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SALARY SURVEY Why Senior Management Salaries Have Gone Flat! As direct reports to the CEO, senior managers could have expected their salaries to zoom. After all, wasn't that happening to the boss' salary? The bad news: it didn't happen last year, and probably won't, this year too. A BT-OMAM SURVEY FROM:
Miffedmukesh@poorpay.com Sir,
I didn't say anything when you got yourself a new C-class Merc and gave me your old Opel Astra instead of the new Lancer I wanted. A car after all, is just something to go from point a to point b. But I am sending you this message because there are some rumours within the organisation that the compensation-review process will be completed in the next month or so. Instead of waiting till the deed is done, I am pre-empting things. It is me we are talking about, your right hand man. The troubleshooter you turn to when all else fails, your Man Friday. The loyal old faithful who vets your presentations, allows you to take credit for his ideas, and works around the clock so that you get to spend time with the twinkie you have installed in the office guest house (yes, that is an open secret). I got a raw deal last year, sir, and you
know it; my salary increased by a mere 9 per cent. That was just enough to
keep ahead of inflation. My vacation was shot. I couldn't buy a car (the
household's third) for my daughter who had just entered college. And that
new set of golf clubs I had been eyeing had to wait. Don't do the same
thing this year. Pleaseeeeeeeeeeeeee.... FROM: Allmineboss@poorpay.com Mukeshboy, Let me first congratulate you on your daughter entering college last year. I didn't know you were so old. And keep that thing about the twinkie to yourself, will you; it wouldn't do to have the missus hear about it. Now, don't go about getting yourself all heated up over your hike.
I hope you realise the true state of affairs in the industry. In case you don't, let me tell you that a survey done by the Delhi-based Omam Consultants for Business Today of 100 companies across 13 sectors shows that the average annual salary of senior managers of all hues increased by a mere 8 per cent last year. If you think that's bad, Mukesh, wait till you see the projections for this year, 8-9 per cent again. According to the survey, a typical 'senior' senior manager earned Rs 21,20,160 last year, and a typical 'junior' senior manager, Rs 15,04,800. You certainly earned more than either in
2000-01. As for the quantum of your hike last year, it was a whole
percentage point over the average increase mentioned in the survey. Now,
get back to work. Putting your nose to the grind is the best way to stop
worrying about unnecessary things. And, by the way, those rumours were
wrong. Things have been so bad that we have decided not to look at reviews
for at least a few months. FROM: Miffedmukesh@poorpay.com Sir, At the risk of offending you, I must point
out that the survey says junior managers received a 12 to 14 per cent
hike, and middle managers a 9 per cent hike last year. That's more than
what it says senior managers received. I do not have any pretensions about
being the spokesperson for the entire species of senior managers, but we,
sir, are the people responsible for a company's performance. You yourself
have often told me, and others in the company that you wouldn't know what
to do without me. Don't you think, the quantum of our hikes should be more
than ordinary foot soldiers'? FROM:
Allmineboss@poorpay.com Now, you're getting on my nerves. The survey says that apart from few sectors like pharma, telecom, and FMCGs, most others can expect to see a decrease in the quantum of increment for senior managers. Do you need me to tell you that we don't belong to any of these industries? Now, can we schedule a meeting to discuss the hospital-project on which you are three weeks late? That is, if you are done worrying about how much you don't earn! I am sorry for having to yell at you, but the problem with you Mukesh, is that you always miss the big picture. Now, if you don't be a good boy, I'll make it a point to remember that handicap during our next performance review meeting.
The exchange of e-mails may be fictitious, but the numbers aren't. The salaries of senior managers-direct reports to the CEO like general managers and vice-presidents-grew by a mere 8 per cent last year. The future doesn't look too cheerful either: the average increase for this year is likely to be just 8-9 per cent (not all companies have finished their review process for the year yet). That's a significant fall from the 12-13 per cent by which salaries grew in 1998-99. There are, as there always will be, a few exceptions, but even in these companies that have already announced their salaries for 20001-02, the quantum of increase has shrunk significantly.
Thus, increments for senior managers at Asian Paints are down from 35-40 per cent last year to 18-20 per cent this year. ''This will still be among the highest in the industry,'' says T. Subrahmanian, Manager, HRD, Asian Paints. At consumer electronics major, LG, increments at the senior management level have stagnated at 20 per cent for the past three years. And at up-and-coming software company Hughes Software, the average increment for senior managers this year is 15-20 per cent, down from the whopping 30 per at which senior manager salaries have grown over the past five years. An investigation into the case of the shrinking increment comes up with a list of usual suspects: widespread industrial slowdown, huge salaries to begin with, and performance-based pay. ''It's no rocket science: compensation is linked to the performance of the industry,'' says Jagdeep Khandpur, Director, HR, Bharti Tele-Ventures. Adds Santrupt Misra, President, Corporate Human Resources, Aditya Birla Group: ''Salaries have grown aggressively for the last couple of years; the law of averages was bound to catch up.'' These are reasons (call them excuses if you will) with which most people are familiar, but a single digit increase in pay is insignificant, no matter which way you look at it. A thinning top
The catch? Before salaries become global, companies, or at least their revenues, must. ''Salaries can't be international till our earnings reach the level of global companies,'' says Aadesh Goyal, the head of HR at Hughes Software. The company's average return per employee (across levels) is $30,000. Entry level salaries in the US are far higher, $40,000 in the software business. And with the slowdown well and truly on in the US economy, well-entrenched senior executives are unlikley to shuck it all up for a little more - not when things are as uncertain as they are today. There are, as is only to be expected in an organisational context that is increasingly becoming performance-conscious, huge differences between increments for performers and those for non-performers. Most senior managers at LG had to be content with hikes below 20 per cent this year, but the performers, one out of every four managers in this case, clocked 40 per cent. Says Deepak Gupta, CEO, Korn/ Ferry International: ''Increments are chugging along for the average senior manager. But that doesn't hold those who perform well.'' If Mukesh is still miffed, that could be because his boss' salary doesn't seem to be defined by the same rules. CEO salaries in India have, in most cases, caught up with those in the first world; senior manager salaries haven't. Most senior managers find it difficult to accept this. They see salaries of their reports and their reports growing. And they see their chief executives earning more than ever before. Watson Wyatt estimates the ratio of CEO pay to senior manager pay at 1:1.5 in the US and Europe. In India, it is 1:3. 1 2 |
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If the figures for last year, and the
expected numbers for this year have resulted in some raised eyebrows,
that's because the employees in question are senior managers. Over the
past few years, India Inc., with the transnational companies at the
vanguard, has striven to achieve some sort of parity with global
compensation trends at this level. ''Every year,'' says Shailesh Shah, the
chief executive of HR consulting firm Watson Wyatt, ''we lose between 15
and 20 per cent of our best senior managers to companies abroad''. If
that's the case, then companies have to pay top dollar to their first
mates or risk seeing them desert ship.