Your Answers: How Can You Justify Making So Much Money?
It’s the single hardest media training question for spokespersons to answer.
Let’s say you’re a top executive from a not-for-profit association, a quasi-governmental organization, a membership group, or a utility company. You work for a group that depends on taxpayer funding, private donations, or middle-class ratepayers. You make $600,000 per year. Or $800,000 per year. Or $1.2 million per year. Here’s the killer question:
“How can you justify making $800,000 per year?
Last week, I asked you to weigh in with your suggestions for how to answer that question. You had some great ideas, as you’ll see below (my reaction to each comment follows in italics).
Comment 1: Melissa Agnes: “The utility company (assuming you mean IT or something of the sorts): something about them working hard and being fortunate to be in such a position???”
I really like the second part of your answer about being fortunate to be in such a position. I’d be careful with “working hard,” since it can make people who make less but also work hard bristle.
Comment 2: Name withheld at reader’s request: “In any organisation, it’s not what you spend that matters – it’s what you bring in – whether “it” is the person in the mail room providing a fantastic service or myself in the job that I do, bringing in new business, future vision and leadership that will steer the company to profit or above and beyond where we are now….I think any reasonable person can see that at this level, there are decisions requiring skill and experience that has been acquired over many years…My salary package is something I make transparent at all company meetings and it’s decided by the shareholders and freely discussed at all levels of the company.”
I like your pledge for transparency and focus on return on investment. But I’d stay away from phrases such as “Any reasonable person can see,” since it’s dismissive of the reasonable people who disagree with you.
Comment 3: Christine: “I think it’s really, really important that the CEO acknowledge that achieving his/her position is a combination of hard work AND good luck … because many many people work 18-hour days and make minimum wage. He or she can acknowledge the importance of a good education, having a plan, etc. … but don’t say that it was all hard work, because he/she would offend soooo many people!”
Great point, Christine.
Comment 4: Jeff: “I would also focus on the fact that “I have many years of experience that allow me to make strategic decisions for the company on a daily basis that affect each and every employee and the future of our business.”
That’s an important point, but I’d focus the benefits less on the “future of our business” and more on the benefits to donors, ratepayers, or members.
Comment 5: Chris Floore: “A government agency such as a city or school district could easily be a community’s top employer. You want to set the pay for the CEO (Commissioner, Mayor, CAO, Superintendent, etc.) in such a way that it reflects the level of skill and expertise needed to effectively manage an organization that has deep and long-lasting impacts on the community…The pay can easily stand on its own by showing what the agency does and who it impacts.”
I like this answer and it includes great elements. I’d still be concerned about the inevitable follow-up: “But do you really have to siphon $800,000 away from the taxpayers each year to do your work? You could do the same work for half of that, which would allow you to respect taxpayers while still making a lot of money. Why do you refuse to do that?”
Comment 6: J. Noble: “To answer your question directly: Advise the client to cite stats showing their salary is in line with other CEOs in the same space and with the same size organization (apples to apples comparison)-assuming that is true. That said, there is no strong or good answer when the UN Sec General makes $237k and you as a CEO of a significantly less important, less complicated and smaller non-profit make $800k.”
Fair point, and that’s the trickiest part of this question – many people inherently don’t believe that executives deserve to make so much money. The second part of your answer, about comparing salaries, is a good approach.
My approach borrows from pieces of the commenters above. In an ideal world, the organization that is paying high salaries uses an outside “benchmarking” firm to establish what comparable wages are. If that’s true – and if the executive is paid something close to the median, I prefer this response:
“You’re right that I’m fortunate to be paid well for my work. I agree that we owe it to our members to be fiscally responsible, which is why no executive in our company makes more than the average for other executives in comparable positions. We think the 50 percent mark is perfect – it’s high enough to attract top talent who can serve our members well, but low enough to respect the contributions generously provided by our members.”
Thanks to the readers above for weighing in! What do you think? Please leave your thoughts in the comments section below.
Yours is a great response and I see how it covers all bases. It’s very clever without pandering to the masses, whilst also not coming across as being embarrassed for being so successful. I guess that’s why you’re Mr. Media Training..heh..heh…
Here’s my ten cents worth – sometimes the approach with these sort of difficult questions is to ADDRESS the underlying issue; in this case “justify” would suggest behaviour. Or one could tak a word or phrase from the question and tackle it more head on. If one was to address it then it might be something like What we are talking about here is how we make our financial decisions and actions …
Brad’s response is to acknowledge the money – you are right is aso a good one.
My point is that we have choices abut how we respond the journalist’s questions, it comes down to what are the impressions we want to create? The resposne is a strategic one that is is line with the mission and values of the organization.
Good discussion Brad!
A lot of working class people like myself could care less about CEO parity, we think they’re ALL making too much. Never mind 50% of what other CEO’s make, what percent of the junior accountant in your company’s salary and benefits are you making? That’s something you shouldn’t point out, but know that we think about it.
I liked Hastings answer the best. It acknowledges leadership, transparency, and calls the listener or viewer a “reasonable person”.
Interesting dynamic pointed out by Penelope…overall resentment toward CEO comp as a whole, which is particularly acute depending on the organization he/she works for. The discussion mentions non-profits, government and utilities. Because the public feels it has no say over its government and utilities (one of which I work for) they feel its employees work for them. If they’re suffering economically, they can want to see salaries cut to acknowledge everyone else’s pain. With a non-profit, the citizen at least feels the ability to contribute or not.
Jeff – You and Penelope are right that people resent CEO salaries. There are two additional approaches I didn’t mention here that are worth mentioning.
1. I’ve asked many CEOs whether they’d be willing to cut their salary. I’ve yet to find the CEO who agreed.
2. CEOs can highlight their programs to help the impoverished (for example, a utility company can discuss its fund for poor customers), and can also make a generous contribution annually to that fund.
This question assumes that the CEO agrees to neither option. Most of them don’t.
Thanks for your comment,