Managers Commanding Better Pay
In today’s tight labor market, high-powered agents like Jerry Maguire should give some thought to switching from sports to business.
Q. I own a small plastics manufacturing company and am in desperate need of an experienced operations manager. I’m willing to pay a salary equal to mine, but I still can’t generate any interest. How can I attract the talent I need?
A. It’s getting harder every day, especially in rapidly growing industries that require managers with specialized talents. As businesses become more sophisticated and technology-dependent, the compensation premiums that qualified managers can demand will continue to increase. Consequently, a “typical” compensation package won’t be enough to attract and retain the kind of people you’ll need.
It seems that salaries can’t go high enough and perks can’t become perky enough to attract the individuals who can make a critical difference in competitive industries. Today, talented executives want a piece of the action. They want to share in the goodies that they perceive will accrue to the owners of the enterprise if the venture is successful.
That’s why stock awards, bonuses and options have become so important, even in start-up firms. Managers are keenly aware of the fortunes that have been made in Silicon Valley. It has been reported, for example, that the typical equity signing bonus offered by Cisco Systems just five years ago is already worth in excess of $5 million dollars.
Indeed, the demand for equity participation has become so prevalent that there are office receptionists under 30 years of age who are already multimillionaires.
This phenomena is grounded in workers’ long-abiding desire to participate in the wealth-accumulation opportunities that were traditionally reserved for founding entrepreneurs and capital providers. Historically, equity has almost exclusively represented payment for capital; “labor” was never perceived as “capital.”
It’s different today. Experienced, knowledgeable, innovative, industrious managers constitute a precious capital resource, even thought their value is not reflected on the balance sheet. Increasingly, workers themselves, what they know, and what they can do, are making the critical difference in corporate performance.
Accordingly, a “piece of the action” will become a commonplace management demand in most industries as we move into the new millennium. The only open questions concern the degree and form of such “ownership entitlements.”
It isn’t just the monetary components of ownership that managers covet. While the economic aspect of ownership is significant, the psychological dimension is equally compelling. Keep in mind, most entrepreneurs don’t start their business with a primary goal of getting rich. Surveys show that that pecuniary motivation ranks third or fourth on the hierarchy of motivations.
The truly capable venturer wants an opportunity to implement, to perform, to prove himself or herself, and to do so free from the fetters of normal corporate life. That’s why we are seeing so many corporate “Dilberts” breaking ranks and going into business for themselves.
Therefore, the ownership enticements offered to managers must provide both economic and psychological satisfactions. Equity participation must be complemented with a work environment resembling the circumstances a manager would enjoy if he “owned the joint.”
So, it isn’t just a question of equity; it’s also a matter of providing operational circumstances in which the manager can assume responsibility, make policy, effect change, innovate and experiment. (You know, the kinds of fun stuff that, in the old days, were the exclusive prerogatives of the owner.)
This trend is quite understandable. Talent has been selectively brokered in other economic venues for years. For generations, movie stars, recording artists, and athletes have been selling the rights to the future revenues they will generate. More recently we’ve seen the top executives of large firms cut megamilliondollar deals for their future services.
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The following fields overflowed: CREDIT = Paul Willax The Spokesman-Review