you off? Perhaps more importantly: do we concentrate too much on salary in job negotiations, instead of worrying about things like the fit between the person and the workplace?

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