Saturday, March 10, 2012

What is normal ratio of management to employee pay?

I have noticed that during the NBA lockout that the owners want half of the money to go to them and half of the money to go to the players. My question is whether or not that happens in normal industries? Is it normal for half of all pay to go to executives and half to go to employees? I assume in the 'real world' that management compensation makes up for WAY more than half of all employee pay. I cant find any data on this subject.What is normal ratio of management to employee pay?
I was wondering the sameWhat is normal ratio of management to employee pay?
It would depend on which aspect of executive pay you are looking at. And normally it is mostly about executive pay than it is about management pay. Most managers only see a marginal increase in pay above their direct reports. If they started out lower in their pay and get promoted it is possible the manager makes less than some direct reports. This is also common in some specialty fields where the more valuable employee is the person with the skills and the manager is paid far less. We see this in IT and engineering. So going up the organization chart from supervisor, manager director, vice president and so on you might see a 5-10 increase for each step. But that scale may not hold at the VP level and up.



So for the executives we look at the ratio of their pay to the pay of the lowest employee. There was a time not long ago that ratio was 7 to10 times the lowest paid employee at the most. But that is no longer the case even in government. If you wanted to look at the pay in the aggregate it gets harder since many companies have very different percentages of executives. But$1,000,000 is equal to 10 mid level IT people and 20 to 25 junior staff or more depending on benefits.

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