So, you work at Marathon Petroleum, do you? Great company, but did you know that it would take the annual pay of 935 typical Marathon employees to equal the pay of your CEO? Nice gig. Look, nothing against Marathon. Your friend at Humana? She and 343 of her typical employee friends at Humana could combine their full year’s earnings ($57,385) and cover the annual pay for their CEO.
Still tough to swallow? Well, look at Intuitive Surgical, where the CEO earns only 32x the annual pay of typical workers. You feel better now, right?
Bottom line: CEOs earn more. A lot more.
In an eye-popping article this month, the Wall Street Journal reported what we all basically knew: big company CEOs earn a lot more than typical employees. Thanks to a supplemental requirement to the 2010 Dodd-Frank Act, public companies are now required to report these pay differences. The first reports were recently released, so the WSJ thought we should know how we’re doing. Wonder what’s being asked at corporate town halls right now?
Don’t blame the CEOs. They’re doing what any of us would do – looking for the next step in their career, looking for a compensation increase from their last job. The same thing that all employees do, it’s just that the numbers are bigger. The numbers in their previous job were big, too.
Don’t blame the Compensation Committees, either. Boards of Directors want to hire the best CEO they can find, and there’s a limited talent pool, an active labor market and market comp factors for C-level staff, too. The Comp Committee is simply paying what the market requires and paying what it takes to get their top candidate to join their team. Same issues most of us are used to, just bigger numbers.
Explore new opportunities.
Want to increase your earnings level? Sure, we all do. One of the best ways to do that is to explore opportunities outside of your current company. That’s not the way it should be, but unfortunately, that’s the way it is in many companies.
What did you receive on your last merit increase – 3 to 5%? Less?
Would you rather see about a 10-15% increase or more? Change jobs. Now. Contact us, let’s talk.
For top performers in high-demand roles and senior leaders, the job-change premium can be much higher: 18 – 20% in base pay alone in 2016 (SHRM, 2017). That figure increases to 34.5% when incentive pay is included, although that’s not typical. The range of 10-15% is about right, based on my years of corporate HR and recruiting experience.
Let that sink in for a minute. Stay put and hope for 4.5% or consider other opportunities and see an excellent chance for an increase of 10% or more. But that’s just for starters.
Real earnings growth comes from the compounding effect: A 15% increase in base salary of $100k to $115k means that merit increases, bonus amounts, and the NEXT job-change premium is calculated from that $115k base salary. Another 15% at the next job change down the line and we’re looking at a base of $132k…and it continues from there.
Two job changes can potentially move your base salary from $100k to $132k in 3-4 years. Your call.
Important to note in this conversation is that compensation is absolutely NOT the only reason to consider a job change, though it is an important factor in career planning, along with many others.
If you’re feeling underpaid at Whirlpool because your CEO earns 356 times what you do, take that next recruiter’s call, explore your options and see what it feels like to make that discrepancy a bit smaller.