Salaries: why it’s not always about what you get paid
A radio programme this week explored the sensitivity around wages. Radio 4’s The Joy of 9 to 5 looked at why we get paid what we do, and how comfortable we are disclosing it.
The first part of that previous sentence suggests an interesting – possibly intractable – question. The second seems to really depend on your cultural upbringing…
Why companies pay what they do
When being briefed on jobs, we are often asked what might be a reasonable salary. It’s a thorny question: many of the roles for which we recruit are so new that benchmark salaries have not yet been established. If this is the case, we can only advise clients on the individual arrangements that people have during the search phase.
Even in more established roles, there are rarely clear and definable packages for similar roles in different companies. For example, the same role in Bloomberg, Thomson Reuters, or Dow Jones will have different rewards, with Dow Jones typically at the lower end of the pay scale. A similar scale can be found in most areas of the media: the UK arms of Conde Nast, Hearst and Time Inc; or the Daily papers – Mail, Telegraph, Express. You can list the same in events businesses, tech companies, or broadcasters.
But, as the programme makes clear, it is not all about salary. As long as people feel they are not being paid less than colleagues in the same company, other considerations come into play. Every company has its own culture: the high rewards usually come with high demands, or cultures that suit only a few. It is not uncommon for people to refer to the relatively high pay at Bloomberg or Daily Mail as ‘danger money’. This is a partial view: I know many people who love both places and wouldn’t work elsewhere.
More important to most employees is the culture: their immediate boss and team, the ambitions of the business, the ability of the company to meet the employee’s personal needs for working arrangements.
In each sector of the media industry, it is certainly not true that the lowest paying companies produce the worst results. Yes, you need to be competitive: but you can retain good people if your overall offering (culture, benefits, environment, flexibility) is compelling.
I can illustrate the impact that non-salary concerns have in two cases: one in which a senior head of research took a 50% pay cut to go to a more family-friendly environment; and another in which a sales candidate turned down an OTE package which trebled his potential package because he felt his current employers ‘understood his ambitions’.
It is not always about the package. Companies that can only afford to pay below market rates can still compete if they pay attention to some of the more intangible benefits of working life.
Disclosure
It is an odd thing, but until I became a headhunter I never believed anyone would discuss their salary package with third parties. They do, of course – just typically not with their colleagues, friends or (in my experience) siblings.
Headhunters are a different proposition. People know that to advance their careers, folks like us need to know (and be trusted) with information that would normally be regarded as confidential.
On the programme, they highlighted the case of a logistics business in which everyone – from the CEO down – was paid exactly the same amount. This form of egalitarianism is extreme, but at least everyone knows where they stand. In Norway, it is a matter of public record what everyone earns. In the US, anyone with a role in the public sector – including civil servants, administrators and even public-service broadcasting – has to make their salary details available.
In the UK, we may think this is a very foreign approach, but there are huge areas of our society where such disclosure is common. The outrage over Martin Sorrell’s £70m package this year is a direct result of the requirement for large companies to disclose their Directors’ remuneration. The BBC and – increasingly – other publicly-owned assets have to disclose the salaries of senior executives. MPs’ pay has long been known – and now it looks as if they will have to disclose their tax returns as well.
How would you feel if your pay was a matter of public record? I suspect it depends on the audience. We are comfortable telling our bank or IFA, but I would image we’d be far less comfortable telling less our neighbours.