More Than the Money

Sure, compensation is about the dollars, but for many distribution executives, benefits, flexibility, and job satisfaction are as much a part of the package

Industrial Distribution

Kimberly Griffiths
Associate Editor

It's all fun and games until you find out someone doing the same job as you is making more money. It hurts, and we've all been there, but perversely, still think to ourselves, and still want to know, "How much is he/she making?" Well, here at ID, we always like to give our readers what they want, even if it may pain them to have read it.

This year's Annual Compensation Survey was filled out by 570 distribution professionals, a record number, giving us some of the most accurate information we've ever been able to present.

So, how much is he/she bringing home? The respondents' average salary across all titles, including bonuses and commissions, is $80,000 annually. That's a good-sized number, but to break it down, according to the responses, 12 percent of those surveyed are paid $50,000–$59,999; and another 12 percent are stuffing their wallets with $150,000–$250,000. Other significant percentages include 11 percent being paid $40,000–$49,999; 10 percent receiving $60,000–$69,999, and $80,000–$89,999; and 9 percent bringing home $70,000–$79,999.

Broken down by job title, the average salary brought home by presidents/owners/CEOs is $135,000; general managers: $85,000; operations managers and other management positions: $60,000; sales managers/marketing managers: $100,000; inside salespeople: $41,500; product specialists, outside salespeople/account managers: $72,000; branch managers/purchasing managers: $60,000; and other sales positions: $55,000.

These numbers are comparable to figures reported by the U.S. Department of Labor's Bureau of Labor Statistics' National Compensation Survey from August 2005, which cited white-collar executive, administrative and managerial positions earning $68,360 annually. Sales managers bring in $42,652 annually; and the chief executives make more than $100,000. Of course, your basic, general, white-collar worker, including sales, earns $48,063 annually.

But wait -- who are these people? What do they do in a distribution company? Respondents listed their job titles as: product line specialist/sales (21 percent), sales/marketing manager/sales marketing (18 percent), president/owner/CEO (17 percent), branch manager/purchasing (8 percent), other management (7 percent), and other sales (2 percent).

When asked how their salaries changed over the past year, all said they received an increase, while the largest percentage, 30 percent, said that they received a 2 percent to 4 percent raise. (The across-the-board average was 4 percent.) Fourteen percent said their salary went up 5 percent to 7 percent; 11 percent said less than 2 percent; 9 percent stated 8 percent to 10 percent; 8 percent said 11 percent to 20 percent; and 5 percent received an increase of more than 20 percent.

"Compensation is a dichotomous area," says Jack Dolmat-Connell, president of DolmatConnell and Partners, a compensation and benefits consulting business in Waltham, Mass. "There's the executive realm, and then there's everywhere else. That, of course, causes tension. Executive salaries increase 6 percent to 8 percent, and bonuses are strong, but to the broader employee base, budgets are declining, benefits are costing more, and their participation in stock and pension plans is decreasing."

Dolmat-Connell has spent the last 12 years consulting with companies on their compensation plans.

"In looking at the public companies in the industrial distribution industry, they fall along those trend lines, where executive salaries go up about 7 percent, bonuses increase their take-home by 60 percent to 100 percent, and then with their equity in the company, even if the options are flat, the stock grants go up."

More than half of the respondents (52 percent) said that their last raise was part of a normal annual review. Twenty percent switched jobs or were promoted. Twenty-eight percent cited "other," but in the survey's fill-in space, cited reasons such as asking for it; bonuses and commissions; business growth or expansion; and an increase in production and/or sales.

And speaking of bonuses, when asked what percentage of their salary is variable or based on certain performance measures, 21 percent of the respondents said that is the case with 11 percent to 20 percent of their salary; 19 percent said 1 percent to 10 percent; 11 percent said 21 percent to 30 percent. Nine percent said that 91 percent to 100 percent of their salary was based on performance measures.

It's all "benefit"-cial

When it comes down to benefits, respondents were asked to note which they receive at their jobs, in addition to medical and dental. Some were quick to point out that dental isn't always a given, and is not part of their package, but they were among the minority. Since respondents were asked to select as many benefits as they received, the percentages will not equal 100, but instead show how many respondents receive them.

Eighty percent receive a pension plan/401K; 44 percent cite profit sharing; 40 percent say flexible working hours; 38 percent said training; 37 percent state company car as well as tuition reimbursement; 33 percent have the ability to work at home; 16 percent may take part in a stock purchase plan; and 10 percent cite both pay for unused vacation and stock options.

"While the pension plan and 401K is listed at the top, those can both be capped, so some executives are asking for non-qualified investment opportunities so they may invest more," says Dolmat-Connell. "Also, supplemental disability or life plans can give more coverage. Another benefit provided by some companies is financial and estate planning, where a consultant is provided by the company, and executives have access to this person to discuss their investments, company-related or not."

Some of the fill-in responses included car allowances, bonuses and employee stock ownership, but others, cited only once, include a country club membership, cell phone, ball game tickets, and casual dress.

When asked which of those benefits are the most important to them, the respondents again gave the pension plans and 401Ks the top spot (67 percent noted it), but cited flexible working hours (43 percent) second. In order of importance, after those two, were profit sharing (36 percent), company car (32 percent), ability to work at home (27 percent), training (20 percent), stock options and stock purchase plans (9 percent each), and pay for unused vacation and tuition reimbursement (7 percent each).

According to the BLS survey, 60 percent of workers in private industry had access to retirement plans; paid leave was the most commonly provided employee benefit in the private sector; and 49 percent of workers who had access to life insurance participated in the program.

But do you like it?

Over the last few years doing this survey, we've asked some questions about general job satisfaction, but this year, we expanded on those queries, looking for more in-depth responses.

When asked to rate their general job satisfaction, 42 percent of the respondents said that they were very satisfied and 44 percent said somewhat satisfied. Twelve percent said somewhat dissatisfied and 2 percent said very dissatisfied.

A feeling of accomplishment (47 percent), salary (31 percent) and their company's financial health (24 percent) were selected as the three most-popular factors that have an impact on job satisfaction, and were followed by benefits (21 percent), relationship with colleagues (18 percent), job security and opportunity for creativity (17 percent each) and advancement opportunities (16 percent). Other factors, coming in with 15 percent or less of the respondents citing them, include leading a team, technical challenge, location, managing people, workload and travel.

(Let's digress for a moment on the thought of workload. When asked if they've had any change in their responsibility load over the last couple years, 80 percent said that their functions had increased. Seventeen percent have the same functions, and only 3 percent have a decreased level of job responsibility.)

Also, in regards to the factors for job satisfaction, verbatim responses included: challenges, customer relationships, flexibility, freedom, and company ownership.

But if they were to leave their present jobs, what would be the single most important reason? By a wide margin, higher pay was the answer; 33 percent of the respondents cited it.

"When it comes to a more favorable compensation package, there is not a lot of loyalty these days, but by and large, most people don't have a lot to gain with loyalty," says Dolmat-Connell. "The equation has changed on both sides of that, and most people understand that you have to do what is to the benefit of yourself and your career."

Other responses included: more advancement potential (9 percent), different industry (7 percent), better and/or more manageable location (6 percent each), and better boss/manager, company stability, and more responsibility (5 percent each).

As with the previous question, the verbatim responses varied into areas we hadn't thought of, including: a combination of the above factors; burn out; selling the company; less stress; more opportunity; and retirement.

We also asked the respondents what they like most about their jobs. Forty-two percent said that they most enjoy the work itself; and 24 percent cited the challenges inherent in their jobs. Seven percent said camaraderie; 6 percent stated salary and location; 4 percent cited job security. Fewer than 3 percent cited management support, benefits and chance for advancement.

"Compensation is rarely one of the top three drivers for job satisfaction," says Dolmat-Connell. "It usually comes in fourth or fifth, as it did here."

For the first time, we asked what respondents like least about their jobs, and the answers poured in. The highest percentage cited lack of management support (24 percent), while 16 percent said additional workload, 13 percent indicated salary, 8 percent said location, and 7 percent marked lack of job security.

Interestingly, 21 percent of the respondents chose to write their own reason, and those verbatim notations included: co-workers (their attitudes, work ethics, etc.); budgets; corporate culture and direction; dealing with people; employee issues; hours; lack of customer loyalty; paperwork; price-cutting competitors; slow growth rates; travel; and "the unbelievably bad last few years."

We also asked the most difficult challenges the respondents face in their jobs, and were flooded with responses. They include: adapting to the impact of China and India; advancement opportunities; balancing workload, administrative duties and family; working in a male-dominated field; boredom; changes in all aspects of the business; competition; continued growth; convincing others of value, leadership, idea worth and opportunities; dealing with co-workers, turnover and corporate structure; doing more with less; finding good people; getting it all done; growing the business; increasing sales; and keeping customers happy.

When asked what one area about which they are most concerned, 24 percent of the respondents cited management support; 18 percent said company merger or acquisition; 18 percent noted keeping current on technology; 17 percent said job security; and 12 percent cited sufficient operating budget.

Who we talked to

Of course, we asked some questions about the respondents themselves, and their companies. Twenty-one percent of them work for a company that boasted $500 million or more in sales in 2005; while 16 percent are from $20 million to $49.9 million; 13 percent cite company sales of $10 million to $19.9 million; 12 percent say $5 million to $9.9 million; and 11 percent say $100 million to $499.9 million.

"Those numbers, in relation to the compensation amounts, make a lot of sense to me," says Dolmat-Connell. "There's no fool-proof equation that says how much an executive or leader will make based on the size of their company, but there is a strong correlation related to that company's size."

Here's the breakdown of the rest of the respondents' stats:

• Average age is 48.
• Ninety-one percent are male.
• Fifty-five percent consider themselves general-line distributors; 45 percent are specialty distributors.
• Respondents work an average of 49 hours per week.
• Half of the respondents (50 percent) have been with their company one to 10 years.
• Average time at their present job is five years.
• Average amount of industrial distribution experience is 20 years.
• Twenty-three percent have worked for three companies; 22 percent for two companies; and 20 percent for four companies.
• Forty-nine percent of the respondents have an undergraduate college degree.
• Ninety-seven percent of those with degrees have them in something other than industrial distribution. Three percent, in fact, do have ID degrees.

One of the last questions we asked the respondents was a new one: would you recommend a career in industrial distribution to someone graduating college or considering a career change? Seventy-five percent said that yes, they would recommend it. Consequently, 25 percent said no.

Why yes? They'll tell you. That it is a challenging and rewarding career full of variety was noted by a majority of respondents, as was diversity of daily tasks; flexible hours and high-pay potential; great opportunities; growing market and industry; interesting work; available jobs; and unlimited potential.

Why no? Their reasons include: competition; consolidation; declining industrial customer bases; uncertain future; low pay; lagging technology; not enough opportunity; too much stress; no growth in the market; and "there are better opportunities to make more money in sales in other fields."