• Define your organization's compensation philosophy and market pricing objectives
• Identify and select salary survey sources
• Understand the importance of matching benchmark jobs
• Interpret salary survey data
• Determine market rates and the competitiveness of current pay
• Develop salary ranges
• Adjust or update a pay structure
• Communicate the compensation plan

REDMOND, WA - August 7, 2009 - During the most recent 12 months, average Total Overall Compensation of the highest paid executives in US publicly-held companies decreased by 8%. "This 12 month period is the first time every component of Executive Compensation decreased since ERI Economic Research Institute created this index in 1997", observed Dr. David Thomsen, ASA, Director, ERI Economic Research Institute.

The Compensation Indices reflect data from a representative group of 45 companies randomly selected from the approximately 6,500 companies that report compensation data to the Securities and Exchange Commission (SEC). The index has been adjusted to reflect merger activity that has occurred since the inception of the index 12 years ago.

Dollar Changes in Compensation Components - Past 12 Months

From August 2008 to August 2009, Total Overall Compensation of the highest-paid executive decreased 8.0%. The average top executive received $16,091,931 while average company revenues grew 5.1%. During this period all the components of compensation decreased for the highest-paid executive as follows:

	August 2008	August 2009	%Change
Salary	$1,252,974	$1,226,974	-2.0%
Bonus & Non-equity Incentives	$4,071,078	$3,848,968	-5.5%
Restricted Stock Awards (RSA)	$5,039,589	$4,684,349	-7.1%
Stock Options	$4,185,174	$3,968,588	-5.2%
Total RSA/Options	$9,234,763	$8,652,937	-6.2%
Pension	$1,763,583	$1,595,208	-9.6%
All Other Compensation	$1,173,609	$767,844	-9.8%
otal Overall Compensation	$17,485,106	$16,091,931	-8.03%
Company Revenues (Millions)	$60,756	$63,836	5.1%

Dollar and Component Changes in Compensation since 1997

During the 12 year period, Total Overall Compensation of highest paid executives in the US publicly-held companies has changed at an annual rate of slightly more than 0.5% and for the 12 year period has changed 6.7%.

Annual Rate of Change 0.54%

Total Change 12 years 6.7%

The following are the changes in the components of Total Compensation for the highest paid executive during the 12 year period.

Compensation Components	1997 Average Dollar Amount	2009 August Dollar Amount	% Change
Salary	$930,640	$1,226,974	31.8%
Bonus & Non-equity Incentives	$1,579,871	$3,384,968	143.6%
Restricted Stock Awards(RSA)	$1,310,575	$4,684,349	257.4%
Stock Options	$10,487,946	$3,968,588	-62.2%
Total RSA/Options	$11,798,521	$8,652,937	6.2%
Pension		$1,595,208	-
LTIP	$441,749	0
All Other Compensation	$335,769	$767,844	126.7%
Total Overall Compensation	$15,086,550	$16,091,931	6.74%
Company Revenues (Millions)	$28,547	$63,836	124.3%

The components of Total Compensation for the highest paid executive have changed in relative importance during the past 12 years as shown below:

	1997*	2009
Salary	16.5%	10.3%
Bonus	21.7%	4.0%
Incentives (Non-Equity)	***	16.3%
Restricted Stock Awards (RSA)	10.2%	32.3%
Stock Options	42.5%	24.0%
Total RSA/Options	52.7%	56.4%
Pension	***	8.2%
LTIP	3.6%	0.0%
All Other Compensation	5.4%	4.8%

*** Non-equity Incentives and Pension were not part of the format of the 1997 SEC Summary Compensation Tables.

The trend away from guaranteed base salary along with a shift from stock options to restricted stock awards has continued throughout the period of the study. "While there is a tread towards tying compensation packages to performance through Incentive Plans, Stock Options, and Restricted Stock Awards, there is also a shift away from Stock Options to Restricted Stock Awards. Pensions and Non-Equity-based compensation are now accounting for a greater share of Total Compensation", observed Dr. David Thomsen, ASA, Director, ERI Economic Research Institute.

Index Value Changes since 1997

ERI created the Executive Compensation Index 12 years ago. Index values differ from dollar values as Index Values are calculated on the percentage (%) changes rather than the dollar ($) amount of change. Since its inception in 1997, ERI has tracked the index values for the highest paid executive in each of the 45 companies which comprise the Index.

The August 2009 Revenue Index stands at 269.9 (1997 = 100), while the August 2009 Total Compensation Index stands at 256.3 (1997 = 100). This indicates that, among the 45 companies in the index, the average percentage increase in Total Compensation has been slightly lower than the average percentage increase in Revenues. Since 1997 the Total Compensation Index has increased by 156.3 points, while the Revenue Index has increased 169.9 points.

The index value changes indicate that total compensation for the highest paid executive has increased at about the same pace as company revenues.

Total Compensation Index versus Revenue Index Changes 1997-2009

	1997	August 2009	Index Change
Total Compensation	100.0	256.3	156.3
Revenue	100.0	269.9	169.9

To view additional graphs and charts from the August 2009 Executive Compensation Index, please visit the News Room at www.erieri.com.

ERI Economic Research Institute is a leader in compensation analytics and performance metric information. Based in Redmond, Washington, ERI provides salary survey and cost-of-living research reports and software to over 15,000 organizations worldwide. With information gathered from online surveys and an extensive survey library, ERI provides subscribers with assessments on salary, relocation, the cost of living, and executive compensation. ERI's pay data covers the United States, Canada, and the EU. ERI's Executive Compensation Assessor® & Survey software reports executive cash compensation in 1,287 industry sectors based on information from private executive pay surveys, as well as publicly reported information for 6,500 US, 1,150 Canadian, and 2,300 UK and EU organizations. For analysis of executive pay in tax-exempt organizations, see ERI's Nonprofit Comparables Assessor™& Tax-Exempt Survey software, which utilizes the ERI database of 28,000,000 measures from over 525,000 organizations. Both the IRS National Appeals and Tax Exempt Entities Divisions use these two Assessor Series® products in their reviews of reasonable and unreasonable compensation. Visit www.erieri.com to learn more about ERI and to review its other talent management and compensation indices.

Notice I said “perceived” competitive value, when I spoke of pay, because if the employer doesn’t know how much skill you have or doesn’t believe it is worth more money to them, it won’t help your paycheck. That’s one reason knowing the truth about what current (not ancient) surveys of wages and salaries say about your pay is important: your boss may not be aware of how much others are willing to pay for exactly what you do. Since “what you do” is usually summarized in a job title, that title is what others look at when they compare studies of what others pay for work.

A title like Analyst IV might have a special meaning that is well known where you work, but it doesn’t say much to anyone else. That’s why employers use the term “benchmark job” to describe the underlying skills and responsibilities in common words that everyone can understand. Surveys thus tend to use a lot of “benchmark” terms that are clear to anyone in order to translate all the unique special titles and ranks used at many companies into broad standard groups of title names so they can properly compare the pay for work that is generally the same although the titles and tiny details may vary a lot.

The members elected to the board of directors of every corporation have fiduciary responsibilities about executive compensation but have obviously dropped the ball at AIG. And don't imagine there aren't other firms just like them out there, who did the same thing. Rather than impose caps or pass special tax laws or wait to see if their shareholders sue them, why not let the boards do their thing independently but apply IRS IRC 4958 to them, as part of the bailout terms? That formal regulation simply says that any insider excess benefit transaction shall be refunded and may carry personal liability penalties to any/all of the powerful elite who approved it. If a board lets a CEO rip us off, the CEO must return the excess with interest and the board members (and/or their advisors) pay personal fines per incident. Put teeth in the penalties for board negligence or actual malfeasance. Hold them personally accountable to the taxpayer funding the bailout? Would be a real "ow-ie!"

Back in late 2008, I first suggested that the compensation professional society should recommend such an application of IRC 4958, the Internal Revenue Service regulation prohibiting excess benefit transactions among officers and other influential insiders, with personal $10,000 fines (per incident, with joint & several liability) to any/all complicit in the decision after the excess (determined by the IRS) has been refunded to the "victimized" enterprise. The IRS already has software of proven value permitting their accurate and objective determination of normal executive compensation which they have used for many years. After using the interactive software with the updated executive pay study database, IRS agents have said "this is like shooting fish in a barrel."

You can download a demo copy of the NonProfit Comparables Assessor yourself, at ERI's homepage. The Consultant Edition of that executive pay study contains a census of all top executive pay published in tax returns of every tax-exempt entity and the proxies of publicly-traded corporation. Try it, and see if you can't find a number of identifiable top executives whose pay is obviously out of line. If you can do it, an IRS agent or a congressional investigator can do it, too. So why don't they?

With today's (Sept. 22, 2008) bi-partisan announcement of agreed principles for a bailout of financial institutions, the specter of federal constraints limiting executive compensation is raised.

Rep. Frank (D) of the House Financial Services Committee and Sen. Shelby (R) of the Senate Finance Committee both agreed that those who made the mess should not be permitted to float away enriched by golden parachutes. Both observed that the terms of the bailout would make the saved enterprises less than fully private, since the US Treasury will underwrite their financial survival.

A surtax on millionaires was suggested. Our founder recommended that to the Senate Finance Committee a few years ago, when he warned them about the impending liars' loans debacle we foresaw from our credit rating service product's feeds showing the tremendous number of loans based on overstated incomes. For details, see the bottom of page 2 in this newsletter. This is just the first shoe to drop, in my opinion, per our economic prediction in 2005, whose problematic issues still remain unresolved.

What do comp people think?

Far as I’m concerned, let boards pay execs whatever they choose, but remove the corporate tax-deductibility of all pay over a million bucks (with the cap tied to a lagged escalator like the WorldAtWork or ERI annual overall last year’s pay increase figure for all workers in all industries). Noblesse oblige! IMHO, all millionaires variously: · created the problem · profited from it · exacerbated it · ignored it · failed to act to stop it

A gentler response would be to place the entities being bailed out under microscopes. Make their books totally open to congressional oversight review for as long as we’re taking out their garbage, with all profits over their industry median diverted to accelerated paybacks of the debt-guarantees, for example. Would employ heck of a lot of business valuation analysts.

These are just my first opinions. Please share yours.

E. James (Jim) Brennan

(Tomorrow, I'll share a more current view.)

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Maximums are not very important, in my opinion.

A grade range maximum ("Max") is useful as a compensation control point beyond which you require extra levels to sign off for approvals. The Max limit typically exists as a "bright line" beyond which pay should not go for this job this year. Exceeding a Max should require extraordinary authorizations for specific reasons.  The maximum is theoretically supposed to be the highest figure authorized to anyone in a pay grade.  It usually increases every year if and when the whole pay structure is increased incrementally in line with general competitive market replacement costs.

Almost every grade range maximum I've ever seen was completely arbitrary, based on some cockamanie percentage originating from the nether regions of lemming-land or plucked from the personal preference of the most powerful executive around.

The existence of an official formal maximum ceiling is simply a management convenience. It allows a boss to take refuge behind the policy that says “no more than this” when the boss does not want to pay that much anyway. When a boss wants to grant more money than the "compensation policy" allows, they can usually find an easy way around the max limit.

I intensely dislike “maximums” because they relegate the compensation professionals into becoming feckless comp cops enforcing capricious nonsensical rules ignored whenever it pleases top management because they know there is no real reason to comply when they choose not to.  In general, the pay budget usually belongs to the department head, not to the compensation guardian, and line executives really will get whatever they want if operations require it. Max limits just make helpless targets out of compensation staff who have better things to do than be trod into the mud under the heavy feet of those with more power who can ignore an arbitrary guideline.

Salary or pay grade maximum parameters are problematic because they are not based on realistic metrics and no one knows exactly why they are there when they can be evaded so easily.  However, they remain popular with bean-counters who love uniform rules because they impose some facsimile of fiscal discipline and imply that limits can be precisely computed.

I have no problem with a “max” that is simply a guideline trigger point for additional approval signatures to confirm that the sponsor has justified an extraordinary number. But I have no patience with those who pretend that the “max” is some kind of sacred rule that permits no exception.

TITLE MODIFIERS

Assistant: The "Assistant" modifier is used for incumbents who use established practices and procedures or work under relatively close supervision to provide assistance to higher classified employees within an organizational unit or discipline.

Associate: "Associates," working under more general supervision, perform duties and have responsibilities that utilize standard practices and procedures which at times require more in-depth analysis and problem solving than the work of the "Assistant."

Senior: The designation of "Senior" is to be used when an employee performs many of the same duties and responsibilities as subordinates but at a higher level. Employees with the title "Senior" often handle the more complex and/or non-routine components of the job, have a larger scope of responsibility, or act as a resource person for the work group.

Principal: "Principals" often are responsible for setting priorities, assigning work to and following-up on duties carried out by the work group. These employees usually spend more than half of their work time performing duties similar to the work group members and are liaisons to management. They would typically be considered to be the subject matter experts in their field.

Fellow: This modifier is used to denote a level of advanced technical or scientific achievement and is restricted to the Engineering and Scientist ladders. Movement to this position level requires review and concurrence from a technical review committee of the level of responsibility of the job and the individual's accomplishments.

Advisor: "Advisors" are the true experts of their professional field. Employees with this title are entrusted with delicate, visible responsibilities that require high quality development and execution skills. Not all work groups have "Advisor" roles, and "Advisor” positions should be rare in those groups that have them.

Consultant: "Consultants" are frequently defined as the know-it-alls for whom nothing is impossible because they don’t have it do to it themselves. Plus, they charge more than all the rest.

What other title modifiers have you seen that have puzzled you? Suggest them and I’ll try to translate them.

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My name is all over tax court records as a well-known expert witness who testified in scores of reasonable compensation cases. Search the term, "unreasonable compensation" for the first article with more detail. Our pay survey research firm has also studied top executive pay for more than three decades. Once you equalize for size and industry (and to a lesser extent, profit and location), you can't find any differences in pay amounts for the same job between private and public firms.

Our experience is that, where careful analysis has rendered no evident pattern, there is no general rule for private companies paying more or less than public companies in cash compensation. The market for U.S. executive talent has traditionally been national and is now growing more and more global. If you pay less, your people leave. Both private and public firms are competing to attract, retain and motivate from the same pool of executive talent and, therefore, must pay competitively and according to other classifications (industry, company size, etc.), rather than according to their status as private or public. Likewise, in the terms for defensibility of maximum reasonable executive compensation, as defined by the Internal Revenue Service regarding tax deductibility, no "allowances" are made for a company being privately-held or publicly-traded.

The logic about business trends is simple: what happens at large public corporations flows down to small Cs and private firms and sub-Ss and mom&pop partnerships and such ... they all get the same news, they belong to the same associations and clubs, they all compete in the same markets for the same people who all know what their opposite numbers make at "other kinds" of enterprises. Executives want the same or equivalent incomes as their peers at comparable entities, whether it is paid out in cash or stock or phantom shares or a long term incentive plan or whatever. The companies frequently share the same board members and usually hire the same consultants who glory in constantly re-branding the same remuneration packages, with the only differences being how they label the value components... because top execs don't care about the form as long as the price is right.

If anyone has evidence to the contrary, let's hear it.

The organization already has a fixed opinion about the person already on board. If that's you, you may know them, but they also feel that they know you; and that isn't always a good thing.

If you have ever in your work history here made a single mistake or blunder, it will be remembered by someone. If that someone happens to be a manager or on the selection team, he or she may bring up that horror story as proof that you are not always perfect like they thought when they hired you; and that simple reality can kill your chances.

Remember, hiring is an heuristic activity. That means that the selection team operates by process of elimination. First, they throw out obviously unsuitable applicants. Then they winnow out those who lack some critical elements. They keep eliminating until they get down to a manageable handful that look perfect on paper; those get called for follow-ups or brought in for personal interviews. The negative examinations continue, as the selection managers pick away at the candidates until they find one or two with whom they can find absolutely no fault. You see, they will get little credit for picking an exceptional new worker (after all, that's their job); but they will catch a world of hurt if the new hire flounders and fails. Employment thus tends to be all about CYA, making sure everyone signs off on the safest possible recommended consensus decision so that if it goes bad, everyone can shrug and say, "who could have known?"

The operative question is rarely, "Who might possibly be able to do the job?" but is almost always, "Who can we recommend as the absolutely safest possible hire so no one will criticize our choice?"

It is extremely difficult for internal candidates to survive this hyper-cautious and defensive elimination process, because they are a known quantity with flaws or shortcomings evident to the selection team. Outsiders, on the other hand, can display a sparkling resume filled with impressive achievements, show no obvious flaw, and they rarely offer any reference who will not praise them to the skies. Outsiders, being relatively unknown, can look great compared to the known-to-be-fallible merely-human insiders. Of course, after the squeaky-clean outsider comes to work and gets dirty doing normal work, their defects and shortcomings will similarly become visible and they will also sink back down to the same lowly status as "known insiders." Thereafter, they will run the same risks of being passed over in the future.

Better reasons for going outside to hire include (a) wanting people with new skills, competencies, ideas and experiences different from your current crew, (b) a critical need for special credentials, like if you are entering a new type of business totally foreign to your staff, (c) the opportunity to handicap a competitor by stealing away a key producer, hurting them while dramatically enhancing your staff's capabilities, and (d) when the only source of training is other employers.

Suggest some other reasons insiders get passed over for outsiders, and I will take a stab at explaining them, too.

If enough people are interested in what compensation and reward systems experts with many decades of practical experience in performance management systems have to say about it, let me know and I'll revisit the subject. While a good concept, it is extremely difficult to properly implement anywhere and particularly so in the public education field.

On the same day, yesterday, I also responded to a questioner asking what the normal bonus would be for all the employees who helped complete a project. It suddenly occurred to me that one of the big differences between those who throw money around as though they owned the Treasury’s printing presses and those who flinch at unnecessary give-aways is their layoff experience. Once you have laid off an innocent party for reasons beyond anyone’s control, you discover a new reluctance to be profligate with always-scarce payroll dollars.

Firing a bad performer is relatively easy and painless; but casting a productive worker out into the great unknown will give you sleepless nights.

So, to all you managers out there, do everyone a favor and do your best to avoid such nightmares. Think ahead. Be conservative, be sensitive to consequences and offer all possible aid to those who suffer. Those who are not managers should realize the burdens that come with greater responsibilities. There are reasons to take pity on those who must unwillingly impose those sufferings.

In addition, most people also want to consider long term goals, too. Ideally, each step will be upwards according to your career progression plan. The best jobs feature better prospects for advancement, opportunities to grow, a chance to learn new skills or operate in a unique environment, and a sense of accomplishment. More freedom to act, to exercise greater responsibilities and to expand your horizons, along with prestige, recognition and all the other conventional psychological motivators are all additional popular elements, too.

People don’t work for bread alone, but the bread still better be right.

Other factors that apply to an individual’s salary situation are related experience, job level, industry, size of the employer, profitability or operating budget (for non-profits), the entity’s pay structure (at, above or below local norms) and the relative willingness of competing candidates to work for less. Even the internal equity situation of the company can have an effect on your starting pay: if current veteran employees who hold the same job in the same department have years of established proven performance history behind them but earn less than what you expect for a starting salary, you may have a problem. What seems fair to you may create insurmountable internal equity problems for the firm from others who see unfairness from their perspective.

A comprehensive list of factor categories that affect employer pay policies and practices would probably also include overall competitiveness, pay for performance, government regulatory compliance, cost control, communications (the degree to which pay rewards should be used to communicate organizational objectives), turnover, cost effectiveness, concern for employees ("heart") and administrative ease.

The role that education level plays in your salary depends on the nature of the job and the relevance of your education.

A PhD in Physics won’t earn you more money as a cab driver, but it will probably put you at the high end of the starting pay scale for physical stress measurement technicians, and it may be merely an essential entry requirement for rocket scientists.

In some jobs, like many commissioned sales positions, education is relatively irrelevant because initial income will be based on outputs (closely-measured productivity results) rather than on inputs (education, experience, process, etc.). At the same time, however, related education can affect the employer’s estimate of how effective a new hire will be immediately, and that can produce a fatter starting pay offer. A candidate for a telemarketing job with a degree in communications should be more productive and the hiring manager could probably justify a premium entry rate for someone expected to possess advanced essential skills and special competencies. If applying for a professional position as a suicide-prevention-line counselor, that same candidate with a bachelor’s degree in communications might merely meet the minimum requirements; they would most likely earn less pay at the beginning than a candidate with superior relevant credentials like a master’s degree in clinical psychology or a PhD in social work.

All else being equal, more formal education or advanced credentials in the specific field of work or occupational area will carry some weight in starting-salary offers. How much difference will depend on the employers and their practices.

Different locations feature different salaries for otherwise similar jobs because each area has a unique competitive market for labor, based on the practices of employers in that area. Generally speaking, people are willing to work for different amounts in different locations. Manhattan workers demand different salaries than those in Queens, for example. Los Angeles has different salaries than Detroit. Miami pays differently than Atlanta. Salaries vary by the practices of the employers in the area.

Every organization has its own way of paying people. Each decides which labor market will apply (and for what jobs) as their basis for competitive comparisons. For jobs where good candidates can easily be found within the nearby commuting area, most employers pay local competitive rates. When the company has to search an entire region of states to find the right worker, they will be forced by competitive necessity to pay a regional or even national salary. Executive jobs tend to be paid on national or international scales where the pay practices nearest the work location are less vital than the pay practices within the reach of the candidate. Hourly workers usually can’t justify moving to another state for a higher wage and thus tend to be limited to a relatively narrow range of local pay; but executives move (usually with their relocation expenses paid by the employer) routinely and know that they operate in a wider competitive market for pay.

Every enterprise, whether it is a major corporation , a private company, a hospital, a corner store, a charity, a public organization, a non-profit entity or some other kind of enterprise, has to compete in an open market for human talent. They all have to pay enough to attract, retain and motivate competent workers. Employers are constantly being surveyed to determine the competitive practices of the moment. Those who pay too low fail to attract or retain decent workers and must either raise their entry salary or do without new hires. Those who pay too high will have long lines of applicants for every opening, but they better be much more profitable or more efficient than their competition or they may spend themselves out of business.

Despite the basic truth that everyone pays according to what the market requires , no two entities pay exactly the same. Beyond the minimum starting rate, they all vary in their practices, even for similar organizations of the same size within the same city and in the same industry. In addition, no two will agree on exactly what their “competitive market” is for all jobs, how it is defined or what their target pay should be. Once an employer has paid enough to hire someone, the cash paid above that amount is totally up to the entity. Pay always reflects a particular employer policy on the intended role of salary within their mix of total compensation elements, of which base salary is merely one.

Once you have been on board for a while, you should begin to earn increases based on your performance or seniority (or whatever policies your employer follows), just as those before you did and as those hired after you will do. Employers generally take care to assure that entry starting rates match the hiring market requirement and that new folks will start at a lower salary than veteran job peers.

So, if the middle number (the median ) is lower than the average number, then normal pay is below average. Sounds odd, but that’s statistics for you.

The arithmetic mean or the average is the product of the sum total of all the numbers in a set divided by the number of observations, so the average of 1, 3 and 8 is the number 4 because that is the quotient of 12 divided by 3. In that particular example, 3 is the median (middle) but the average (4) is higher because one observation is much higher than the rest in the group. Pay averages tend to be higher than the median figures: that’s because no salary should fall below the minimum wage, so there is a limit at the bottom; but most jobs have a few high-end outliers that pull up the arithmetic average. Medians are better measures of “normal” pay, being the central values, unaffected by a few rare exceptions at the high or low ends. No matter how high the high or how low the low, the median (middle) is still the middle (the center point). Averages can swing wildly with the addition of extremely high or low values to the group.

Have you had enough of statistics-speech? Are there other terms that you would like explained?

Those general realities seem to be impacting the American economy. Not a nice spiral, but everyone wants a guarantee.

What do you think?

They both had a certain extremely specific identical characteristic in common. Guess what it was?

While a person’s individual value is arguably (depending on your philosophy of life) infinite, there is a finite limit on the value of your work. The compensation (wage, salary, commission, bonus, etc.) you earn for your work performance is a matter of commercial supply and demand economics.

What you are able to negotiate is sometimes due to your skills of persuasion, but more often your eventual income will depend on a combination of your personal skills and competencies (human capital) and your employer’s circumstances (context). How much profit the company can make from their application of your abilities will usually determine your pay. The better the match, the better your salary. Albert Einstein and Stephen Hawking both would have been relatively worthless as ditch diggers but they were invaluable as theoretical physicists and educators.

People are usually most productive when doing things they enjoy, so seek out places that can make the greatest use of what you like to do.

Whether you submit a letter of resignation or not, when you announce your intention to leave, a lot of places will give you pay in lieu of notice along with accrued vacation pay (if they've already deducted it on their tax return) in your final paycheck.

The reason is simple. Companies dislike the idea of seeing valuable employees (people they want to keep) hearing you carry on joyfully at the prospect of getting out of here. The more you talk about that better job with more impressive title and a lot more pay that you can’t wait to begin, the more damage can be done to the morale of your current co-workers. Voluntary quits can spread like an infection when the company doesn’t want that to happen. Besides, with your mind distracted with thoughts about the new position, your head is no longer focused solely on their business. In addition, the more cynical employers will want to be sure you don’t spread word about your dissatisfaction (hey, if you were completely satisfied, why would you leave?) with clients or customers who might suspect wholesale disaffection among the remaining employees of the organization. Trade secrets or confidential lists may suddenly become off-limits since you’ve already declared your intention to desert your firm; and that can limit your effectiveness while you work out the remainder of your notice period. Rather than undergo those potential problems, it can be much simpler and cleaner to cut you a check for the time you remain willing to work.

It can be really nice, if you have already pre-negotiated an ASAP starting date at your new employer. If NewCo is willing to have you start today while OldCo has given you a month’s pay in lieu of notice, you can double your income for that period. Realistically, most outfits will not give that much pay for un-worked notice-time unless you are an executive, but it’s something to consider.

What is the policy of your employer?

You always want to maintain good relations with past employers so you will continue to get positive references in the future. It's not advisable to tell them the real reason you're leaving is you can't stand your co-workers, your boss is a creep, your work is boring and you believe the organization is run by incompetent crooks. Even though folks rarely leave a job just because of the money, that’s always a safe excuse.

This will usually do the trick: “I am sorry to announce that I am reluctantly leaving this wonderful organization for a different job with more pay and greater opportunities for advancement.”

Do you have a better phrase? (A polite one, of course.)

SalariesReview.com publishes an evergreen (constantly updated) salary increase survey used by thousands of employers to monitor the latest trends.

Chances are, no one has a lifestyle precisely like you. It is unlikely that any other individual would buy exactly the same items costing the exact same amount in a given year as you would. The odds against that happening are astronomical.

Living costs depend on what you spend. Different people have different expenses, so it is unlikely that anyone else has exactly the same “cost of living” cost that you do. Even in the same town, different locations have different prices for the same things. But people keep talking about “cost of living” as if it were a single discrete universal number.

In fact, there is no one single cost figure that accurately measures family expenses. It is hard enough to figure out what the average family is, without tying to estimate exactly what it would spend on what items and services in any location.

Wages and salaries are what you earn, while living costs are what you spend. One comes in while the other goes out. It would be nice if your employer would constantly raise your income to match whatever you chose to spend, but most will not be that foolish.

For general information about average living costs for people who rent, you can get some decent comparisons from SalaryExpert.com, which uses mostly government data. Low-cost more detailed individual reports are available at www.SalariesReview.com, but those are computer-generated reports based on government data updated and enriched by individual input. Each contains a Methodology section that defines how it operates. For the most accurate and detailed data acceptable for expert witness reliance in federal courts, you have to move up to the level of research that costs a lot more.

To the extent that normal American lifestyle living costs can be most precisely calculated, ERI Economic Research Institute has developed a software tool to do that with its Relocation Assessor and Survey. It predicts local family expense budgets according to the variables that affect family lifestyle costs: income, the size of the home rented or owned, number of family members, number of automobiles and their value and the distance driven each year. With that detailed information, their tool lets you compare living expenses between cities.

Employers who want to know how pay varies between cities use the Geographic Assessor , which shows the relative cost of labor and the renters’ living cost at different income levels. That survey software shows pay and living cost relationships at over 7,000 locations. Wages and salaries can vary a lot from place to place, regardless of living costs, because they are different things created by different decisions by different people. What you spend depends on what you buy and where you buy it. What you earn depends on what you do for a living. How far your earnings go depend on where you choose to spend your money. Most workers don’t live within walking distance of their work place, so the living cost where they work usually doesn’t match the living cost where they live.

Information on what jobs earn is available from other ERI database tools. Precise geographically specific pay figures for over 5,700 job titles in every industry is found in the Salary Assessor and Survey. That product reports updated figures on the complete range of competitive salaries according to years of experience, level of complexity and size of employer, as well. ERI owns numerous survey organizations like SalariesReview (online surveys) and Abbott-Langer Association Surveys, where you will find traditional historical surveys of specific industries and job families.

Since 1987, ERI Economic Research Institute (headquartered in Redmond WA with offices in Newport Beach, Washington DC, Surrey BC, London and Rome) has provided detailed information on current pay and living cost practices to employers and consultants on an annual subscription basis. Holding the U.S. patent on internet economic surveys, ERI only does research and refuses any fee for service business that would risk its reputation for objectivity and neutrality in its publication of the most accurate and reliable current salary and cost estimates.

Also see the ERI NewsRoom for the archived Oct2005 Cost of Living article, the April 15, 2008 ERI News Release about 2009 salary increases, the June 5, 2008 News Release about COL wage increases, and the homepage white paper on “COL Up, Merit Pay Down”.

In general, each job is paid according to the organization's estimate of the value added by that person in that job. Long service in the same position frequently means that a senior specialist might earn more from increases accumulated over the years compared to their brand-new boss hired right out of school but expected to rise in the company.

Sometimes the boss is simply a bureaucrat paid to handle budgets or funding or do other things different from the skills or competencies of the superstars supervised. The most brilliant Nobel-prize-winning research scientists probably report to program managers who make less than they do; but their skills lie in different areas. Think of any professional sports team, where the General Manager directs the subordinate players but generally earns less than the top players.

Different jobs bring different pay. And having a long distinguished track record of exceptional performance in a position will usually mean that your pay will exceed that of most of your peers and maybe some of your supervises. That's especially true if the boss is relatively new to their job, even though it may be "worth more" in the long run to the enterprise and may have a higher range of potential pay.

Management positions usually earn more because they have more leverage on the success of the operation. It is the responsibility of the senior executive team to make sure that no one is raised to a position of power without the necessary minimum skills, competencies, experience and knowledge to exercise management authorities. Anyone with those credentials (sometimes called "human capital") will expect a certain amount of pay to take on that job, and it will generally be a higher rate than the normal wage or salary of their subordinates; but not always.

For HR executives and professionals SalaryExpert offers a FREE Demo below of the Cost of Living Software. The Relocation Assessor® provides Cost of Living data for over 10,000 areas/cities including Canada.

The Relocation Assessor® is used by thousands of companies to compare cost-of-living levels in over 11,500 area worldwide. The demo edition provides access to a limited dataset for product evaluation purposes.

More Free Salary Tools at: SalaryExpert.com

"Foot-promotions" usually come to people well known for their skills and competencies who are regularly solicited for job opportunities elsewhere. It's not a money thing, most of the time. Making a move to do your same work for a little more pay usually isn't persuasive. Most folks don't want to go through the disruption of a job change without a bunch of very compelling reasons.

People generally seek satisfying and challenging employment close to home where they have pleasant co-workers, supportive supervisors, fulfilling work in which you can take pride, and have opportunities for recognition, growth and advancement while earning enough to support their chosen lifestyle. You can almost always find someone willing to pay you a few cents more to do the same job under much worse circumstances, so it's never money alone that is at issue, or people would change jobs every week. But when those basic economic satisfiers and psychological motivators are not present in your current job, then you tend to be more open to considering other places where you can be happier and feel better about your future prospects while earning more at the same time.

Does that seem to ring true to you? Have I missed any elements in my list? What other reasons can you think of for changing jobs?

Openly sharing current survey results can be highly illegal. The US Dept of Justice could slam an employer with an FTC restraint-of-trade violation if you violate the safe harbor provisions affecting surveys of pay and other prices. The provisions require (among other elements) that the survey be conducted by a third-party, and the data must be aged 3 months before released in only aggregated form not permitting the identification of any rate from an individual provider. Releasing raw data would be a no-no.

It’s a One-Stop Topic from 2008, covered in detail for members of the compensation professional society, at WorldAtWork. Others can see the rules detailed under Antitrust Safety Zone provisions.

Normally, it means wages, salaries, bonus and other incentives, commissions, overtime, shift differentials, premium pay and other cash components that appear on W-2 taxable income statements. Good surveys are careful to clarify what they report. Base salary is the regular sort-of "guaranteed" pay, whether stated as a hourly wage or as a periodic paycheck. Total Cash Compensation is all the cash that is paid by the employer.

Some variable pay elements like overtime, shift differentials and premium pay are rarely reported in pay surveys because they change so often. Surveys of pay practices are more likely to cover those details, which vary mostly by industry and location.

Executives often receive extras that (when paid by a publicly traded corporation) the US Federal Securities Exchange Commission (SEC) require be valued in terms of equivalent cash; in those cases, an executive compensation survey may show Total Compensation that includes base and bonus (all cash beyond the base) plus non-cash elements like Stock Appreciation Rights, Long-Term Incentive awards, Long-Term Compensation and Other things like special taxable benefits like moving expenses and such. "Long-term" elements generally involve periodic annual payouts of pre-established bonus/incentive plans that involve performance measures and payout values computed and paid over multiple years. Examples of all the details involved in top executive compensation can be seen in corporate proxy filings .

In some economies like in the UK, Total Remuneration is the operative phrase to cover cash pay, stock awards, pension and benefits (because Britain requires those executive compensation elements to be published in corporate annual reports). Likewise, in the United States, top executives of tax-exempt entities have to openly publish the same kind of direct cash, non-cash pension, benefit and allowances information on tax forms that are technically available to anyone who wants to pay for a copy from the Internal Revenue Service. For a free look at the phenomenal amount of summary and detailed pay data publicly available, see the NonProfit Comparables Assessor .

The more basic the information, the easier it is to collect and analyze and the less expensive it is to get.