Upside Down Compensation?

What do you do when you are underpaid?

Stay in a law firm marketing job long enough and you’ll find that the ‘market’ salary rate for your job has increased faster than the typical ‘cost of living’ raises you received over the past several years. But don't believe everything you hear – the reality is usually less than the rumors on the street. Still, it is not usual that incumbent marketers may be compensated at at a rate of 20% to 50% below newly placed marketing professionals. According to some of the recruiters I’ve spoken to, this is the main reason why CMOs change jobs at a rate of between every 3 and 4 years.

It is rare that firms will increase salary significantly for incumbents. It is a hard sell, especially in slow times. On the other hand, it is very expensive to replace a good CMO, including the opportunity costs of spending time on an executive search instead of pursuing BD projects. One recruiter I spoke to said that many firms lose CMOs to higher paying jobs, thinking they can replace the person for a similar salary, but struggle to find the 'right person' for months, sometimes as long as a year. They often end up raising the starting salary to a rate that is similar (or more) to what the previous CMO requested, but lost 8-18 months of momentum, often with a higher level of attrition in the marketing department during the period.
In many firms, tracking marketing salaries, including the top marketing position, falls on the shoulders of the CMO. The Human Resources department rarely keeps track, and many CMOs report to the Chairman or Managing Partner, who have other fish to fry than following the CMO labor market.

It is ironic that long-term Chiefs provide the highest value to firms – they know the culture, they built trusting relationships with attorneys, and they are often able to take a more strategic role within the firm. These ‘veterans’ are frequently the lowest paid among their peers and are at highest risk for being drawn away to other firms, or consulting.

Asking for a raise

Despite their reputation, many attorneys are uncomfortable with conflict and negotiation. Many lawyers are not confident in their role as manager and hate, above most things, facing the prospect of (1) being blamed for losing a well respected marketing director and (2) spending months, more dollars and lost opportunities searching for replacement. Perhaps the only thing they fear more in this realm is being accused of paying too much for a staff member or C-level staff.
Before you start a compensation conversation, do your homework. Know the numbers. Don't exaggerate or inflate. Present the facts - recent surveys of salaries are available from Association of Legal Administrators, Law Firm Inc and some private consulting and research firms. LMA will conduct a new salary survey in 2008. Communicate numbers in terms of comparisons to peer firms in and outside of your region.

Identify ways your job requirements and expectations have changed over time. Have mergers or fast growth increased the complexity and sophistication of your job? Have the number of direct reports to you increased? Budget? Events? Retreats? Number of practice groups? Some marketing managers have literally seen their firms double in size (or more) in the span of five or seven years. Don't rely on rumors. Ever.

Give your boss resources to verify your numbers, such as the recruiters, human resource professionals or managing partners from peer firms (perhaps someone in your legal network or a peer firm in a similar geographic market.)
Try to find an advocate in a partner or internal client to make the case on your behalf, or at least support your case.

Talk value. If you are asking for a market-equalizing raise, what's in it for them, besides keeping you? Have you, or will you, be providing new of different services, such as competitive intelligence, business development support, professional salesforce management, or other services? What's in future for your firm and marketing department?

Consider making a proposal to the firm. Tell them what you will do for them over the next one-two-three years in exchange for a compensation increase . Consider it 'contract negotiations' and agree to do it again in a few years. Whether it is a formal or informal proposal, you need to ask for what you want and communicate what you will give in return.

Consider creative alternatives. If your rate is 20% below market, would the firm consider you working a four day week and consult on the fifth day? What about a paid three month sabbatical every three years? While the firm may not buy the alternative arrangement, they may get the point that their compensation decisions communicates their limited commitment to you.

If you don't know already, find out how attorneys in your firm communicate their value, are evaluated, and appeal compensation decisions. Managing partners are sometimes more comfortable dealing with compensation issues in a framework that is familiar to them.

Don't threaten, but realize that they will feel threatened and abandoned just because you are forging the issue. Anticipate feelings of defensiveness. It may require extraordinary patience and presence of mind to keep your cool during the conversation. Breathe.

Know what you want and ask for it. If you are willing to settle for a certain number or circumstance, be prepared to discuss and come to agreement. This is your conversation, and you are responsible for the opening argument, presenting evidence, facing cross-examination, and communicating what you want in your closing argument.

Don't let it drag out forever. Lawyers are notorious at coming up with excuses, other priorities, delays, etc. If the Manaing Partner or Executive Director needs time to "check with the Management Committee", set a mutually agreed upon deadline and hold them to it. Conversations like this can go on for years, if you allows it to.

This is risky business. Beware, there be dragons about.

Bringing up issues of compensation, value, and alternatives raise issues of loyalty and trust between you and your boss. If and when the word gets out that you threatened the managing partner, or that you are interviewing, you can ruin the credibility and trust built up over years.

That being said, if you want to have ‘balance of power’ in the negotiations, you need to be prepared to leave and search for another job. Sometimes, you just need to leave your current firm to increase your compensation. It may not make any sense for you, or the firm, but some (perhaps most) firms would rather conduct a search than to give a director a 20% to 50% pay raise.

Another option is to stay put and be content with less-than-market compensation. Perhaps there are other benefits to being at your firm, including lower risk, established relationships, freedom and flexibility to do creative, fun or particularly effective projects.

Here's the reality: While the tenure for CMOs has marginally increased in law firms, it is still painfully short. For most Chiefs, it takes a year to learn the firm culture, align the marketing team to the CMO’s style, and to initiate programs and processes to make the team effective and efficient. In the second year, the successful CMO has the credibility and trust of the attorneys to initiate branding, marketing and BD programs that are strategically important to the firm. By the third year, the firm sees some of the results (or not), and the CMO has enough experience (or migraines) to staying with the firm or move on. I don't want to reduce the myriad of reasons why CMOs leave law firms down to simply compensation, but compensation is at the top of the list.

Firms need to figure out this reality. Most managing partners would rather not deal with the mess of highly compensated directors and staff, high job dissatisfaction, and high turnover. Managing Partners and Executive Directors need to manage and direct, making informed decisions about director-level and C-level roles, expectations and compensation so that tenure can be extended, resulting in more a stable work environment for CMOs so that firms can realize the benefits of having an experienced, consistent, trusted advisor in the marketing chief.