Tale of Two Sectors
Ops Fare Better Than Programmers in Latest Compensation Survey
By K.C. Neel -- Multichannel News, 10/21/2007 8:00:00 PM
On the heels of substantial gains in 2005, average salary raise for programming workers was a paltry 0.2% in 2006. And programming companies, which posted an average 5.1% lift in salaries in 2005, saw a .04% drop the following year.
On the other hand, employees at cable operators saw an average 3.6% increase in salary over 2005 — basically keeping pace with the 3.7% average increase companies across the country saw in 2006, according to Mercer Human Resource Consulting data.
The cable statistics are from the latest annual compensation survey conducted by Croner Co. for the Cable Television Human Resources Association. The study cited changes in job definitions, movement by workers to different positions, turnovers and layoffs among the factors affecting the 2006 numbers in the programming sector.
“When we did a deep dive of the data, we found that in many cases, the same company posted the same job but with a different salary,” said Croner president Hali Croner. “Some of that might be attributed to turnover. Companies may not to have to pay as much to fill a position that has been vacated. There has been a lot of change in leadership in the programming arena, and we're not sure how much that might have affected the changes. We think that after the huge increases we saw in 2005, which averaged 5.9%, the '06 numbers showed that the industry is stabilizing this year.”
The programming sector has certainly been turbulent over the last couple years. Last year, Court TV laid off dozens of employees when the company was taken over by Turner Broadcasting System and operations were moved to Atlanta from New York City. NBC shut down MSNBC's Secaucus, N.J., headquarters in October affecting 700 employees. Lifetime Television realigned its marketing department, laying off several employees after Martha Pease joined the network in January 2006 as executive vice president of marketing.
And the trend has continued in 2007. It didn't take long for Discovery CEO David Zaslav, who was hired in November 2006 to replace Judith McHale, to make significant changes in the company's workforce. Two months after his coming on board, Discovery Networks president Billy Campbell, Animal Planet head Maureen Smith, Discovery Networks International president Dawn McCall, and Discovery Communications senior vice president of human resources Pandit Wright were released. Another 200 corporate workers received pink slips last April and Zaslav finally shuttered its retail division in May, laying off 1,000 people, or 25% of its workforce.
MTV Networks began laying off top staffers in January, giving pink slips to affiliate sales president Nicole Browning and executive vice president Peter Low. More layoffs followed a few weeks later when 250 staffers were let go. Many of the layoffs were in the marketing and affiliate sales departments, but several departments were affected.
Among high-level and long-time executives on the hit list: Eric Sherman, general manager at VH1 Classic, VH1 Soul and the high-definition music channel MHD; MTVN general counsel David Sussman; executive vice president of programming Paul DeBenedittis; senior vice president of production Salli Frattini; VH1 senior vice president of communications Laura Nelson, executive vice presidents of affiliate sales Jessica Heakcock and Sandy Ashendorf; and senior vice president of affiliate sales Susan Keith.
Meanhile, operators, which already had their bout with massive layoffs earlier in the decade, were busy adding mostly field personnel as demand for bundled services skyrocketed in 2006.
Indeed, field workers saw the biggest raises in 2006 as triple-play bundles of video, voice and data launched in most systems. Hourly wage earners — mostly installers and call center employees — experienced an average 3% lift in salary; but salaried employees, which include engineers and other professionals, saw an average 5.3% increase in 2006, the survey said. Corporate wage increases mirrored more closely programmers' raises at 0.7%.
It was the smallest salary increase for corporate personnel in the last five years. Non-sales bonuses, though, were higher for corporate employees than any other operator sector at 117% of target. Non-sales bonuses for field personnel averaged 103% of target representing strong performances, Croner said. Hourly workers' non-sales bonuses were 90% of target.
“Bonuses for field personnel were up last year and that is good,” Charter Communications senior vice president of human resources Lynne Ramsey said. “The bottom line is that it's the field that generates revenue, we need to make sure they are compensated for that.”
Faced with the anticipated retirement of baby boomers who expect to leave the workforce full time by 2010, Ramsey said the industry has to “make sure we have strong attraction and retention programs. I think you'll continue to see an increase in salaries. But that is not at the top of most new entrants' lists. It's career development and advancement opportunities, so we have begun to heavily focus on career pathing. We also have to become more flexible with our work/life balance programs.”
Job candidates may want to have more flexible working environments, but that doesn't mean they want to sacrifice salary for them. According to a survey by Robert Half International and CareerBuilder.com, titled “The Employment Dynamics and Growth Expectations (EDGE) Report,” job applicants are more apt to ask for higher salaries going forward.
Fifty-seven percent of hiring managers polled for the project between July 19 to August 7, 2007, said it was difficult to find qualified candidates 12 months ago; 91% said recruiting is equally or more challenging today. More than half (52%) of hiring managers who are having trouble recruiting cited a shortage of qualified professionals. As competition for skilled labor has become more intense for business overall, 58% of workers polled said they are more likely to negotiate a negotiate a better compensation package today than 12 months ago — double the number from last year's poll.
The survey, conducted by Harris Interactive, included responses from more than 1,000 hiring managers and 900 workers.
During Charter's well publicized financial troubles a few years ago, the company agreed to higher-than-average salary requests to entice workers to join and to stay with the company. In general, that's changed since the operator's turnaround, Ramsey said, but she concedes that geographic hotspots and especially competitive markets often require above-average salaries.
Ramsey and Charter director of variable compensation Summer Gafford often use the CTHRA salary survey to justify salary adjustments and realignments.
For example, Ramsey said, “we've been hard hit in some places geographically when it comes to competition. We'll make adjustments to balance out any inequities. We have found that when we do make those adjustments, we have better retention; and armed with the statistics from this study, we can justify those adjustments and show the high cost of turnover.”
Some categories are more poachable than others, with engineering and IT being at the top of the list. “Those are people everyone targets so we will go above the 50th percentile when it comes to paying those folks,” Ramsey said.
Engineering and IT employees at programming companies were among those who received the biggest pay raises in 2005 as networks went digital. But those pay increases didn't follow in 2006, suggesting that sector has stabilized and demand has been sated, Croner said.
“You have to be nimble,” Ramsey said. “Targets shift and you have to stay in front of it.”
Some programmers may be laying off employees, but that doesn't mean they aren't trying to keep their top performers. Roughly one in five of the participants in the EDGE survey, which included responses from 1,035 employees across the country in various industries, reported that their voluntary employee turnover rate is higher than it was a year ago, which is consistent with the past two years' findings.
Thirty-one percent of hiring managers said their firms have instituted new policies and programs to increase staff retention rates in the last 12 months. The primary measures taken included offering bonuses (23%), increasing pay (16%), improving the office environment (15%) and providing a more defined career path (10%).
The EDGE survey also found that professional and technical staffers are the most difficult to recruit, with 43% of employers reporting that they were struggling to find candidates for these positions, up from 37% in 2005. Moreover, 17% reported difficulty filling director, manager, supervisor and team leader positions, up from 15% the prior year.
In the 2006 CTHRA survey, programmers did not track with the EDGE survey. Raises for directors and managers were down from 2005. But salaried personnel, including directors, managers and supervisors working for participating operators, received the second highest salary increases in the 2006 CTHRA survey, reflecting some of the data found in the EDGE survey.
“The survey results from 2005 to present show an increasingly competitive job market for professional-level and highly skilled positions,” chairman and CEO of Robert Half International Max Messmer said in a prepared statement. “To recruit successfully, companies must 'sell' applicants on the benefits of working for their firms.”
Long-term incentive packages are becoming increasingly popular, with restricted stock being the incentive “du jour” mainly because of tax implications, Croner said. “It's less expensive than stock options and it's real stock,” she noted. “It's really an accounting decision, but it's a great retention tool at the same time because it's real stock when it's issued.”
Some 78% of programmers offer long-term incentives, while 82% of cable operators offer such a package. That compares to 77% and 75%, respectively, a year ago. Almost half (43%) of programmers changed their equity plans in the past year, with the most popular change being the addition of restricted stock into plans or a change to restricted stock only. Almost all (94%) restrict the participation in those programs to selected directors or vice presidents and above.
Cable operators are bit more liberal with their long-term incentive plans. “I've always been impressed with MSOs' [multiple-system operators'] strong use of equity,” Croner said. “Programmers don't use it as much because, I think, they are more stratified. Operators are more streamlined so using equity is generally simpler.”
Only a small percentage (21%) of operators changed their equity plans in 2006, either to include restricted stock or to link the size of grants more closely with company performance. Croner said the number is so low because most operators already incorporated the incentive before 2006. Three-quarters of participating cable companies limit the participation of long-term incentives to directors or vice presidents or above. The rest offer broad-based equity plans to all or most employees.
Non-sales bonuses were also telling, in terms of programming versus operator performance, according to the CTHRA survey.
Actual non-sales bonus awards for programming employees were on average 93% of target. That generally means companies didn't perform as well as projected, Croner said. That compares to 2005 non-actual bonus awards of 103%. Actual sales awards, however, exceeded target, Croner pointed out, reaching 119% of target.
“The bonus statistics tell us the programming companies didn't perform as expected,” Croner said. “That's the first time that has happened since 2002 after the dot.com crash. The performances are terrible. Ninety-three percent is close to target.”
Conversely, with the exception of hourly personnel, actual non-sales bonuses for operator workers exceeded targets, reflecting strong corporate performance in 2006, Croner said. Actual sales awards, were, on average, below target.
Some firms that have long used performance as a barometer for bonuses are tweaking the program to reward personnel individually rather than by department, Croner said.
“You may have one employee who really worked hard and had much better numbers than others; but in the past, the entire department would get the same bonus,” Croner said. “Now, companies are trying to reward the employees who really did the work.”
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