If you keep tabs on the nation's economic heartbeat you will have noticed some discomforting trends surfacing throughout much of this year. Wall Street's recent-years' stretch of tech-fueled upward mobility has stopped rather abruptly, and beleaguered industries across the nation are feeling the crunch. And the horrific events of September 11 have injected an even greater degree of uncertainty, exerting yet more pressure on an already struggling economy.
To these most recent trends, we need to factor in economic performance over the past year since the 2000 salary survey was published. After a low of 3.9 percent in October 1999, the unemployment rate rose to 4.9 percent by August, its highest reading in four years, according to the Bureau of Labor Statistics of the U.S. Department of Labor. In fact, in the second quarter alone, the economy grew at its most sedate pace in more than eight years, the U.S. Department of Commerce reported. Furthering the economic stall, as of August, 1.1 million jobs were slashed in fiscal 2001, according to research firm Challenger, Gray & Christmas, Chicago.
How is the grim news affecting the salaries and compensation of workers? For many firms, the logical means to combat a staid economy has been predictable: downsizing and salary cuts. Los Angeles-based Korn/Ferry International did just that. After announcing it will reduce its workforce by 20 percent, or about 500 employees last summer, the executive recruitment firm also moved to cut executive salaries by 10 percent as part of the shakeout. "The economy is having a profound effect on corporate hiring, and therefore, we are taking necessary and prudent steps to right-size our business for the prospective economic recovery," says Paul C. Reilly, chairman and ceo.
Yet, with the economy treading such turbulent waters, training professionals on the whole seem to be floating just fine—for now. In fact, Training's annual salary survey finds that at $63,177, the average base salary for training professionals is nearly 4 percent higher than last year's $60,794, and 7 percent higher than 1999's $59,157. Across all salary ranges, training professionals averaged a 6 percent increase, excluding promotions or change of employer. Once again, however, the 3.9 percent increase over last year's average fell short of the general wage-earning populace, which for the second straight year increased by 4.6 percent, according to WorldatWork, Scotsdale, Arizona.
Despite falling behind the national increase, training professionals are generally content with their remuneration. Overall, those making more than $65,000 felt fairly compensated or well-paid. Predictably, executive-level managers making more than six figures felt most satisified, with 83 percent reporting a fair or well-paid exchange. As predictably, almost half of those earning less than $50,000 felt their salaries were low for their responsibilities, while only 2 percent of wage earners making $40,000 or less reported feeling well-paid for their work.
UnitedStates@Work, a study released last year by Aon Consulting, Chicago, suggests that while rewards such as personal growth, career development, skills training or work/life balance are important areas of focus in the battle for worker attraction and retention, employers also should pay particular attention to benefit packages. When asked which they would prefer—an increase in take-home pay or benefits—56 percent of survey respondents opted for more benefits. Training's survey revealed that 401k employer contributions were the most widely distributed noncash compensation, at 67 percent. Educational reimbursements and retirement plans were next, at 54 percent and 50 percent, respectively, while stock options, 22 percent, and stock or equity options, 11 percent, continue to be a rare perk for employees.
Show Your Worth
As this survey illustrates, there are some tangible reasons to seek greener pastures. A change of scenery can do wonders to your personal income. Like last year, the pacific, $69,208, and northeast, $66,794, continue to be the most lucrative regions for training professionals, with the central states bringing up the slack at $58,547, or 7.9 percent below the overall average.
Of course, experience continues to be a sound bargaining chip, as workers with 13 years or more under their belts earn 33 percent more than those with less than three years of experience. But the news is good for degree holders entering the general workforce. Many college graduates continue to command top dollar, according to a report released by the National Association of Colleges and Employers this summer.
"The graduating class of 2001 has had to work harder than its recent predecessors to get jobs, but employers continue to look to this market to help meet their needs," says Marilyn Mackzes, nace executive director. "As a result, we continue to see many new grads getting substantial starting salary offers." However, a Job Outlook 2002 survey conducted by nace shows that employers expect to hire 19.7 percent fewer new college graduates in 2001-'02 than they hired in 2000-'01.
A less apparent strategy to maximize compensation may come down to demonstrating your worth—that is, selling yourself or your department on the merits of effective HR functions and training initiatives. Outside consultants, instructional designers, line/staff managers other than hrd and organizational development specialists consistently report higher wages than personnel managers/specialists, classroom instructors, and trainers in one-person training departments often because they have more perceived value within an organization.
But Mae Lon Ding, president of Personnel Systems Associates, Anaheim, Calif., believes that training professionals on the low end of base salary can boost their prestige in the eyes of top management. "It is important to educate management about how your function can help the company make more money, save money, improve quality, improve service and improve productivity," says Ding. "In order to have credibility, you must demonstrate that you really understand the business objectives, operations and cost concerns."
The training position that continues to have the most success in showing its worth and increasing its earnings is outside consulting. With an average base salary of $86,972, consulting out-earns the next closest training-related profession—supplier to training—by 16 percent and is surpassed only by executive level training/hrd managers and top management positions.
For Seth Silver, a lack of recognition and value led him to leave his operational developer position at Xerox to become an independent consultant. "I didn't feel I had the leverage as an internal provider," he says. "It seems the further removed you are from the organization, the more respect you are given and the more you are trusted to be objective and share knowledge about what other organizations are doing."
To better show their worth, training professionals should start thinking like a consultant, Silver recommends. "Many trainers typically are not of the mindset to impartially ask which training is the right answer for a company," he says. "The consultant mindset focuses on evaluation and asking what you're trying to achieve with training."
The high-tech heyday has crested, as the Nasdaq—once the beacon of booming times—has taken more hits than a low-rate prizefighter. For several years, companies have had a difficult time finding and keeping talent in the IT field, and IT professionals have been able to command top dollar for their coveted skills. Yet, with more available talent, companies are starting to splurge less on salaries.
"Overall, hiring activity is slowing down," says Ilya Talman, president of Chicago-based IT recruiting company Roy Talman & Associates. A skill shortage still exists, Talman agrees, "but the skills that are in shortage are those held by top-caliber workers with experience in the latest technologies."
In World at Work's 2000-'01 Total Salary Increase Budget Survey, 72 percent of respondents indicated difficulty in attracting IT professionals. But Kay Sandvik Schmitke, a project manager for World at Work, says that in light of the abating IT talent war, that figure has dropped to almost 64 percent.
"We no longer have a problem filling IT openings compared to 18 months ago," says MaryEm Musser, technology training manager for bdo Seidman of Chicago. At $66,371, IT training managers in Training's survey still managed to outpace the overall average by 5 percent. But ensuring fair and steady pay increases comes down to—once again—showing your worth, says Musser.
"Historically, I see that IT people have not been challenged to 'work smart' and implement systems that meet the business needs," she says. "Instead they've been able to spend big money for grand systems, implement 40 to 50 percent functionality, and the application never matures to be what it was intended to be. Thus the push now to raise the question: What did we really get for those dollars?"
What Gender Gap?
At first glance, the survey figures for salaries by gender show a glaring disparity between men and women. Overall, men's average salary in the training industry outpaces women's by 20 percent, or $70,610 to $58,611. Men are paid at a higher clip in all job categories save for consultants—in which women gross 16 percent more than men. At the executive management level, for example, men earn 23 percent more than women, while female classroom instructors take home 28 percent less then their male counterparts.
Such a disparity in salaries seems to fly in the face of female empowerment in the workforce that hit its stride in 1963 with the Equal Pay Act, which stipulates that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility. On closer examination, however, legitimate reasons emerge to explain why women earn less than men. In fact, many studies have shown that the "adjusted wage gap" is far smaller than the "average wag gap" frequently cited in the media.
"The average wage gap tells us nothing about the presence or absence of discrimination," says Christine Stolba, a senior fellow at the Independent Women's Forum, Arlington, Va., and co-author of Women's Figures: An Illustrated Guide to the Economic Progress of Women in America (American Enterprise Institute, 1999). "It is only when one holds important variables constant—like age, education, consecutive years in the workforce and time off for child-rearing—that you can start to draw conclusions about wage discrimination."
Other figures cited by Stolba further explain the gender pay variances. Women tend to work fewer hours, for one thing, according to Stolba. Significantly, 27 percent of working women work part-time, while female full-timers only work 92 percent of the full-time hours put in by men. On an hourly basis, rather than weekly, almost one-third of the wage gap disappears, says Stolba. Data from the National Longitudinal Survey of Youth, analyzed by economist June O'Neill, shows that the salaries of childless women ages 27-33 are close to 98 percent of men's.
Much of this might explain the apparent female-friendly consulting field, as revealed in our survey. Consultants thrive on flexibility, and the consulting field tends to offer more choices for manipulating work/life balance than the rest of corporate America.
There are precious few indications that the worst economic slump in a decade is letting up. But the Bureau of Labor Statistics predicts that despite the ongoing meltdown, employment of human resources, training, and labor relations specialists and managers is expected to grow 10 to 20 percent for all occupations through 2008.
Employers are expected to devote greater resources to job-specific training programs in response to the increasing complexity of many jobs, the aging of the workforce and technological advances that can leave employees with outdated skills, the Bureau reports.
Attraction and retention will continue to be a key concern for employers, as training and HR professionals will be expected to maintain a delicate balance between recruiting and retaining the best employees while keeping payroll manageable. How this influences base salary increases in the coming year is difficult, if not impossible, to predict.
"The economic downturn appears to be catching up with salary budgets, as we can see that companies are expecting to reduce increases over the next year in all categories," says Anne Ruddy, executive director of World at Work. "However, the importance of finding and keeping talent seems to be stronger than keeping executives happy."
jeff barbian is associate editor of Training. firstname.lastname@example.org