MMA Survey: Executive Compensation Must Be Creative to Compete for Top Talent

Apr 26, 2001, 01:00 ET from Michigan Manufacturers Association

    LANSING, Mich., April 26 /PRNewswire/ -- Executive compensation patterns
 in closely-held manufacturing businesses will need to adapt to the realities
 of the present-day economic market in order for companies to attract and
 retain key leaders, according to the 2001 Michigan Manufacturers Association
 (MMA) Executive Compensation Survey.
     The survey, conducted by Management Resource Center, Inc., compiled
 responses by more than 100 companies in Michigan.
     Current trends in the business world show that many times, a company will
 hire a lead executive from outside its own specialty to bring fresh thinking
 and ideas into its operations.  But the addition of an executive from
 "outside" raises a broad range of philosophical and practical concerns.
     Among the "market realities" pointed out by the survey:
 
     -- The vast difference in compensation levels between professional
        vocations make "same pay" policies for siblings or partners in a
        manufacturing firm dysfunctional, particularly in comparison to outside
        executives' compensation plans.
     -- Holding down family or partner executive compensation places a
        significant burden on the process of hiring outside executives.
     -- Holding down executive compensation unnecessarily impedes the
        accumulation of wealth and makes transition of ownership more difficult
        than it needs to be.
     -- The illusion that privately-held companies cannot mirror the attractive
        programs of their publicly-traded cousins unnecessarily restrains
        creativity in executive compensation program design.
 
     Closely-held or family-owned companies tend to organize a series of jobs
 with the same base salary -- from the top operating executive to the office
 manager -- according to Edmund B. Ura, MRC president.
     "Often families set base salaries at the same rate in order to minimize
 conflict among siblings, in an attempt to be 'fair,'" Ura said.  "In many such
 situations, however, what is done to achieve 'fairness' usually results in the
 opposite -- resentment and frustration.
     "Regardless of where the base level is set, one result is clear: paying
 several senior-level managers, from diverse functional areas, the same base
 will result in overpayment of some and underpayment of others, relative to the
 market."
     In the 2001 MMA Executive Compensation Survey, about a quarter of the
 firms surveyed fit that pattern.
     The survey also indicates that executive compensation in smaller
 manufacturing companies was at, or close to, that of middle managers in larger
 firms.  "The new reality is that middle management market pay levels have
 increased to the point where they exceed -- often by 20 or 30 percent -- the
 opportunities available in executive roles in smaller companies," Ura said.
     For more than eight years, MMA has partnered with Management Resource
 Center, Inc. to track the compensation and benefit trends occurring in
 Michigan's manufacturing industry.  Reaching companies of various sizes
 throughout the state, MMA commissions three surveys in addition to the
 Executive Compensation Survey, including:
 
     -- The MMA Employee Benefits Survey, which contains useful information
        about employee benefit practices, data on the cost of health insurance
        coverage, and trends in new benefit options.
     -- The MMA Cash Compensation Survey, which tracks new-hire and existing
        employee compensation, incentive plans and employer budgeting.
     -- The MMA Human Resources Policies and Practices Survey, which reports on
        the current trends, practices and issues faced by human resource
        professionals in the manufacturing industry.
 
     Founded in 1902, the Michigan Manufacturers Association represents more
 than 3,000 businesses that collectively employ more than 90 percent of
 Michigan's manufacturing work force.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X97633737
 
 

SOURCE Michigan Manufacturers Association
    LANSING, Mich., April 26 /PRNewswire/ -- Executive compensation patterns
 in closely-held manufacturing businesses will need to adapt to the realities
 of the present-day economic market in order for companies to attract and
 retain key leaders, according to the 2001 Michigan Manufacturers Association
 (MMA) Executive Compensation Survey.
     The survey, conducted by Management Resource Center, Inc., compiled
 responses by more than 100 companies in Michigan.
     Current trends in the business world show that many times, a company will
 hire a lead executive from outside its own specialty to bring fresh thinking
 and ideas into its operations.  But the addition of an executive from
 "outside" raises a broad range of philosophical and practical concerns.
     Among the "market realities" pointed out by the survey:
 
     -- The vast difference in compensation levels between professional
        vocations make "same pay" policies for siblings or partners in a
        manufacturing firm dysfunctional, particularly in comparison to outside
        executives' compensation plans.
     -- Holding down family or partner executive compensation places a
        significant burden on the process of hiring outside executives.
     -- Holding down executive compensation unnecessarily impedes the
        accumulation of wealth and makes transition of ownership more difficult
        than it needs to be.
     -- The illusion that privately-held companies cannot mirror the attractive
        programs of their publicly-traded cousins unnecessarily restrains
        creativity in executive compensation program design.
 
     Closely-held or family-owned companies tend to organize a series of jobs
 with the same base salary -- from the top operating executive to the office
 manager -- according to Edmund B. Ura, MRC president.
     "Often families set base salaries at the same rate in order to minimize
 conflict among siblings, in an attempt to be 'fair,'" Ura said.  "In many such
 situations, however, what is done to achieve 'fairness' usually results in the
 opposite -- resentment and frustration.
     "Regardless of where the base level is set, one result is clear: paying
 several senior-level managers, from diverse functional areas, the same base
 will result in overpayment of some and underpayment of others, relative to the
 market."
     In the 2001 MMA Executive Compensation Survey, about a quarter of the
 firms surveyed fit that pattern.
     The survey also indicates that executive compensation in smaller
 manufacturing companies was at, or close to, that of middle managers in larger
 firms.  "The new reality is that middle management market pay levels have
 increased to the point where they exceed -- often by 20 or 30 percent -- the
 opportunities available in executive roles in smaller companies," Ura said.
     For more than eight years, MMA has partnered with Management Resource
 Center, Inc. to track the compensation and benefit trends occurring in
 Michigan's manufacturing industry.  Reaching companies of various sizes
 throughout the state, MMA commissions three surveys in addition to the
 Executive Compensation Survey, including:
 
     -- The MMA Employee Benefits Survey, which contains useful information
        about employee benefit practices, data on the cost of health insurance
        coverage, and trends in new benefit options.
     -- The MMA Cash Compensation Survey, which tracks new-hire and existing
        employee compensation, incentive plans and employer budgeting.
     -- The MMA Human Resources Policies and Practices Survey, which reports on
        the current trends, practices and issues faced by human resource
        professionals in the manufacturing industry.
 
     Founded in 1902, the Michigan Manufacturers Association represents more
 than 3,000 businesses that collectively employ more than 90 percent of
 Michigan's manufacturing work force.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X97633737
 
 SOURCE  Michigan Manufacturers Association