What’s Your Net Worth?

Sizzling is the word for it. Salary increases for marketers in 1998 were at their highest since the start of the decade. Bonuses are now reaching deeper into organizations, as employers continue to seek ways to attract and keep talent. And while consumer promotion spending is projected higher for 1999 in all segments tracked by PROMO, moderation is the watchword.

Meanwhile, the Internet has forever altered the rules. And it’s happening faster than you can say, “dot-com.” Net-based technologies have become integral to business operations as companies use the Internet and intranets to disseminate information, conduct e-commerce, and communicate with consumers, clients, and vendors. Indeed, “e-engineering” has replaced reengineering.

As a result, there is no end in sight to the demand for employees with broader skill sets amid a tight labor market. Despite all the talk about the shortage of information technology professionals, skilled marketing, sales, and promotion staffs are needed just as urgently.

The bottom line: Talent is the alpha, the omega, and everything in between.

These are among the findings of PROMO’s 10th annual Salary & Workplace Trends Survey, conducted in March by Pennington, NJ-based Gallup & Robinson from a sample of 7,500 readers.

Double-digit increases The competition for experienced marketers is cutthroat, and the corporate coffers are open to attract and hold them. The average merit salary increase for 1998 was 11.4 percent, the biggest raise recorded in the PROMO survey since 1990. That double-digit increase was almost three times the reported national average for all salaried employees of 4.2 percent, itself the biggest raise of the decade (see chart I, page 40).

“Actual employer spending on pay was higher than expected for all levels of employees in our annual study of 1,069 employers nationwide, which shows that companies have had to spend more to attract and keep talent,” says compensation business leader Ken Abosch of Hewitt Associates, a Lincolnshire, IL-based human resources consulting firm. The nation’s unemployment rate, which fell to a 29-year low of 4.2 percent in March, is no doubt a big contributor to employers’ largesse. Commenting on the report, Labor Secretary Alexis Herman said, “It’s an indication this is an economy that is lifting all boats.”

Increasing employer support of variable compensation plans (performance-related award programs that must be re-earned each year) is another key factor contributing to the overall earnings potential for most employees, according to Hewitt. Two-thirds of PROMO respondents reported something extra in their pay envelopes in 1998, and their number has grown every year since 1990, when only 37.5 percent received incentive pay.

The trend is in line with the 72 percent of American companies that currently offer at least one type of variable pay to employees. Bonuses as a percent of total pay for this year’s respondents registered 13 percent. While down slightly from last year’s high of 14.2 percent, PROMO readers clearly enjoy add-on incentives that consistently exceed the national average, which for 1998 was 8 percent.

Bolstered by these circumstances, respondents were bullish about their future prospects, anticipating another record salary increase of 12.5 percent in 1999. Likewise, they projected that they would see bonus percentage rise back to ’97 levels this year. (see chart II).

Field of dreams There are good reasons those prognostications might come true. In addition to the overall shortage of professionals, the demand for employees with multiple skill sets in the age of technology is having a profound effect on human resource needs. “It’s a very tight labor market owing to the lack of qualified candidates,” says partner Lawrence Levine of New York City-based recruiting firm Trebor Weldon Lawrence.

The rapid integration of a variety of disciplines – especially those relating to the Internet or new media – are further expanding the multiple skills needed to succeed in today’s marketing and promotion departments, according to Levine.

“Companies and agencies are looking for thinking and entrepreneurial skills that are the most difficult to find. Employers want self-starters who can help the company prosper,” says Karl Heine, a principal at Creative Search & Management in Stamford, CT.

But companies cannot afford to be too picky in a market where the prospects have the upper hand. “Job-seekers are taking advantage of the robust market to pick and choose among potential employers,” says Levine. Prospects are more specific about their wants and needs. “For those with the right qualifications, the current economy has given rise to a field of dreams for opportunities,” he adds.

The Hewitt Report shows the tight labor market is influencing pay in a number of hot job areas. Demand is outpacing supply in the much publicized information technology area, but also other “hot spots” in the job market such as sales and marketing. In fact, sign-on bonuses were the most common tool used to attract marketers. For someone just earning an MBA, starting salary offers average $61,170, according to the National Association of Colleges and Employers 1999 Job Outlook Survey.

The result is a sea change in salaries among those responding to this year’s survey. Median compensation for marketers across all segments was $92,000, including bonus and incentives. (The median is the level at which half the respondents report higher, and the other half lower compensation.)

Among senior management that included presidents, chief operating officers, and executive vice presidents, total median compensation was $115,000. Among middle managers, total median compensation was $79,970 (see chart III).

Company size is a key determinant of salary. Large companies with more than 1,000 employees added significantly to compensation levels, a pattern repeatedly played out in other national studies. Median compensation for middle managers in large companies indexed 20 percent higher versus those in medium-sized (less than 1,000 employees) and small (under 100) companies. The median remuneration of senior management in large companies was $175,000 versus $100,000 at smaller concerns.

For the first time in PROMO’s 10 years of salary surveys, agency middle managers topped their client-side counterparts with median compensation of $90,000, compared with $87,000 for brand managers. Mid-level execs at supplier and marketing services firms, meanwhile, registered in the low-70K range (see chart IV).

Regional disparities Paychecks for the same jobs varied by region, with the Northeast indexing 6.8 percent higher than the $80,000 median salary of all those responding, followed by the Midwest at even money, and the South and West at 3 percent and 10 percent below the median, respectively.

While these pay differentials reflect broad geographical areas employed in PROMO’s survey, the reality is that employees’ salaries can, and do, differ dramatically depending on locale. According to a just-released study by human resource strategy consultants William H. Mercer, Inc., a salary that averages $50,000 nationally would be 16.4 percent more, or $58,200, in New York City, but nearly 17 percent less, or $41,750, in Brownsville, TX. In contrast, salaries in cities such as Houston, Kansas City, and Fort Wayne conform more closely to the national average.

The higher the salary, however, the less sharply it will vary by city. In Boston, a salary that averages $50,000 nationally would average about 8 percent more, or $54,050. An $80,000 salary, on the other hand, would be $84,320 in Boston or only about 5 percent more than the national norm, according to Mercer’s 1999 study.

Regardless of where you work or in what type of business, every company is feeling the red-hot job market pushing up compensation levels. Says Creative Search & Management’s Heine, “There are simply not enough of the right people to go around.”

Buoyed by an economic expansion that’s lasted for eight years, promo respondents reported overall job satisfaction up 20 percent over last year, with half of them saying they are “very satisfied” in their jobs.

More than a third (34.2%) felt “more secure” about their jobs, with almost three-quarters (73.0%) indicating that they expected to be working for the same company a year from now. Still, there are job dissatisfaction undercurrents in many of the same industry segments that have been observed in previous year’s surveys.

Package goods marketers registered lingering concerns over personal growth, with two-thirds or more of those working in food (66.7%), health and beauty care (70%), and general merchandise/non-food (78.2%) responding that their companies support their career goals only “somewhat” or “not at all.”

Two-thirds of financial services marketers (68.7%) and almost eight out of 10 (78.2%) in entertainment marketing said the same thing.

This is in stark contrast to over half (53.3%) of consumer services managers and three-quarters (76.2%) of executives in the communications industry who gave their companies “top box” scores. And in another positive shift, respondents working in consumer durables registered a 35 percent increase versus a year ago to 42.4 percent saying their companies were doing “very well” in supporting their careers.

Train and retain Apparently, there are some things that money just can’t buy. The rapidly changing nature of skills needed to compete is increasing the importance that employees place on training and development.

“Job seekers talk about the need for stimulating and challenging work, not simply the need for change,” says Heine.

Job security and money are no longer the only prerequisites to job satisfaction. American workers who receive em-ployer-sponsored training are more satisfied than the average employee, according to a study commissioned last year by Development Dimensions International and Training magazine. Findings of the nationwide survey of workers demonstrated the value of training in attracting and retaining employees in view of the competition for talent in a full-employment economy and the growing need for continuously updated skills.

“The survey shows that employees are hungry for more training, with eight out of 10 saying it would be ‘important’ or ‘very important’ in keeping them as employees if their employers offered more and better training,” says DDI’s senior vp of marketing Richard Wellins.

Training respondents desired most included uses of new technology and communications skills for working with other people. The study revealed that 24 percent of workers who were not receiving training planned to change employers within the next year, compared to 14 percent of those who do.

“Agencies have been quicker to embrace technology solutions of all types for marketing and promotion, and it’s been accompanied by a steep learning curve,” notes headhunter Levine.

Indeed, more than two-thirds of respondents at promotion agencies and half in marketing services supplier companies reported their employers are doing “very well” in recognizing and facilitating their career goals, in part the result of opportunities created by the Internet.

By comparison, barely three in ten (28.2%) client company executives gave their employers the same vote of confidence.

The Cybercorp Internet time is measured in dog years, so they say. Virtually everyone is connected to their company’s intranet: Almost nine out of 10 (88.9%) of survey participants in agencies and suppliers and an equal number (86.5%) of client company respondents are plugged in. This represents connectivity increases of 17.2 percent and 8 percent respectively since PROMO first surveyed readers about intranet usage in 1997.

More significant is how – in two short years – their intranets and the Internet have changed the way they work and communicate. For starters, almost three-quarters (72.6%) of respondents now have their e-mail addresses printed on their business cards versus less than a third (29.7%) of those surveyed in 1997. An equal number (71.2%) reported they have access to the Internet now, whereas less than four in 10 (37.5%) reported the connection two years ago (see chart V).

PROMO’s respondents are heavy users of their intranets. While messaging to internal associates has remained essentially the same (82% in ’99 vs. 88.6% in ’97), they reported dramatic increases in messaging to other companies and to remote associates (see chart VI).

As anyone who uses a personal computer at work can attest, e-mail has moved right alongside the telephone and fax as the primary means of business communications in North America. Last year 766 billion e-mail messages were sent in the U.S. compared to only 107 billion pieces of U.S. mail delivered, according to the online business resource Marketer .

For the majority who are connected to the Internet, three quarters (74.8%) “always” or “almost always” use it to gather research and information, followed by communications (68.2%), and to a lesser extent education (45.8%), and sales and marketing (38.3%). All uses were up from 1997 except for entertainment, which dropped almost 29 percent in reported usage (see chart VII).

Up next, the most expedient use of the networks is the conduct of business beyond text communications. Usage of intranets to review graphic designs and creative work almost doubled in the last two years, from 28.5 percent to 51 percent of respondents reporting they use it for this important application. Says president Jon Brown of Stamford, CT-based J.Brown/LMC Group, “Both internally and externally, network communication is the most significant change to the agency business in the past decade.”

The company sends creative materials over the Net to its clients for approvals via its Customer Retailer Consumer system, or CRCLinx. The system provides real-time feedback for logos, positioning and contacts in support of account- specific promotions.

“The real benefits of our ‘extended enterprise’ over the Net are at the strategic level,” notes Brown. Over the next year, the company plans substantial investments in building an ROI communications model that will include the ability to predict the sales volume impact of promotions for clients on an account-by-account basis, utilizing the thousands of data points accumulating in the system.

“It has made the process of distributing artwork for packaging and promotional materials to vendors for production faster and more economical,” says graphics designer Antonio Asevedo of Spitfire, Inc. The in-house design group for the distributor of Spitfire sparkplugs and Peak antifreeze has kept pace with the technological improvements of sending art files over the Internet. “The time and cost savings are significant,” underscores Asevedo.

“The ability to share national programs in advance with our clients’ sales forces makes a big difference in support by key retail accounts,” says Paul Ivans, president of Dugan Valva Contess Interactive in Morristown, NJ. The capability, which the company calls The Gallery, allows both clients and their respective field sales representatives to view and print out copies for approvals and presentations, if necessary.

The Gallery system lets DVCi clientsview password-protected sites, make comments, and provide approvals of creative work. “Clients really appreciate it because it makes their lives easier,” notes Ivans.

Having a public Web site has become de rigueur for most companies. By the end of 1999, eight of 10 respondents said that their companies will have an Internet presence, with almost two-thirds (63.2%) reporting that the site is already operational. Product and service information is by far the most prevalent service available to visitors according to 92.6 percent of respondents, followed closely by marketing and press materials available at 74.5 percent of the sites.

Client respondents reported that only three out of 10 sites (29.8%) have any current plans to be e-commerce enabled or otherwise provide the ability for order taking and fulfillment in 1999. Nevertheless, this situation probably will change as rapidly as will everything else Internet-related. Some analysts predict that more than half of mainstream U.S. companies are likely to sell their products or services via the Internet by the end of 2000.

Spending moderates again Less than three in 10 (26.9%) of client company respondents projected that consumer promotion spending will increase somewhat overall, with 60.3 percent saying that trade promotion spending would “stay the same” or “decrease somewhat.”

Managers in financial services and entertainment were equally divided that promotion spending would increase somewhat or sharply, with half saying so and the other half expecting it to stay the same or decrease somewhat.

The cautious spending forecast is most assuredly a reflection of the struggle companies underwent to show some profit growth last year, despite an economy that’s the envy of the rest of the world. All the while, economists project companies are in for more of the same in 1999.