smart spending

3 executive salary secrets

Highlights
  • Staying with one employer for too long may hurt your bottom line.
  • Using leverage can pay major dividends during salary talks.
  • Staying well-connected and networking opens up opportunities.

In the turmoil of the Great Recession, one thing has remained constant: The average executive salary remains in the stratosphere.

Indeed, a study by The Wall Street Journal and Hay Group found that in 2008, median CEO compensation at America's 200 largest companies dipped just 3.4 percent, to a little over $7.5 million.

In the face of massive turmoil in the job market, is there anything we can learn from CEOs to help boost our own bottom lines?

Following are three principles CEOs use to get paid more. Putting these maxims to work might boost your pay, too:

No. 1: Employee loyalty is for suckers

Staying at the same job for years or even decades has benefits -- job security, good relationships with co-workers. However, it may not be the best way to maximize career opportunities or pay.
"Executives often have very high relationship-building skills."

CEOs understand the advantages to changing jobs often, says John Challenger, CEO of the outplacement consulting firm Challenger, Gray & Christmas.

"We often see (CEOs) moving in multiple industries -- different kinds of companies -- so they see not just one way of doing things and one industry," Challenger says. "They get a kind of cross-pollination of seeing multiple cultures and industries and how they work, so they can bring those kinds of experiences to bear on other jobs."

A variety of job experiences can make you more valuable to future employers and help secure higher pay. Oftentimes, employees who remain with the same company hit a salary ceiling, even if they are star performers, Challenger says.

"Even if the market says you should get between $60,000 and $90,000, but in this company you're in, people make between $40,000 and $65,000 for the role, you're not going to get $80,000 for it. They're not going to put you there," Challenger says. "You can go to another company and get that."

A diverse work history also helps create the perception your talent is in demand, while staying at the same job for many years can sometimes have the opposite effect.

"The old notion was, you stay with your company and lots of people like to talk a lot about loyalty, but loyalty can also be interpreted to mean you don't have any other choices and you're stuck where you are," says David Lewin, Neil H. Jacoby chair in management at the UCLA Anderson School of Management in Los Angeles.

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No. 2: Negotiate hard from a position of strength

Most CEOs are not only good at negotiating, but also at creating situations where they have good leverage.

"(CEOs) are tough-minded negotiators -- they're smart and they're tough-minded and they understand their worth," Challenger says. "But you can only negotiate if the organization feels that you're invaluable."

Making yourself invaluable starts with outstanding job performance, Challenger says. Most CEOs were successful employees or businesspeople who brought a long list of carefully cataloged achievements to the bargaining table, he says.

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