A sincere question about CE pay

Written By: - Date published: 12:00 pm, October 13th, 2012 - 139 comments
Categories: public services, wages - Tags:

David Cunliffe is a courteous dude, so when he’s taking the Government to task for paying a guy $70k just to get the logo on his business cards changed, he’s very conscientious about making it clear that the guy in question, MoBIE CE David Smol, is a good dude and it’s not about him personally.

I have no pre-existing relationship with Mr Smol, and I almost certainly lack Cunliffe’s courtesy, so I’m just going to ask this, in all sincerity,:

What the fuck can David Smol possibly be doing to earn $589,999 per annum?

I mean, let’s assume he’s a hard-working 80 hours a week kind of guy, you’re still talking about $284 an hour or $8 for a two-minute potty break.

As Cunliffe points out, that’s 17 teachers’ worth of pay.  Assuming each teacher is in charge of 25-30 kids, David Smol is being paid the equivalent of teaching 468 children for a year.

It could also be 11 nurses, according to Cunliffe.  Let’s say every nurse either saves a life or helps bring a baby into the world just once a week.  Taking off 4 weeks’ leave, David Smol is being paid the equivalent of 572 lives saved / babies born, plus all the other good hard work nurses do in their daily jobs.

It’s equivalent to hiring one sex worker from an elite Wellington agency to fuck you 24 hours a day for 82 days straight.

Yes, my numbers are silly and probably woefully inaccurate (I’m sure I can hear nurses cackling at the notion of ever getting to take 4 weeks’ leave) but they serve to flesh out my point:  what the hell can a person be doing that’s worth $589,999 a year?

The usual defences of CE pay amount to “but they have a lot of experience” – I presume in some kind of secret military time-distortion facility which makes their “experience” more important than other people’s – or “but they have networks and relationship management skills” – i.e. we’re paying the old boys’ club to remain an old boys’ club – or some kind of “strategic leadership mumblemumble”.

What it always seems to boil down to – to me, as a raving lefty feminist hater of entrenched power systems – is that we have to pay people, and yes, predominantly older, whiter, maler people (though there are always exceptions), the big bucks to be leaders because otherwise they’ll feel unappreciated.

Don’t you wish that worked for your salary negotiations?

I honestly want to know.  What on Earth can David Smol – or anyone – really bring to the table that deserves that kind of pay?  Our own PM’s on a paltry $411k.  The median income (all sources) in NZ is around $29k.  Is David Smol – or any other state CE on the same kind of pay – worth six average people’s annual income more than the PM?

(And is the PM worth 14 average people in the first place?)

139 comments on “A sincere question about CE pay”

  1. prism 1

    David Cunliffe et al are making good points about the princely sums being paid to government heads. Private concerns, profit-making, the shareholders are supposed to have some control about this.

    But government, though the jobs are not permanent and settled as previously, (an old USA joke about a non-performing rocket Civil Servant – it won’t work, can’t be fired), the contract system definitely needs a different pay level at the upper echelons. Not just increasing last year’s salary, already too high, compared to the hard working taxpayers down below from those situated on Plutocracy Heights.

    My comment at number 13 on Open Mike 13/10 is relevant here. I think it would be a good idea.
    Anybody agree?

  2. AsleepWhileWalking 2

    That’s a lot of fucking.

  3. Kotahi Tāne Huna 3

    Hmm. That many people are low paid is an argument for lifting their wages, not slashing someone else’s.

    On the other hand, all MoBIE has done is produce glossy plans with no substance, so the true value of their work is precisely zero to date.

    • QoT 3.1

      That many people are low paid is an argument for lifting their wages, not slashing someone else’s.

      Of course, but the comparison serves to illustrate how we currently value those roles. And I can’t really get teary-eyed over the notion of “slashing” the pay of someone on 590k, it gives me Susan Wood “waaaaa I’m only on 350k to read a teleprompter I had to go home and yell at my children” flashbacks.

      • vto 3.1.1

        “That many people are low paid is an argument for lifting their wages, not slashing someone else’s.”

        In fact however it is worse than that because earlier in this week, the same one this prick got his payrise, these people who are low paid didn’t just stay still in their pay rates, their pay rates were cut !!!!!!!

        To borrow your manner qot, it is fucking fucked and obscene and makes my red-blood boil. Pricks and arseholes.

        They deserve to go the gallows for increasing the pay of the highly paid and lowering the pay of the lowly paid.

        Absolute wankers and c$#ts.

      • Jokerman 3.1.3

        🙂

    • weka 3.2

      “That many people are low paid is an argument for lifting their wages, not slashing someone else’s”

      Except where someone else’s pay is grossly over-exaggerated relative to what they do. You can raise the minimum wage, or the salary of nurses and teachers and CEs are still paid too much. Government ones, that’s money that could be way better spend elsewhere – like raising wages at the bottom end.

      The thing that worries me is that the govt CEs who are on these high salaries (and bonuses) obviously feel ok about it. If that’s the case they are woefully ignorant of the plight of the nation and people who are struggling, and lack any sense of fairness that is meant to be a core NZ value. Surely that means they’re not the right person for the job?

      • Draco T Bastard 3.2.1

        The thing that worries me is that the govt CEs who are on these high salaries (and bonuses) obviously feel ok about it. If that’s the case they are woefully ignorant of the plight of the nation and people who are struggling, and lack any sense of fairness that is meant to be a core NZ value. Surely that means they’re not the right person for the job?

        Yep, that’s what I’ve been thinking lately. If they think that they’re worth that much then they can get another job. Public servants, including the PM and CEOs of state enterprises, should be capped at $250k.

        • Colonial Viper 3.2.1.1

          Nah mate 89% income tax at 10x the median wage = $290,000 pa. It effectively caps income at or around that level. Someone earning $1M pa effectively only has $78,100 extra take home pay.

          And that applies to all jobs, public sector and private sector. Level playing field.

  4. Maybe its because the mission of this government is to facilitate the corporate takeover of NZ and wealth transfer to the upper echelons. Salary is crude way of doing it. Better to offer share options or bonuses that can be hidden from public scrutiny.

  5. Bill 5

    Hmm. How many $$$$ to flush you conscience down the toilet and be the zombie CEO of Heartless, Fuckwits and Bastards Corp? There’s a market based on that tacit understanding. It was created in and by the private sphere. And, of course, there are a lot of zombies more than willing to take up positions involving moral bankruptcy for far less. But the pay bar was set. And then the public sector head pays had to be seen to keep up with those in the private sphere so the morally bankrupt could be enticed into the public sector to infect it with spread their superior corporate culture.

    Cost: $589 999 (so far)

  6. Tiger Mountain 6

    Yeah OTT salary. It is part of the state superstructure that maintains capitalism and upward transfer of wealth.

    The only people that seem to get regular pay rises these days are union members (generally miserable 2% to 5% type rises but rises nonetheless) and CEOs. And due to actual useful jobs being constantly ‘disestablished’ union density is likely to drop even further.

    Soon there will only be precarious employment, service workers, aged care, dog walkers and lawn mowing rounds left. Degrees are an expensive dead end with no job, or an unpaid internship, for a lot of kids too now that uni is just bums on seats. More kiwis will likely be semi destitute living with their parents, flatting at 50 or calling a cardboard box home.

    So by all means stick it to the likes of D. Smol who gets the equivalent of over half a lotto win every year.

  7. prism 7

    TM
    To me it seems that uni education is used by the government as a replacement for other more or equally important goals. The idea that all we need is lots of educated people and then enterprise and revenue will zoom is an old-fashioned pipe dream, and hardly anyone smokes pipes these days do they.

  8. Draco T Bastard 8

    what the hell can a person be doing that’s worth $589,999 a year?

    Nothing. It is physically impossible to do so much work as to be worth that much.

    (And is the PM worth 14 average people in the first place?)

    Nope.

    • Just for the record, I work with a lot CE’s in my professional life and they work fucking hard. I frequently get emails from them sent at 2:00am Monday mornings and as well as their job often they are often members of boards and other professional bodies in an unpaid voluntary capacity.

      I am certainly not justifying the pay (I, like most of us, am not in the position to do so) but I am just trying to dispel the myth, whether it is held here or not, that being a CE is some sort of cushy desk job.

      • QoT 8.1.1

        Cleaners are still at work at 2am vacuuming the CE’s office. IT people can often be in the office on weekends till 3am making sure the CE’s computer – and the HR systems, and the phone systems, and the payroll, and the record-keeping – are working properly. Advisors and senior advisors can work ridiculous hours.

        It may not be a “cushy desk job” but I’m still yet to hear exactly what it is CEs do that provides so much extra value to their roles that they’re worth 17 teachers or however many of their far-worse-paid underlings.

        • lprent 8.1.1.1

          IT people can often be in the office on weekends till 3am making sure the CE’s computer – and the HR systems, and the phone systems, and the payroll, and the record-keeping – are working properly

          And if you are like me then you often work at 0200 or at 0600 and over weekends. That is what home computer systems are for. I had to go to work today, but that was because the build system I’m testing is on the inside of the security perimeter and completely inaccessible from the outside. e-mail systems usually are not.

          I’m forever burning the candle at one end of the other. It also helps to only need about 5 hours sleep.

          Doesn’t mean that I spend more than 12 hours day working. Usually I only spend 10 and a lot less of most weekends.

          • Kotahi Tāne Huna 8.1.1.1.1

            Anything more than forty hours per week steals food off another’s table. It only takes four people working fifty hours a week to steal one whole full-time job.

            • TheContrarian 8.1.1.1.1.1

              “Anything more than forty hours per week steals food off another’s table. It only takes four people working fifty hours a week to steal one whole full-time job.”

              If I am reading you right then it seems you are saying I shouldn’t work anything more than 40 hours per week because, in doing so, I take work from someone else.

              I only get paid for 40 hours but I work much more than that. I don’t do it for money, I enjoy my work and take it seriously. Are you suggesting my desire to work and do well is a detriment to others so I shouldn’t work as hard as I do?

              • Colonial Viper

                Until the unemployment problem is solved 30 hours a week is all that should be worked.

                • Solving unemployment by working less.

                  Interesting perspective….

                  • felix

                    What’s wrong with sharing?

                    • Colonial Viper

                      it will also mean that parents get more time with children and family members. Lots of good things.

                    • Frankly, this whole idea that by me working more than 40 hours means I am stealing work from someone else therefore I shouldn’t do so is bizarre in the extreme.

                    • Draco T Bastard

                      Well, if you and everyone else who’s working far more than you need to are quite willing to pay welfare instead of wages then do stop whinging about paying it.

                    • “Well, if you and everyone else who’s working far more than you need to are quite willing to pay welfare instead of wages then do stop whinging about paying it.”

                      A) I am not working “more than you need to” I am working as much as I need to do. I decide, not you Draco, how much work to do.

                      B) I have never, not once, complained about paying taxes into the welfare system so you can stow that bullshit right now Draco. I have even advocated raising taxes in order to address inequality in NZ. Do you feel shame when you invent someone elses point of view and apply it to them?

                    • Draco T Bastard

                      I decide, not you Draco, how much work to do.

                      Gee, and here’s me thinking that it would be decided by how much work needed to be done.

                      Do you feel shame when you invent someone elses point of view and apply it to them?

                      The point of me putting in “everyone else” was to get across the point that I wasn’t talking solely about you. I could still probably have phrased it better so I apologise for implying that you’re a selfish arsehole.

              • Kotahi Tāne Huna

                “I only get paid for forty hours but I work much more than that.”

                And by doing so, you are preventing someone else getting paid to do that work. Doing so for love of the job is one thing, but many people who work extra unpaid hours are doing so because of employer “expectations”, or in some cases, overt bullying. In this latter category I suspect low-paid women are over-represented.

                • “And by doing so, you are preventing someone else getting paid to do that work. ”

                  Completely untrue. I drive my own output and run my own department as it were. If I only worked 20 hours a week then only 20 hours work gets done. I have management over my role and decide how much needs to be done. I work my own projects and decide how to do so. I don’t work more than 40 hours because I need to finish things, I work more than 40 hours because I enjoy it, not because things need doing. It’s not something that someone else could just carry on with, like a repetitive task, they are my own projects.

                  • felix

                    And to be fair, quite a few of those hours are spent trooling the standard…

                  • Kotahi Tāne Huna

                    “I work more than 40 hours because I enjoy it…”

                    Choice! Perhaps you missed the part where I explained this isn’t about you?

                    • I didn’t miss it, I am using myself as an example of why your comment that working extra hours means a job is being stolen from someone else is ass-backward as fuck.

                    • Kotahi Tāne Huna

                      That’s what I mean -you’ve got an anecdote about your own situation and that’s it.

                    • Because it relevant you fool. You said: “And by doing so, you are preventing someone else getting paid to do that work.”

                      Which is untrue. And is untrue everyone I know. My brother in law for example is recruitment agent. He frequently works overtime to drive his own business. In doing so he isn’t taking someones job – it’s his job.

                    • Kotahi Tāne Huna

                      Oh look another anecdote:

                      “My brother-in-law and I both do this so it must be the right thing. And since we have a choice about it and we enjoy our work, that must be true of everyone else too.”

                      Flawed argument much?

                      “His own business” – nothing wrong with that at all I’m talking about employees, not employers.

                    • Yeah an anecdote. So what?
                      Your premise ““And by doing so, you are preventing someone else getting paid to do that work.”” is false.

                      Then you have the gall to tell me I have a flawed argument? Fool.

                      “I’m talking about employees”
                      He is an employee of the recruitment company.

                      Your premise is false.

                    • Kotahi Tāne Huna

                      Yes, I know you think I’m wrong. Saying so over and over again is not an argument.

                      Since you are so enamoured of anecdotes here’s a counter-example: that of a bar manager who is paid for forty hours a week. She regularly does unpaid hours, because on the one occasion she knocked off on time, her employer abused her in front of customers and other staff, and demanded she “get back behind the bar until I say you can go.”

                      Perhaps if you call me some names that will all go away. On Planet Contrarian.

                    • You specifically told me, in relation to my working hours “And by doing so, you are preventing someone else getting paid to do that work.”

                      Your story about the barmaid is not relevant. Sure, that happens but your blanket assertions are false.

                    • Kotahi Tāne Huna

                      In your mind. Two others (three including me) have commented in this thread who appear to agree with my personal opinion. Better luck next time.

                    • Truth isn’t determined by popular opinion.

                      “And by doing so, you are preventing someone else getting paid to do that work.”

                      No, I’m not.

                      Better luck next time.

                    • Kotahi Tāne Huna

                      Oh, sorry, did you miss the part where I explained this isn’t about you again?

      • weka 8.1.2

        Actually I think it’s a false argument. The issue isn’t whether they have a cushy job or not (although I’m not going to accept that there are none with a cushy job), and to bring that up just confuses the real issue, which is that no matter how hard someone works, they’re not worth that much money and neither is their work. And further, lots of people work very hard and do voluntary work and don’t get paid exorbitant salaries.

        Speaking of worth, I agree with QoT’s argument that the rationales for high salaries are vague and not particularly convincing. Personally, I think that people who risk their lives routinely deserve a higher pay – there is a direct relationship between being willing to lose one’s life and being rewarded with a certain lifestyle/standard of living because of that. Likewise, for people that give up other aspects of life, like family or socialising, and work long hours, over the long term, esp where that work is in service to others, perhaps deserve higher pay. But there is still a limit beyond which it’s just greed and extravagance.

        And it’s still hard to see how some people deserve lots of money for working really hard, but others who work equally hard somehow don’t deserve the same recompense. Esp when the people in the former group are running a govt department that affects the lives and wellbeing of the latter group.

      • tc 8.1.3

        You’ll find sending emails at odd hours is an old trick, using trigger based rules, to make it look like they were burning the midnight oil. The only oil they are burning is others.

      • Colonial Viper 8.1.4

        Just for the record, I work with a lot CE’s in my professional life and they work fucking hard.

        Yeah like the guy milking cows at 4am doesn’t work just as hard. This is just justification for greed and fulfilling a “Masters of the Universe” sized ego.

      • tc 8.1.5

        I’ve also worked with many C level people over the decades and whilst they used to work real hard back in the day they mostly delegate that now and specialise in wrapping themselves in a governance BS cocoon that ensures they are overpaid, take no responsibility and isolate themselves from the real world most folk live in.

        Another example is the CEO of Oz post, he’s paid multiples more than similar CEOs of larger businesses that operate globally without monopoly markets to exploit. But then he was an ex C of NAB so another good old boy so well played sir, bravo.

      • Draco T Bastard 8.1.6

        Just for the record, I work with a lot CE’s in my professional life and they work fucking hard.

        I didn’t say that they didn’t. What I said was that they don’t, and can’t, produce that amount of value. Administration is necessary but it’s not where the wealth is created.

        I frequently get emails from them sent at 2:00am Monday mornings

        So? Do you think I should have sympathy for their inability to time manage? Or perhaps it’s the SMTP server that sent it late? Or perhaps they’re actually really good at time management?

      • RedLogix 8.1.7

        Well yes it is a cushy desk job actually.

        Sure the hours can be fairly long, but that’s because much of their normal business hours are taken up in meetings where there is a fair bit of downtime. (Yes meetings can be tedious and you have to pay attention but mostly it’s about being on top of the information flow. Besides the lunches are nice.) The downside is that to get all the paperwork done a fair bit of it happens in evenings and weekends.

        But trust me; they do not have that on their own. Personally the reason why I comment here less often these days are the 50-60 hour weeks I’m normally working … as are many other salaried people at my level are doing. In fact many working New Zealanders are slowly but surely burning themselves out working stupid long hours. I know I am.

        All the same it’s still a desk our CEO drives. He’s not to found being dragged out of bed at 2am for his 20th callout for the week, or knee deep in freezing water in a muddy ditch at the end of a 20 hour day to fix an essential service, or any of hundreds of dirty, difficult, stressful or risky jobs that NEED to be done to keep life going for all of us.

        By contrast if the CEO takes a month off … everything more or less carries on as usual.

        Now I’m not arguing that they do nothing. A good CEO is fundamentally a good thing, and they can bring real value to an organisation in terms of ethics, values and leadership. And all the unsolvable shit ultimately lands on their desk … a consequence of the strict hierarchal corporate model which concentrates too much power into their hands.

        Along with their absurd salaries this insulates them from the people within their organisations. Far too many CEO’s really have no idea what their people are doing and how they contribute. Sure they give might make ritual soothing noises at staff meetings … but in reality they are isolated and as a result they become ineffective.

  9. Rich 9

    The US president makes USD400k, or NZD490k, approx. The VP makes USD231k = NZD282k.

    The VPs salary forms a cap on all other federal salaries, so nobody on the US government dollar can make more than 280k.

    We should have a similar rule.

    • Colonial Viper 9.1

      89% income tax bracket starting at 10x the median income i.e. applies to every dollar earned over $290,000 pa.

  10. Ad 10

    Let me try a couple of points on you QoT.

    MoBIE is the most ginormous entity now, and in the right hands with the right policy mix could turn a whole lot of this country around. Perhaps the pay seems high because its policy mix is pretty light. We dont agree with it and mix thatannoyance in withannoyanceabout pay.

    But then, just as a small example, what if there’s a huge oil strike in the southern ocean, or there’s a policy to e the film capital of Asia and the southern hemisphere, and the whole country gets richer as a result. Does David Smol’s pay feel more worth it? I think it would.

    Same for Primary Industries. Or if indeed there becomes a Ministry of Infrastructure. Or Ministry of Cities that included a massive nation-building programme.

    Surely those bureaucratic leaders would be paid according to their results.

    Secondly the public CE pay rises follow significant amalgamations. They get rewarded for increases in reporting staff, in the scale and number of deliverables, and of course for managing the increase in risk they now present to the government.

    I am not saying I like that level of pay for public servants. But I can imagine circumstances in which they change this country forever and for good.

    If Smol turns out to was effective as Sutch, perhaps he is worth it.

    • QoT 10.1

      Is David Smol creating the oil? Is David Smol setting the policy about our film industry, or merely providing the leadership to implement the policy of politicians?

      And even if he is the magic bullet to exploit those things for maximum value, is he still worth $590k? How about any other government CE who sure, may very well be the person on the ground when there’s an opportunity, but doesn’t create the opportunity, doesn’t necessarily come up with the ideas to take advantage of them … what is he bringing that’s worth the equivalent of 10 policy advisors in the 50-60k pay bracket? Or 6-7 senior analysts on 90-100k?

    • Colonial Viper 10.2

      I am not saying I like that level of pay for public servants. But I can imagine circumstances in which they change this country forever and for good.

      Oh FFS

      this country used to have a strong public service culture. PUBLIC SERVICE. Does anyone around here still know what that means? It means you get paid a decent amount, not that much but enough to be comfortable, and you do your job to the utmost in order to SERVE NEW ZEALAND and your fellow NEW ZEALANDERS.

      Now its been totally contaminated by this bullshit neoliberal thinking.

      Let me ask you – if they fail, do they have to give all the money back???

      • Ad 10.2.1

        The era of unadulterated public servant culture went out about 2 decades ago. We may want it to come back, but it won’t.

        • Colonial Viper 10.2.1.1

          Disagree. Society has often swung between an emphasis on privateers and profit at any cost, to more of a mindset of service to the crown and to the public.

          • Ad 10.2.1.1.1

            Not in the last 30 years. And not in the next. Otherwise, it would be great.

            • Colonial Viper 10.2.1.1.1.1

              2042 is going to look a hell of a lot different to 2012. And agreed, it might not be all good.

            • RedLogix 10.2.1.1.1.2

              OK so if think that it’s ok for the public sector to abandon any pretence to civil society then why should the private sector bother either?

              Indeed why bother with ethics, governance and political debate at all? Just take what you can get away with …. wherever you can find it.

              • muzza

                Thats what exists already….

                When the “top job” in the country is far from being the best paid, it becomes rather telling on who really pulls the strings..

                Would that be the elected representatives, the unelected corporate “heads” we now have all over the public sector, or the people behind all of them, who have the power to have made it this way!

    • weka 10.3

      “But then, just as a small example, what if there’s a huge oil strike in the southern ocean, or there’s a policy to e the film capital of Asia and the southern hemisphere, and the whole country gets richer as a result. Does David Smol’s pay feel more worth it? I think it would.”

      NZ doesn’t need to be richer. We have enough wealth here already. What we are lacking is people in leadership roles who understand that resources are finite, and that real wealth comes from the wellbeing of the people and communities.

      • Ad 10.3.1

        If so you don’t really need IRD, MoBIE, much of MFAT or indeed Treasury. Nice thought but bad luck.

        • Colonial Viper 10.3.1.1

          You’ll still need those things, and others, in a steady state economy.

        • weka 10.3.1.2

          Not following you there Ad. How are those departments inherently incompatible with what I said?

          • Ad 10.3.1.2.1

            Those are the Departments that encourage wealth to grow, or bring it into the state, so that it is redistributed by the state in the form of services. If as you say we have enough wealth already, you won’t need any of this redistributive nonsense.

            • Colonial Viper 10.3.1.2.1.1

              But how do you combat the massive upward redistribution of wealth extraction from workers, which is the fundamental basis of capitalism?

            • weka 10.3.1.2.1.2

              Of course wealth needs distribution. I’m just saying that we should do that with community wellbeing in mind as the primary focus rather than using corporate models based on perpetual growth and in denial of finite resources, and as cv points out models that give most of the wealth to very few. It’s about fairness.
               
              There is no reason that I can see that any of those departments couldn’t function for the good of the people instead of the good of the capitalist economy. So you still haven’t answered my question.

    • Poission 10.4

      But then, just as a small example, what if there’s a huge oil strike in the southern ocean, or there’s a policy to e the film capital of Asia and the southern hemisphere, and the whole country gets richer as a result. Does David Smol’s pay feel more worth it? I think it would.

      For somewhat less you could get the head of NASA,JPL,or 5 heads of the Russian space programme.and I suppose that is rocket science.

  11. Ad 11

    Well on the first point as to whether they are setting policy or providing the leadership, of coursethey do both. You would know that politicians are less than 1% of policy formation or execution. Over 99% of any government is run by public servants.

    On the second point, try this as part of a evaluative matrix for pay: how much do they transform New Zealand. That would get you some of the multiplier you are seeking.

    • Colonial Viper 11.1

      On the second point, try this as part of a evaluative matrix for pay: how much do they transform New Zealand. That would get you some of the multiplier you are seeking.

      ***facepalm***

    • tc 11.2

      You missed out that they are quality people, have an overarching strategy, excell at putting ticks in boxes and always value the stakeholders input in deriving a mutually beneficial outcome.

      Typical corporate double speak behind most events which don’t stand the cold harsh light of a rational day, these folk risk nothing except their relationships with the other boys club network members.

      I’m willing to be overpaid playing with someone else’s money to copy and paste from other policies already written aound the globe but I am not part of that club so will never know those lofty heights.

    • Draco T Bastard 11.3

      What do you think would happen if Prism’s idea was followed?

      Position is advertised, people put their tender in showing their experience and price, people vote on it. The person with the winning vote gets the job.

      How much do you reckon the job would be worth?

      See, I’m reasonably certain that it would probably be far less than $500k. In fact, I’d bet that it would be less than $200k and the position would be filled and done well. I suspect that if the people actually paying executives salaries had a say those pay packets would nose dive quite drastically. You’ll note though that those people don’t have say and we get all sorts of justifications about why those salaries are so high. Justifications that don’t stand up to the light of day.

    • QoT 11.4

      how much do they transform New Zealand.

      You may disagree, but I personally don’t think there’s a huge role for public servants in “transforming New Zealand” – at least, not in any kind of way that deserves this level of pay. Because public servants shouldn’t set policy. They shouldn’t set the direction NZ goes in, or make decisions about how NZ takes up opportunities – that’s what we elect our House of Representatives for.

      I’m sure very senior managers can play a transforming (ugh, hate that jargon, though) role in their own organisations, given the right circumstances, I’m sure they can lead their people well and keep them motivated as our current government demands more and more cuts … but that’s still nothing that requires such rarefied talents that a person needs to be paid more than half a mil to do it.

      And as I’ve said elsewhere, I know that there are people who are actually passionate about public service, who want to make organisations effective, who would do it basically for the sense of accomplishment and joy of knowing they did a good job.

      • Colonial Viper 11.4.1

        You may disagree, but I personally don’t think there’s a huge role for public servants in “transforming New Zealand” – at least, not in any kind of way that deserves this level of pay. Because public servants shouldn’t set policy. They shouldn’t set the direction NZ goes in, or make decisions about how NZ takes up opportunities – that’s what we elect our House of Representatives for.

        Nope, tend to disagree here. For starters how policy is implemented and how regulation is interpreted and enforced is very much in the hands of civil servants. Ministerial interference in the routine functions of the civil service is usually very bad news and avoided where at all possible.

        Not entirely sure how you define it, but IMO the House of Representatives doesn’t make many decisions about “how NZ takes up opportunities” e.g. it wasn’t up to the House of Representatives to decide on the Crafar farms sale or incentives for Peter Jackson’s the Hobbit.

        • QoT 11.4.1.1

          Of course they don’t make every single decision, but it should be the policy of the elected government, and the legislation they pass, which dictates how and why decisions are made at lower levels.

          By the same token it doesn’t actually matter what CEs do, because the real decisions and work could be being done at far lower levels of their organisations.

          • Colonial Viper 11.4.1.1.1

            it should be the policy of the elected government, and the legislation they pass, which dictates how and why decisions are made at lower levels.

            This is NOT how the public sector actually works to implement legislation and define/interpret regulation.

            • Draco T Bastard 11.4.1.1.1.1

              The politicians set the laws, the public servants then interpret and implement those rules. Anything else isn’t acceptable.

              Of course, the public servants are supposed to give advice to the elected officials who are then supposed to listen and make policies that make sense. Unfortunately, some MPs seems to think that they’re their to dictate to the public servants and to the public.

          • Matthew Whitehead 11.4.1.1.2

            Actually it really is only the legislation they pass that determines it. Unless the law requires a certain action or mandates a certain goal, then public servants, including CEs, are not constrained.

            Of course there’s usually some desire to help the government of the day in its goals in most organisations, and deal with requests from ministers and MPs. This comes about through an odd combination of idealism and the ability of the government to control the budget of various parts of the public service being a very effective lever on CEs.

  12. tc 12

    Good post QOT, when was the last time a C level person actually fronted up and took responsibility for an issue and fell on their sword except in a staged manner only to be well rewarded and given another position equally overpaid.

    Tony Hayward of BP being a widely known example and I’d wager Doug McKay will never take any responsibility for the cock ups at Auckland council he effectively engineered as he came from the transition authority. Follow the trail of debris Mark Ford leaves behind him also, he must be getting about 1.5m of ratepayer/ taxpayer money by now.

    Ah those quality people with experience that ‘work through people’ which was a laughable term I read years ago describing another old boy in Greg Muir, wasn’t he a joy to watch at Hanover, telecom, Warehouse and then pumpkin patch. He meet his match against the Dark Vader of that caper whilst at the Vector trough in the shape of Stiassney.

    • Ad 12.1

      People love having a crack at Doug Mackay and his pay. So let’s go there. He has none of the corporate perks or reward of an equivalent private sector CE, but has spent the last 2 years bringing together an organisation with similar asset base to Fonterra. Unlike the CE of Fonterra, he is subject to full public scrutiny, in the media most days, works like a bastard, and you know what actually achieved something for Auckland that has never been achieved before.

      Plenty say they coulda, or woulda, or shoulda, and he should work for halfthe price, and why doesn’t he pick up my phone and personally pick up my rubbish yadayadayada so says talkback radio…

      Few in the country could have done what he has done, few applied because the pay was a massive step down from the private sector, very few in the world have done it.

      He has.

      He actually earns it.

      And yes, he is well on the way to transforming Auckland, which is 1/3 of New Zealand.

      • QoT 12.1.1

        Few in the country could have done what he has done, few applied because the pay was a massive step down from the private sector, very few in the world have done it.

        Was that really the reason so few applied, or might it have had something to do with the fact that most people could see it was going to be a completely thankless job due to how Rodney Hide’s cowboys had decided to set the supercity up in the first place?

        “Hey people, roll up, roll up, it’s not just a merger, it’s a massive unprecedented local government merger, and by the way half the strategic decisions were made by people who were assuming John Banks would be running the show and selling everything off, that didn’t turn out so well, your workforce is spread across the geographica area of Los Angeles because it was both financially and politically impossible to consolidate even the senior staff into one place, and let’s not even discuss having to amalgamate multiple completely-different computer infrastructures and figuring out how to make all the old bylaws line up, plus all the usual fun times of balancing public opinion with the demands of politicians at central, regional and local levels, and did we mention that we sold this to the people of Auckland as a panacea to all their ills? Have a good one!”

        I mean, I’m the person lamenting the ridiculous salaries of CEs and there’s almost no amount of money you could pay me to deal with that shit.

      • Colonial Viper 12.1.2

        He has.

        He actually earns it.

        And yes, he is well on the way to transforming Auckland, which is 1/3 of New Zealand.

        You talk him up real good.

        How much money did he give back after the World Cup opening fuck up.

        • Ad 12.1.2.1

          Write to the mayor and ask, and pull back on the slimy insinuation if you want more than what you’d expect for that kind of question.

          • Colonial Viper 12.1.2.1.1

            You were saying something about high pay for high performance?

            That means pay gets refunded when performance is shit, right?

            Or is your system of top exec remuneration all pay and no accountability?

            • Ad 12.1.2.1.1.1

              You would be surprised, if you inquired, what percentage is at risk in the public sector.

              • Colonial Viper

                Rortney Hide set up the system to look after the top tier old boys network. Who of course want the high levels of pay you are pushing for.

              • What does that matter when nobody seems to consider real problems as a reason to dock someone’s pay?

                Regardless of whether the he has lost some pay: Should he have? If you don’t answer yes, I don’t see how you can argue that his pay should be higher in the first place.

      • lefty 12.1.3

        few applied because the pay was a massive step down from the private sector, very few in the world have done it.

        Few applied because anybody with any sense knows those jobs are reserved for the corporate troughers who are part of the old boys club.

        There were probably a few dozen people employed by the old councils who could have done as good, or a better, a job for a much smaller pay packet.

        And there are literally thousands of New Zealander managers in NGO’s and public sector positions who could do a better job than Mackay who seems to spend most of his time defending the incompetence of the boards and management of Auckland City’s various assets.

  13. captain hook 13

    these rates of pay have their origins in the mergers and aquisitions in the US in the 80’s where CEO’s realised that crummy lawyers were getting a whole careers worth of pay for about three months work.
    CEO’s began demanding compensation parity with the predators.
    so the short answer is that they dont do anything to deserve that amount of money but they can bullshit the owners, in this case the governmen tthat they are worth it when patently they are not.

  14. RedLogix 14

    I’ve pondered what I’ve wanted to say about this all day.

    I work for an organisation whose CEO pays himself very little change out of $400k and got a payrise this year more than some people in the organisation are paid in a whole year.

    It’s a frankly obscene salary for what is not a very onerous or skilled job. Yeah sure he has to attend a lot of tedious meetings and master a whole bunch of ‘management speak’ that he probably hates … but I’m damn sure that if the job was openly advertised (instead of getting a rubber stamp review every four years) there’d be queues of people perfectly capable and happy to do the job for half his pay.

    In other words his actual salary in no way reflects any ‘market’ reality. It simply reflects his power within the organisation.

    It would be very simple to implement a rule that simply stated; no C-level person is remunerated (that is total pay) more than four times the median income of their whole organisation. That’s pretty generous.

    • Colonial Viper 14.1

      Its the company’s board which made the decision, I take it.

      • RedLogix 14.1.1

        Yes … but the board depends on the CEO to get their agenda and pet projects progressed. Plus the assymmetry of information flow; it becomes a cosy arrangement that no-one wants to rock too hard.

        • Ad 14.1.1.1

          I hear the hard accuracy in your words. Hope you get to get out, or retire early with sufficient wellbeing to enjoy it.

    • QoT 14.2

      It would be very simple to implement a rule that simply stated; no C-level person is remunerated (that is total pay) more than four times the median income of their whole organisation.

      I like it. Especially tied to the median, because I think we know that if you made it the mean a lot of the senior management tiers would be in for a fun time just to skew that shit upwards.

  15. Bunji 15

    “but they have a lot of experience” – I presume in some kind of secret military time-distortion facility

    Gorgeous! Just lucky I wasn’t drinking while I read this….

    No public sector employee should be paid as much as the PM (they have the most responsibility of anybody in the country, even if the current one doesn’t want to take any of it…)

    And I would like to see a rule like they’ve proposed in France where no-one in a company can earn more than a multiple (10x or 15x) the lowest paid employee… Might up some of those lower wages…

    (Great question QoT)

    • Colonial Viper 15.1

      And I would like to see a rule like they’ve proposed in France where no-one in a company can earn more than a multiple (10x or 15x) the lowest paid employee… Might up some of those lower wages…

      In the Mondragon co-op, the ratio is normally 6.5 or thereabouts (depends on the specific operating unit).

      Hence if the lowest paid worker in the factory is on $30,000, the CEOs pay would be capped at $195,000.

      Not too rough is it. If the CEO wants a pay rise, he/she needs to give the workers a pay rise. Fair and square.

      • Ad 15.1.1

        If New Zealand honestly lived up to Mondragon I would be proud to live and work here. And be paid accordingly.

  16. Good post QoT.

    Auckland Council has issued a directive that all departmental budgets should save 3% next year. I am against arbitrary cuts but if it is going to happen then I think that anyone who is on a salary of over (say) $150k should have their wage frozen.

    We get sucked into this continuous contest where if we pay the CEO and his minions a bit more we will save more.

    It is not happening.

    Time for the cuts to be shared around.

    • muzza 16.1

      Time for the cuts to be shared around

      Unlikely – The corporate wrappers have been put in place, so the only cuts made will be as follows

      1: To whats left of the elected councils democratic control over running AKL
      2: To the numbers of staff at Auckland Council
      3: To the assets under control of council, for the benefit of AKL
      4: To the services which used to be included in the cost of your rates bill

    • Ad 16.2

      Well don’t complain when the good ones join the exodus to Australia, or Singapore, or Hong Kong or Rio.

      Compare the number of managers over $100k in Auckland public entities now to the number pre-amalgamation.

      • Colonial Viper 16.2.1

        You’re a sick little puppy.

        Pay is only 20% of what motivates a good public servant.

        Well don’t complain when the good ones join the exodus to Australia, or Singapore, or Hong Kong or Rio.

        We can’t match Australian, Singaporean or Hong Kong pay rates. If money is the real attractor to these people, they need to go.

        • Ad 16.2.1.1

          Different scale, same sucking noise whether you are a miner in Westport public servant inWellington, shareholder in the Waikato, or corporate lawyer in Auckland. Prepare to say goodbye to the grandchildren at the airport. Unwillingly, this goes for the whole QoT post.

          • Colonial Viper 16.2.1.1.1

            Tell the top 1% to fuck off then. We don’t need more disloyal money hungry bastards in this country.

            Prepare to say goodbye to the grandchildren at the airport.

            If you are serious about this then you will know that the key is increasing the median income, and ensuring that there is a surplus of jobs available in the $40K to $80K range.

            However it seems that you’re only interested in cheerleading for more money for the top 0.5%.

      • Draco T Bastard 16.2.2

        Well don’t complain when the good ones join the exodus to Australia, or Singapore, or Hong Kong or Rio.

        I certainly won’t. I’ll just look to hiring people just as good, if not better, who will do it for the lower pay rate. Not a problem, after all, you’re only talking a few thousand people out of 3 million possibles.

        • Ad 16.2.2.1

          Knock yourself out with that. Almost all of the good ones are taken or long since left.

          • Colonial Viper 16.2.2.1.1

            Explains why you’re still here shilling for higher pay for the top 0.5%

            Haven’t heard you say a damn thing about increasing the median wage.

            We need people who have faith in this country. It’s clear you don’t. Go overseas and get the pay you deserve mate.

            • Ad 16.2.2.1.1.1

              “almost all.” luckily.

              “Would just love more pay for them as well. But that’ not the focus of QoT’s entire post though is it?”

              Any time someone pulls patriotism or loyalty or faith or any other bullshit abstract nouns like hope or glory or peace or truth during a performance review, you know they are trying to screw you. ask any public servant who has been through a restructure.

              • Colonial Viper

                Any time someone pulls patriotism or loyalty or faith or any other bullshit abstract nouns like hope or glory or peace or truth during a performance review, you know they are trying to screw you. ask any public servant who has been through a restructure.

                Oh yeah, because only cold hard cash matters to the constituency you are pushing pay rises for.

    • Tiger Mountain 16.3

      “Auckland Council has issued a directive that all departmental budgets should save 3% next year.”

      Heh, nothing like a good old directive “they don’t like it up’em”, Crosby Textor put them out regularly.

  17. Jokerman 17

    A ‘status group’ is a group sociatalized through it’s special styles of life, it’s conventional and specific notions of honour, and the economic opportunities it (legally) monopolizes.

    -Weber

    Human status ought not to depend upon the changing demands of the economic process; It is a mistake to suppose that God is only, or even chiefly, concerned with religion; personally, I have always looked on cricket as organised loafing.

    -William Temple, Archbishop of Canterbury from 1942-1944

    oh the angst
    http://en.wikipedia.org/wiki/Status_Anxiety
    yet,
    Mr Love And Justice (with a cup of chamomile tea)
    🙂

  18. Akldnut 18

    Lardy Bennett keeps saying that the govt are holding recipients of benefits to a social contract, these moochers should be held to the same.

    Pays are supposed to be based on current performance, but it appears the criteria has changed to “possible performance” or that psychics are setting the pay scales based on “future/possible performance”

  19. Does these comments on CE pay apply to very clever people such as Kim Dotcom, who reputedly has earned something in the region of $40 million a year ?

    • QoT 19.1

      Well, sure, on the one hand I cannot fathom how the hell a person ever needs to earn $40m a year, or what they would spend it on.

      On the other hand, my understanding is he owns the business; it’s not a salary someone else is justifying on the basis of how hard he works / how many old boy network contacts he has, so on the other hand, not really.

    • mike e 19.2

      just about all his money has been confiscated so in the end Kim.com is worth SWFA now !

      • burt 19.2.1

        It’s a crying shame isn’t it that an ‘administrative’ bungle can so completely destroy a person’s earnings but it seems to sit comfortably with the policies of envy lefties – he must have been a crook / bad person / thief / exploiter of others etc to have that much right?

        Good people earn buttons and fight the man… yes they fight the man the good old collective union way and they all earn the same.

        Or did I miss the internet tycoon’s union stepping in and shutting down all other internet tycoon websites in sympathy for Dotcom ?

  20. burt 20

    Who decides what a CEO gets paid… who decides what a wharfie gets paid… how much is too much for doing what exactly ? Who gets to decide….

    Opinions are interesting and sometimes quite revealing – but come on guys – who made you god of the boundary between too much and too little ?

    • felix 20.1

      So put it to a vote of everyone who works in the company in question.

      • burt 20.1.1

        All shareholders or all workers. Although I like your sentiment it’s not the way many organisations run felix. It’s not a new idea either though is it. Many times we have seen operations startup with direct worker involvement and they seem to do very well initially but soon seem to revert to a more tradition governance structure… I wonder why that is… Genuinely wonder why it is felix, I’m not baiting you saying this felix I actually wonder why you think that tends to happen ?

        • Draco T Bastard 20.1.1.1

          Many times we have seen operations startup with direct worker involvement and they seem to do very well initially but soon seem to revert to a more tradition governance structure…

          Except for the minor fact that they don’t. Now go watch Capitalism: A Love Story. You never know, you might actually learn something.

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