Well, the Compensation Cafe's predictions have come true. Both the CEO pay ratio and median employee have become topics of conversation in the Finance media world. Not to worry, though. There are no calls for rebellion against the "fat cats." The reporting has been balanced and well-informed.
Take this recent video from Yahoo Finance, which focuses on the median employee. Examples are presented for a range of companies, showing how and why median pay differs from industry to industry. They also take the time to explain the impact of part-time workers on the median pay number.
Bloomberg does a great job with a case study about Coke. It turns out that Coke paid its median worker $16,440 in 2018 compared to $47,312 in 2017. This steep change is due to organizational restructuring. In 2017, their median worker was a full-time North American worker. Then Coke sold its North American bottling operations and took a controlling stake in African bottling operations. The omission of the North American workers and addition of 17,000 new African employees led to the change.
What a great way to educate readers on how the median employee works. By the way, the article goes on to show how Coke's CEO pay ratio was calculated, and provides access to pay ratios for hundreds of companies in 10 industries.
Academics call the pay ratio, "lacking in accuracy, difficult to interpret and incomplete." Yes, it is flawed, but it still inspires interesting and valuable conversations.
This is why the Bloomberg article wouldn't be a bad thing to circulate among the individuals you work with on the calculations. You could add the topic, "What does this tell us about pay transparency?" since the two years of CEO pay ratio data seems to have led to deeper understanding of how pay works rather than any emotional high jinx (which executives were afraid of when this whole thing started).
Also check out WillisTowersWatson's sample shareholder letter for an example of "best practices" and thoughtful communications. Their guidelines suggest that you take the time to educate shareholders about how the CEO pay ratio and median employee data are linked to your company's business and talent strategies -- educating not only your shareholders, but also the financial media (which has turned out to be a great idea so far, given the examples cited above).
Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. A former Board member for the Bay Area Compensation Association (BACA), Margaret coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.
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