Expectation inflation

Calgary's inflated pay packages for in-demand execs might be due for a correction, say placement pros.

The fight is on for skilled workers in Calgary, and it's not just in the trades. According to the managing directors at Boyden Global Executive Search in Calgary, executive-level talent is also in increasingly high demand.

Brent Shervey and Robert Travis, both managing directors at Boyden, have worked in the city's executive-search industry for more than 10 years. They say their clients' acute need has created an interesting situation in the executive suite. “Years ago, we used to talk about the coming war for talent,” says Shervey. “It's actually here now.”

Executives are making hefty demands, particularly when it comes to money matters. In years past, salary talk would come up mid-negotiation. Now, it's right upfront. “Somehow, along the way in the last two to three years, there is an expectation when I call a candidate that this new opportunity is going to lift their compensation by $10,000 or $20,000,” says Travis. “That's not realistic.”

A lot of the demands coming from executives aren't financial, though. People are asking for professional development, support for master's degrees, as well as education and jobs for spouses. And because companies are desperate, they're accommodating these requests–pushing up their own costs significantly into the bargain.

“Are people being given all those extra things because they are themselves superb, or is it because of the position they're occupying?” asks Daphne Taras, a labour relations professor at the University of Calgary's Haskayne School of Business. She says that in the U.S., executive compensation has skyrocketed–and Canada is under intense pressure to compete. “There appears to be almost no relationship between what people are asking for and their actual performance.”

Even so, Taras says that because Calgary's housing, fuel and other costs have increased dramatically, executives aren't out of line to ask for some perks, such as compensation for relocation, or for interest-free loans. Says Taras, “If people are not asking for it, they should be.”

That's one view. But it might be an idea to keep demands in-line with reality. The partners at Boyden believe employment packages negotiated out of extreme necessity–such as those involving salary increases of 25-30%–will eventually backfire on the candidate.

“There is going to be a correction in the market,” says Travis. “When it happens, the people that have inflated packages as a result of desperation on the employer's part will be some of the first that are going to feel the heat of downsizing.”

Until the day that correction comes, Shervey believes some clients will either stop filling positions or restructure the company. “This can only go on for so long,” he says. “I'm a firm believer that what goes up is eventually going to come down.”