Career changers face many barriers and constraints along the way. Helping you to manage these challenges is what we at the Barrett Group do. Consider the information below, and then contact us to evaluate your own specific situation. We’ve helped more than 2,000 executives change careers over 28 years… why not you?
It seems to us that there is often too much focus on CEOs and too little on the legions of capable managers who report to them who also add value. Therefore our report today will look at four unsung heroes or heroines: the positions VP of Sales, VP of Operations, CFO, and VP / Director of Human Resources.
There are numerous sources for compensation data, of course. We will use an index derived from want ads via Indeed.com.
The good news is that this data will be quite recent, stemming from March 19, 2018 and reaching back for up to 36 months. The bad news is that want ads often reflect what the would-be employer would like to pay, but not necessarily what they actually pay. In other words, actual salaries are likely to be higher.
Let’s start with the VP of Sales position
With more than 200,000 positions or ads as its data source, this is certainly a representative sample. The average US salary for these positions lies at about $141,000 per annum with a low of $75,000 and a high end of $233,000. The market varies no doubt across industries but also across major cities, as we see in Figure 1 where the national average equals 100%.
Driven perhaps by the frothing tech market, San Francisco comes in at 118% of the national average, while Atlanta lies at 102%. Naturally, the cost of living also plays a role in this differential as does the relative supply and demand situation.
Figure 2 takes this somewhat into account by factoring in the relative cost of living according to Money/CNN.
In our sample of major cities, we have set the lowest cost of living (St. Louis) equal to 100% (Figure 3).
That means that although you might earn 118% of the national average in salary in San Francisco, for example, your cost of living would be about 95% higher than St. Louis, so, at least at the reported average salary level, you would actually be worse off.
Now let’s consider the VP of Operations position
The universe is also large here at 127,000 positions or ads in this data set. The average salary lies at $129,000 or so with a reported low of $77,000 and a high of $262,000.
In this case, Philadelphia actually tops the average salary chart at 133% of the national average while Atlanta (-4%) and Boston (-2%) come in on the low end (Figure 4).
When we take an index of the cost of living into account, however, Tampa really shines because of the relatively high salaries for this function and the relatively low cost of living (Figure 5).
What about Chief Financial Officers?
Yes, we could have chosen VPs of Finance, but these are relatively rare birds while CFOs are more common, so we focused on them although the number of CFO positions or ads was much lower in the sample (circa 16,500) versus the two previous positions.
In straight financial terms, New York City and San Francisco come off very well at 29% and 25% above the national average on salary, while Philadelphia (-6%) and Denver (-2%) come in on the low end at least within our selection of major cities. (Figure 6).
When we take an index of the cost of living into account, however, the picture changes, and St. Louis actually comes out on top followed by Tampa (Figure 7).
Please remember, this is a simplified comparison. If you want to consider relocating or negotiating a salary, ask an expert.
Lastly, let’s look at Human Resource responsibles
There is probably considerable latitude in the definition of these jobs from hiring managers all the way up to Chief Human Resource Officers and the like. In this sample, we have added them all together (all 106,000 of them) and considered the average salary.
In straight salary terms, Boston (+27%) and New York City (+23%) come in at the top versus the national average salary for this position of $94,000 (Figure 8).
The picture changes, though when we take location into account and again, St. Louis, Tampa and now Houston emerge as relatively attractive from a salary and cost of living point of view based on this data set (Figure 9).
If you are familiar with the theory of the sigmoid curve, you know that whenever you start a new job or activity you need to put in more energy then you get back. At some point your competence and the energy you have put in begin to earn a reward and the job or activity gets easier. However, ultimately, entropy sets in and you start to lose enthusiasm or find yourself putting in more energy then your getting back. Now you are on that slippery downward slope and you will only have to work harder to stay where you are.
That’s why it’s better to make a change at the top of the curve, at the top of your game… to get going while the going’s good.
The executive job market is a case in point.
The Bureau of Labor Statistics’ recent good news about job growth indicates that this 9-year old expansion still has some steam, and even those recalcitrant underemployed older men are starting to reengage as the labor participation rate nudged up to 63%.
Regionally, the US coasts continue to prosper as does the Western heartland, but the Eastern heartland (from Mississippi to Michigan) continue to suffer higher unemployment, opioid addiction, as well as rising disability and mortality rates.
What about the market for senior managers and executives in the US?
The Bureau of Labor Statistics (BLS) reports that this pool included about 2.6 million positions in 2016 with an expected job growth of 8% through 2026, adding another 190,000-plus senior jobs. Median pay for the most senior jobs stood at about $180,000 in 2016 while general or operations managers’ median pay stood at about $99,000.
Not surprisingly the states NY, MA, RI, CT, NJ, DE, MD, DC, VA, NC, FL, TX, CO, and CA showed the highest annual mean wage for the operations and general management echelons ($130,00-$168,000) as of 2016. CEOs showed a similarly higher mean wage at $212,000-$242,000 in NY, MA, RI, CT, NJ, NC, GA, FL TX, CO, NE, SD, and CA n the same year.
A recent study by the National Bureau of Economic Research suggests that the ability of a senior executive to capitalize on globalization, i.e., to help his or her company expand in the global market place most directly impacts the manager’s financial success.
From an industrial perspective, BLS reports that health care leads the way in total job growth predictions with a compound annual rate of change of 4.4% for all health care jobs through 2026, followed closely by Information Services and Individual and Family Services at 4.0% and 3.4% respectively.
The list of industries with fast-declining employment will look familiar and should remind us all that the US economy now derives less than 15% of GDP from manufacturing activity.
If you have ever looked for an executive job before, you know what you’re facing… so brace yourself. The Barrett Group helps hundreds of executives find the right job every year, people in all kinds of situations. We understand what you are up against. Which of these describes you?
Wouldn’t it be great to have a helping hand, a guide, and some moral and very practical support during your six-figure (or more) career change journey?
The Barrett Group has served more than 2,000 executives in the last 2.5 decades in practically every industry as they reflected on their career trajectory, chose their targets, selected their tactics, sharpened their skills, and launched their career change initiative with confidence. Here are a few examples:
Partnering with the Barrett Group was the most important investment that I have made in my career. I strongly recommend their services to anyone interested in advancing their career.
Kevin Baker, Regional Director, Metamark Genetics
I could not have done this without my consultant because she kept me on track for my entire career search, and helped me to understand what type of opportunities and geographical areas to focus on.
Svetlana Tikhonov, Senior Director of Corporate Strategy, SAP
TBG delivers exactly what they promise! I would NEVER have been able to do this or to get the same results on my own. Without TBG, I would still be searching!
Lee Price, Arkansas State Director, US Department of Labor
In December 2017 Congress passed legislation known as the Tax Cuts and Jobs Act. Much has been reported in the media about the impact of this event on people up and down the income scale. Notably, there were specific changes included in the new tax law on the treatment of executive compensation. With tax season upon us, you may wonder: Is the Tax Act good news or bad news for high-earning professionals?
The answer depends on several things, including where you live, whether you’re married, what industry you work in and what your income is. Americans at most income levels will benefit from a lower tax rate, but some medium-high earners will find themselves bumped up to a higher tax bracket. (Some earners who were in the third tax tier paying 33% in 2017, for example, will now be in the second to top tier paying 35%.)
In general, a majority of Americans in the middle-to-higher tax brackets would see a sizable tax cut.
But those who live in high cost-of-living areas, like the East and West Coasts, and from cities where residents have previously been able to deduct state and local taxes from their federal taxes, may still find themselves paying more going forward. Meanwhile, the disappearing incentives to homeownership will present challenges to people in high-cost housing markets and those considering a home purchase.
Ben Dunbar, an investment advisor representative from Gerber Kawasaki Wealth & Investment Management based in Santa Monica, says that the tax law will certainly affect his clients, whose annual incomes range from $200,000-$750,000. “Most of them have mortgages north of $750,000 and already pay high state taxes. Now they’re going to lose the state tax deduction, and the deduction on their mortgages is going down.”
$ 1 Million Deductible Cap Gone
For earners who count themselves among the C-Suite, the Tax Act has several other significant changes regarding executive compensation. The most notable is the change to Section 162(m) of the Tax Code.
Previously, Section 162(m) imposed a $1 million limit on the tax deduction that a public company could take on compensation paid to its CEO and three other highest paid executive officers (other than the CFO) – also known as “covered executives.”
An important exception, however, allowed companies to fully deduct compensation above this cap if it was considered to be performance-based. It’s no surprise, of course, that companies have typically capped the base salaries of their highest-paid executives at $1 million and offered them compensation beyond that figure in the form of stock options, stock grants, performance-based bonuses and deferred compensation.
The new law does several things. First, it eliminates the performance-based compensation exception, which means that companies will no longer be able to deduct compensation above $1 million from their taxes. Second, it expands the group of executives that are subject to the deduction limit to include the CFO. In addition, for executives that have ever been a covered executive, the new rule applies forever – even if they leave the company.
Market-Based Compensation Will Prevail
With high executive pay packages becoming costlier to companies, one might expect to see overall compensation decline – or at least to see compensation packages restructured. That’s unlikely, however, according to several experts.
“Companies are going to pay executives what the market demands. I don’t think corporate boards are going to say, ‘We can’t pay this guy because we can’t deduct it,’” said Clare Wherley, CEO and Co-Founder of Lassus Wherley, a wealth management firm serving the New York City and Florida markets.
The provisions in the Tax Act regarding executive compensation are just the latest effort by Congress to rein in executive pay packages which have soared over the last two decades. But few experts believe it will have the intended effect.
“The loss of tax deductions is not material to most companies. In general, deductions are a cost of doing business,” said Jim Barrall, senior fellow in residence at the UCLA School of Law and former chairman of the executive compensation practice at Latham & Watkins.
As a point of comparison, Dennis Minich, managing director of Andersen Tax in Chicago, points out that when the Affordable Care Act was enacted, it lowered the limit of executive salaries that corporations in the healthcare industry could deduct from their federal taxes to $500,000. “I don’t think the Aetnas of the world have changed policies much,” he said.
One sector that could be most affected by the Tax Act is the non-profit world. A new provision in the Tax Act imposes a 21% excise tax on tax-exempt organizations for compensation paid to any of the top five executives in excess of $1 million. That rate is equal to the new corporate tax rate. This could impact universities where some deans and coaches make in excess of $1 million. But how big of an impact it will be remains to be seen. In the non-profit world, as in the business world, where talent is important, the market will dictate compensation regardless of the tax impact.
A New Wave of American Migration?
“It’s fairly well known in accounting circles that there are a lot of errors in the provisions of the Act. There is a lot of behind the scenes scrambling on the part of the IRS, Congress, and people in the executive compensation field trying to figure things out,” said Wherley.
One unintended effect, however, may be a growing migration of Americans. In November 2017, Chris Edwards, director of tax policy studies at the Cato Institute, told FOX Business that the elimination of the state and local income tax deduction would encourage high-earners to leave wealthy high-tax states, like New York, New Jersey and California, in favor of states with more favorable income tax rates.
In February, Richard Florida, an American urban studies theorist focusing on economic competitiveness and demographic trends, and head of the Martin Prosperity Institute at the University of Toronto, made a good case to that effect in an article published on CityLab.com (See Map).
He argues that a talent shift from large coastal cities, like New York and San Francisco, to smaller cities in the West and South, is already underway. Using maps from LinkedIn, the popular professional networking website, he was able to demonstrate the population gain of cities like Denver, Austin and Charlotte and the population loss of cities like New York, Los Angeles and Seattle, by looking at how LinkedIn users changed their location on their profile in January. The data suggest that professionals are, indeed, leaving high-cost cities – and often for small cities in lower-cost regions. He speculates that this transition might well be accelerated by the Tax Act.
Of course, technology developing as it is, another possible outcome is that professionals may increasingly live in lower cost areas and work remotely for a company that continues to be based in a high-cost urban center. Whether this trend happens will depend on how company policies evolve – but the Tax Act may well be a deciding factor.
The job market is hot! Job openings are at a record high. If ever there was a time to consider changing jobs, now is it. But if you haven’t switched jobs in a few years, make sure you understand what is new, because job searching in the digital age is different from just a few years ago.
Talk About Competition!
For one thing, technology has led to an explosion of the pool of candidates available to employers. Not only is it easier for candidates to apply for jobs, it is also easier for businesses to find qualified candidates. No longer are you competing with just the local talent – you are potentially competing with job contenders from around the globe. Moreover, technology now enables workers to work remotely with increasing frequency. That means that geography is becoming less of a factor in recruitment when it comes to finding someone with the right skill set for a job.
Who Uses Paper Anymore?
Paper resumes are a relic of a bygone era. Virtually all job communications today, including sending resumes, happens electronically. And if you apply for jobs online, you will encounter ATS, or Applicant Tracking Systems. ATS software has become increasingly popular over the past several years because it enables hiring managers to quickly scan thousands of resumes for keywords that match the job description. If your resume doesn’t include the right keywords, it may never be seen by human eyes. This means that it is as important to craft an ATS-safe resume as it is to make it eye-catching to real people.
It is also important to tailor your resume for every job, structured according to what the company’s known needs are. The success of your application might hinge on one word. Dan Resendes, Chief Consulting Officer of the Barrett Group, recounts one client who was the highest-ranking tech person at his company. Although he reported directly to the COO, his title was “Director of Technology,” not “CIO,” and his resume reflected as much. His efforts to find a new position as a CIO continually came up short until he finally added that one word to his resume. Before long, he landed a position as a CIO.
“When an employer gets 10,000 applications and someone needs to find the five best ones, they’re trying to quickly whittle down the list,” said Resendes.
Success Starts with Social Networking
Networking has always been a great way to get a leg up on the competition when it comes to job hunting. In the digital age, it’s crucial. One reason why is that jobs are often posted on job boards as a matter of formality after someone has already been earmarked for that position.
“If you’re responding to job boards, you’re coming late to the party,” says Resendes.
Professional connections enable you to learn about potential opportunities before they even become available. And sometimes a connection is reason enough for a company to create an opportunity. If you offer a skill set that is attractive to a hiring manager, she will find a way to bring you onboard.
Employers often encourage their current employees to leverage their networks and refer their friends. According to a report by software company iCIMS, which designs ATS and recruiting software, 60% of employers believe that referrals bring in candidates that are a better fit for the company. They have good reason to think so. The report finds that 70% of referred employees surveyed have not changed positions since being hired, which means that employers can expect higher retention rates from referral hires.
While a business lunch is still a perfectly acceptable way to network, social media is the best way to build and maintain the informal relationships that are most useful in job hunting. If you’re a professional, the most important one is LinkedIn. The iCIMS report found that, when it comes to job research, 56% of workers use LinkedIn – more than any other social media.
Unlike other social network websites, LinkedIn is uniquely designed for professional networking. Members design a profile page that is structured like an online resume. You can summarize your career and education and highlight certain skills and expertise. You make connections by inviting people to join your network, which enables you to see their connections and even the connections of those connections. This visual web of professional connections enables you to develop new ones at the companies or industries that interest you.
Members in your network can also endorse you for skills, which increases your professional value in the eyes of other members of your network. According to Dan Resendes, your goal should be to get endorsements from 99+ people in your network. How? The easiest way is to endorse people in your network, yourself. People will often return the favor. What’s more, the activity might also lead to a phone call in which you verbally reconnect, catch up and possibly learn about upcoming opportunities – all from endorsing one person.
Did you know that savvy LinkedIn members can tweak their URL to boost hits on search engines? Say that you are a career auditor but want to transition into operations. You can add certain keywords to the URL of your profile to highlight skills that recruiters might be seeking.
Mistakes to Avoid
The number one mistake a job seeker can make is to prepare his cover letter and resume and immediately apply for a job, says Resendes. The first thing should ALWAYS be to ask yourself: Do I have social capital that connects me to that company? Would the person that can connect me to that company advocate on my behalf? Leveraging social connections should always be the first action.
The second big mistake is to customize just the cover letter of an application. It bears repeating that a resume should always be tailored to the position. And don’t worry about the length. Workers of a certain age remember well the one-page resume. But, nowadays, the length can be as long as necessary to show employers that you offer tremendous value. Still, your resume should not necessarily list ALL of your qualifications. Senior people sometimes list everything, thinking it will help them. But doing so can sometimes make you seem overqualified. The trick is to list only what is necessary to appear like the perfect fit.
You will be Googled! Most seasoned professionals did all their embarrassing, youthful antics before the digital age. But remember: whatever information might be on the Internet about you – both good and bad – is there forever. The best way to make sure your digital footprint best represents you is to post new information – articles, posts, etc. Search engines highlight new information over old.
Some hiring managers may ask you to interview by video. If so, be aware of good video etiquette. That means, be aware of your backdrop, confine your movements to the camera frame, avoid barking dogs and other background noise – and, above all, know how to use video technology!
Job seekers should keep in mind that an effective job search cuts both ways. Workers should always research a company before accepting a job offer. Thanks to technology, they have much better means at their disposal than ever before to do so.
According to iCIMS, nearly one in three full-time working Americans – and 47% of millennials – have declined a job offer primarily because the company had negative online employer reviews.
A quick internet search of a company or its leaders will yield a trove of useful information to get started. Job seekers can then find online reviews and salary information about companies at Glassdoor. Finally, they can glean a lot of information about company culture by simply following corporate executives on Twitter or other social media.
Technology has changed the landscape of the job search. Embracing these changes could mean new opportunities for you.
Are you in a midlife career change? Are you changing careers at 30, 40 or 50 years of age? Do you need a new career? If you are currently experiencing difficulty in your job search, we’re here to help. Please send a message with your information or call.