Why are managers so highly paid?

Great Debates
#1

I’d like to add a little background here…

I’ve been working in the ‘real world’ for about 5 years now. I’ve had 3 jobs (2 cities), and I’m currently a network engineer/software-hardware guru for a small software company. I’ve developed one hell of a skill set over the years, and I can troubleshoot just about any problem, almost sight unseen. I have current knowledge about most areas of the field, I work long, tiring hours (12+ a day) when necessary. I solve the problems that everyone else gives up on.

(I’m not trying to shine my own apple here, but I want you to know that I’m no slacker.)

No matter where I look, two things always seem true:

–the manager (team lead, senior tech, whatever) who performs a functional role (as in, they never solve problems, they never build machines, they never have to do the real work) gets paid 30-50% more than the ones doing the actual work. By actual work, I mean that the projects in my hands end up in the customers hands–my work generates direct profits.

–the manager, invariably does not have the skills or knowledge required to do the job I do. They simply decide what to do and when (often at my advice) and tell me to do it. Not how to do it, or what to use, or anything else, just where and when.

Am I the only one who sees something wrong with this?

Am I the only one who thinks that your manager should be able to perform your job? (If for no other reason than that if I should spontaneously combust, someone should be able to do it)

Effectively, managers know only one thing: how to organize and implement people and projects. Is this really worth more than any other skill set?

Do astronauts make less than their ‘managers’? What about ‘rocket scientists’?

Are there any companies that value technical prowess more than managerial skills?

#2

Aside from artists, athletes and musicians, this is almost invariably the case. I have often wondered as much myself, but have no decent theory.

#3

There are lots of research companies where the researchers get the big bucks.

However, in theory, the manager is the one responsible for the productivity of the many many people doing the “actual job.” There are plenty of good managers out there, who add value to the process… and justify their salaries.

There are also plenty of jerks out there, who get paid lots of money for doing nothing (except being satirized in Dilbert.)

Admittedly, the current environment is one where thoroughly incompetent CEOs tend to make millions, regardless of performance. And that trend can (and does) trickle down.

#4

A good manager is well worth his pay, regardless how much more technically qualified his staff is.

Most techs (and I’m one) really are not equipped to handle the nonsense of budgets, personnel management, project coordination, the setting of priorities, etc. that are required of a manager.

That said, what Dex said applies. In order to get and retain good managers, companies set good salaries for the positions. Then they hire some kiss-up shlub out of the department to replace the kiss-up shlub that was promoted to replace a higher k-u. s. on up the chain to CEO.

If a tech screws up a project, that project goes over budget. If a manager screws up a budget, a department goes unfunded. (Of course, since auditing managers on actual performance would require that the previously promoted k-u. s.'s be reviewed and fired, they are smart enough to not actually encourage that level of auditing or review for the higher levels. At that level, to be fired you must spectacularly crash and burn or irritate someone higher by failing to kiss up at the right time.)

On the other hand, technical skills are generally easier to replace. You may be the finest tech in your field, but the company knows that they can get 80% of your expertise for 80% of a manager’s pay (and they don’t understand the final 20%, so it is irrelevant to them).(I’m not sure where you are that managers get 30% to 50% more. My experience is that they get 15% to 25% more. YMMV)

#5

Supply and demand, there are more people who can do tech jobs,manufactoring, acconting or waiting tables than there are people willing to take responseability of seeing that those jobs get done.

#6

We’re not all overpaid :wink:

#7

Tom:

It depends on what levels you’re talking about. And what companies. So, with the caveat that there’s lots and lots of different companies out there with lots and lots of different practices, the most commonly used rule-of-thumb is about 15% to 20% pay differential between midpoints of ranges for base pay.

Thus, if you’re working at a “traditional” pay scale company, at middle or lower levels; and if your manager is one pay grade above you, and you’re both at the midpoint of the range for your grade, the manager is probably making around 15% to 20% more in base pay than you are.

If you were just promoted to that grade and the manager has been there for some time, the differential could be significantly more… And if the manager is two grade levels higher, then the 30% to 50% is not unusual.

And, of course, the manager may have higher bonus targets, etc.

This would all be different in a sales force where pay is largely commission based, of course. In that situation, it’s not uncommon to find a top-salesperson making more (in commissions) than his/her manager (who is on a strict base-and-bonus arrangement.)

And it would be different if you’re looking at a company that’s introduced broad-banding or that has a skill-based or seniority-based compensation system.

And this would also be different if you are talking upper level management, where there can easily be a 50% to 100% jump in pay associated with a single grade difference.

That help?

#8

I guess maybe I should back up a bit.

The process of deciding which jobs are worth more than other jobs is called Job Evaluation. It’s a complex process, and different at each company (for example, a computer software company would value a programmer above an accountant, while an accounting firm would value an accountant above a programmer.)

If the job evaluation process is done well, then the company has a set of reasons that the manager job is worth more than the job that reports to it, based on responsibilities, expertise or skills needed, etc.

Yes, it is true, managerial skills are usually valued above technical skills. The conductor of the orchestra is paid more than the second trombone, even though the orchestra leader probably couldn’t play the trombone if his/her life depended on it. Yet, the conductor tells the trombonist when to play and how to play.

#9

It’s supply and demand yet again. Being an engineer I always thought sales people were grossly overpaid. I mean here I am, I am the one with the technical knowledge doing the actual work and some schmuck who doesn’t know half what I do and is just taking customers out to lunch is making twice what I make.

Now I understand it much better and I know finding a good salesman is much more difficult than finding a good engineer and although it seemed to me at the time the salesman just took clients out to lunch, in fact he is the one bringing in the dough.

It is the same with managers. There are few people who can manage well, especially who can manage people well, and that is why they are worth the extra pay.

#10

Ok, here’s a little more info about my angst.

I know exactly how much everyone makes in my office. It’s a small company–10-14 people in this office, 60-80 in other offices.

I accidentally saw a summary sheet with all of the pay deposits. Before you scold me, it really was an accident–the accountant asked me to help him open a strangely-formatted file, and when I opened it, there it was. Yes, I took a good look.

The strangest thing was that there are project managers (non-technical) who report to my boss who are actually making more than my boss is.

The project manager makes 26k more than I do, 2500 more than my boss, and 5k more than his female counterpart. He has less technical knowledge. I install his systems. He basically handles the customers after they have been sold on our product. He basically manages customer’s expectations and routes the requests from the customers to me so that I can solve their problems. What really gets me is that this guy used a technical background (Oracle and Java) to get this job. I didn’t know anything about either when I took this job, but now know more than he does about those systems (from the questions he asks me).

The entry level salespeople make about the same as this project manager. The higher-up people make about 2x what I do. They are not commission-based in pay–they try to arrange partnerships with other companies.

Dexter:

We are a software company. I build the systems that go to our customers. I am also the only one in the office who can do what I do.

Maybe I should have started a thread about “Why My Job Sucks”.

#11

I’ve noticed that every manager I’ve met, or worked with, has been significantly less intelligent than the employees “under” them. It’s probably because a monkey could “organize” things. In my last job, I invented methods to increase efficiency and decrease errors significantly. The response? I got fired. If you want to claw your way to management, prove your self to be incapable of anything.

As to why this happens, blame Budweiser. Usually, the manager is the drinking buddy of the owner. In fact, the guy who got angry and threw scissors at people had a job created for him because he was a drinking buddy of the manager and was too incompetent to do the original job that was handed to him.

#12

I’d like to clarify my last post by saying that it was not deposits on the sheet, but gross pay.

#13

He basically handles the customers after they have been sold on our product. He basically manages customer’s expectations and routes the requests from the customers to me so that I can solve their problems.

It’s not the whole story, but dealing with customers can be tricky and stressful. The majority of people with technical skills would do it poorly, and detest doing it. Managers typically have to attend to the needs and wants of customers, employees, and bosses. It ain’t always easy.

#14

I have worked in computing for over ten years for various sized organizations. Most of my managers have made from 10-30% more than I due to their greater seniority alone. Right now, my manager makes at most 10% more than me (I am a senior project manager right in the middle of the salary range).

More common in my experience is to have highly skilled technical folks making about as much or even more than their manager unless the manager recently came from those ranks.

Also, in many companies there is an IT payroll differential that pays significantly more. In my current gig I make much more than most of my business customer managers.

I disagree with your assumption that a manager should know how to do the job of his or her team. Maybe in the old factory days; today managing people is a different job involving communicating information and solving interpersonal problems.

Finally, I would be cautious about placing a lot of confidence about what your peers earn from seeing their pay deposits, unless they were gross. Lots of folks’ pay is adjusted by the endless stream of deductions (401k, insurance, medical expense accounts etc.) and tax exemptions and even child support garnishments.

#15

I know it’s not easy. Does it require more work or intelligence? Techs do their fair share of spreadsheets, documents, and diagrams.

Can you tell me what makes it so much more valuable?

Without the product, there is nothing to sell and there are no customers (unless it’s an MLM :slight_smile: ). Yes, you can argue that without people to sell it and maintain customer relationships there wouldn’t be any customers, but it still fails to explain why there is such a large (traditional) gap.

#16

As sailor touched upon, if “it” is the best product in the world and it’s not getting sold, the company won’t make it. The world will not beat a path to your door if they don’t know about your mousetrap.

I’ve been a technical person, a marketer and a manager. I easily grasp why successful sales people are worth the big bucks. And I’ve seen successful sales people graduate to senior management and drive a rocket they’ve ignited into the ground as a result of their mismanagement. That is, their inability to manage the global flow of what’s got to happen when for everything to work out.

That’s not to say there are not incompetent people who’ve risen to mangement positions and seem to just hang on in there (what is that - the Peter Principle?).

In answer to the quote above, I’ll add that another factor may be that managers are often closer than anyone else to the compensation review process.

FWIW, I am employed presently as a technical person, with encroaching management responsibilities looming (again - sigh).

#17

Well, heck.

I, like Ringo up there, have been: network admin, webmaster, DB admin, circulation director, customer service manager, marketing director and telemarketing manager at various firms.

And there really is nothing more valuable to a firm than a person who can put all the pieces in the right order and make them function properly.

However difficult (or simple) you find it to be making technologic parts work properly it is much harder to make human beings work together properly. Rarely has a controller card wasted time conspiring to make a memory simm look bad to the boss.

It’s difficult work, but rewarding in its way. That’s why the American Management Association currently holds that no person should actively manage more than 12 persons. Any more and the job becomes unwieldy.

I realize that managers don’t per se ‘make’ anything. But current management theory states that they shouldn’t. They should spend their time putting their direct reports in the proper position to be productive.

Oh, and this quote:

is so breathtakingly wrong I’m speechless. A monkey can organize things poorly. Doing it right, on time and on budget is the sort of thing that keeps me up nights.

#18

And I’ll bump Jonathan just because this encapsulates a lot very well:

#19

Some time ago I was a division general manager of a large corporation. I had 7 staff managers, 40 or so other managers, 28 shop supervisors, 60 or 70 electrical engineers, around 20 non-technical professionals and myriads of technicians and hourly employees. (I had an IT manager but he didn’t report directly to me).

Here are some of the things we looked for when promoting someone to a management position.

  1. Extreme customer orientation
  2. Very good communication skills (written oral and public speaking)
  3. High energy level and drive
  4. Intelligence
  5. Charisma and leadership ability
  6. Self confidence
  7. Future promotability
  8. Ability to innovate
  9. Able to handle high pressure without cracking
  10. Stable, pleasant, and calm personality
  11. Willingness to accept responsibility
  12. The ability to get the job done
  13. Organizational skills

Then, of course, there was always that intuitive something you can’t define, but that most definitely had to be there. We could always find a capable professional when required, but finding a good manager was hell. A good one was worth everything he/she made and some of them made a lot.

And as someone else said a good salesman (in our case a sales engineer) is worth their weight in gold. (No one had a job if there were no orders)

I probably wasn’t worth what I was paid, but with the pressurized hell I lived in I deserved it.

#20

This may not be the norm, but I think it’s worth mentioning anyway:

I’ve managed teams in high-tech environments where some of the people reporting to me were earning more than I was. It didn’t matter one bit. They were worth it.

This may be seem odd, but I don’t think it’s all that uncommon.

Do coaches of Pro sport teams always earn more than their star players?