I take issue with news editor Arthur Williams' contention that senior managers of the City of Prince George are underpaid (Aug. 4 editorial).
He presents a litany of the compensation of CEOs of Canada's top earning corporations and then of two medium-sized B.C. businesses to make his case. I infer that his observation that "rapidly rising compensation for senior managers in the private sector" may be unwarranted, and I concur with that conclusion but I disagree with the implication that this "reality" is a grave obstacle to the hiring and retention of senior staff in Canadian municipalities and the assertion that these roles are equivalent to senior management positions in the private sector.
These staff positions in municipalities face little of the business risk and market discipline imposed on business corporations. Revenues are not subject to the magnitude of the volatility of the marketplace and the success of the municipality in carrying out its mandates is rarely a predictor of the prospects of its continued existence. It is my impression that an outstanding senior municipal manager simply does not have the scope to make decisions that would result in outcomes vastly, measureably, better than a manager of average competence. Consequently, I conclude that a justifiable strategy in determining compensation is to offer only what it takes to attract a small number of external candidates, not a star candidate. Ensure that solid succession plans are in place so that there are in-house candidates for every senior position against whom external candidates can be compared.
The promotion of internal staff is good for morale and avoids the significant costs of relocation of out-of-town candidates. Entry level positions are much easier to fill and the unknown quantity poses much less of a risk than at a senior level.
Personally, I think executive compensation in the private sector is out of line with the value delivered to the shareholders in many cases. I have the feeling that the relationships between corporate board compensation committees is subject to the temptation of reciprocity albeit indirect, in which compensation consultants happily participate since they benefit directly from compensation inflation. The current nature of the process casts a bit of doubt on adherence to the concept of fiduciary responsibility to the shareholders.
Compensation should be a matter of supply and demand. Succession planning strikes me as the most economical way to influence supply, in both sectors. If managers in the public sector believe that they "have skills and experience which they could parlay into higher-paying jobs in the private sector," they should give it a go. If they have done their jobs well, there will be capable people behind them, ready to step into their shoes. But first have a chat with their counterparts in the pulp mills in town. "City of Prince George Corp" has approximately half the revenue of any of these three operations and I am pretty sure that the counterparts in that wealth creating sector are not making substantially more than what the tax-supported city managers are making.