Straight Answers to Real Questions
Question: I’m the Vice President, Finance for a $60mm CPG manufacturer in Vaughan. The company’s been doing quite well but the owners are getting close to retirement age and are talking about looking for a strategic buyer. The new owners, whoever they may be, may want to keep me on but the odds are against it so I’ve decided to take a look at the market. I’ve been here for over 10 years and although I think I’ve been paid fairly I have no idea what my real market value is.
I downloaded the most recent salary survey published by a major accounting recruitment firm and it cites the salary range for CFOs of companies between $50mm and $100mm as between $131,750 and $177,750. How do I know where I am on that spectrum?
Answer: Unfortunately, the short answer is: you can’t. You’re pinpointing a problem that is endemic to most salary surveys – the ranges they quote are too broad to be of any real use to an employer or a candidate trying to benchmark their compensation. In surveys like this, the data is usually taken from all the placements that firm made in that reporting period. The main problem with this approach is that the people being placed and the firms doing the hiring are going to cover a very wide spectrum of variables.
For instance, a manufacturing company in a mature market with no growth plans and tight margins may hire a VP Finance for what is basically a maintenance type function at a salary of $140,000 and a 10% bonus potential. A manufacturer of a similar size just down the road that’s been experiencing dramatic growth and plan to stay on their current trajectory may pay their CFO $225,000 plus a bonus worth up to 30% of salary.
Which brings me to the other issue with salary surveys of this sort – they only reflect the salaries that the recruitment firm’s clients happened to have hired at. This data may not (or even usually) reflect actual market rates. The range cited in this case suggests that $177,750 is the top end of CFO salaries for companies of this size which is definitely not the case; they’re actually quite a bit higher.
The best way to get a handle on your real market value is to find someone in a similar professional situation and benchmark your employer, position and compensation against theirs. If you have pals in similar jobs, great – that’s the first place you should turn. If not, consider joining a networking group for financial executives. Not only will you pick up market intelligence on compensation, you may also find the group useful in helping you find your next job.