Archive for the ‘Salary’ Category
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.
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
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.
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.
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
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.