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Comparison shopping


Every now and then in my job, I get to read a little bit of policy-wonk research that makes you just about pull your hair out.

For me, the current winner is the C.D. Howe Institute’s “Value for Money? Teacher Compensation and Student Outcomes in Canada’s Six Largest Provinces.” (The institute is one of the country’s many charitable-institution policy think-tanks that do research to suggest public policy directions that governments should take.)
You can find it here: http://bit.ly/1lswxO4.
Its argument is an inverted one: basically, it takes the position that British Columbia’s teachers make comparatively less than teachers in some other provinces, yet have better results, according to some performance indicators.
Therefore, there’s room to limit salaries and pensions in the other provinces and still be able to attract qualified people to the professions.
The conclusion?
“The policy implications are fairly clear. There appears to be room to reduce the growth of teacher compensation relative to other occupations so that teachers in other provinces end up in similar salary percentiles to teachers in B.C.”
That’s because “The B.C ... results suggest that, despite considerably lower levels of overall relative compensation, B.C. attracts persons to be teachers who produce high-quality outcomes.”
It’s a beauty of a battle-for-the-bottom strategy: having found a bottom level with some measurable success, we should drag everyone else down to that point. It’s far from a guarantee of success, but it’s a delightfully simple justification for cutting someone else’s salary. (Even better, it’s cutting salaries to teachers, a job that plenty of people seem to love to hate, but at same time, are unwilling to do.)
But hold that thought about considerably lower levels of compensation.
For years, companies like those that fund the C.D. Howe Institute and receive tax receipts have been arguing the exact opposite when it comes to compensation for their executives, saying that executive pay has to remain competitive.
In fact, major companies often have human resources committees like that of Stellarton, N.S.’s Empire Company Ltd. - owners of Sobeys - which expressly set compensation by averaging up to industry standards.
This is from a recent annual report: “In reviewing executive compensation, the HR committee considered the publicly disclosed executive compensation of the following group of large Canadian publicly traded companies, which are considered by the HR committee to be industry comparators.”
But using the C.D. Howe research, well, that would be a failed metric.
What’s missing is that the HR committee isn’t looking for the people who are running companies better, but for far less pay. (The fiscal measures of success are handily available in everyone’s annual reports.)
To use the C.D. Howe report’s logic, what executive compensation committees across the country should be doing - given that higher pay doesn’t equal success - is looking for the most successful companies with the lowest paid CEOs, and then modelling their executive pay packages on those much lower-paying success stories.
Because “considerably lower levels of overall relative compensation” would still attract CEOs “who produce high-quality outcomes,” right? The “proof” is merely that lower-paid successful CEOs, like lower-paid successful teachers, exist.
See how much fun comparisons are? I await the institute’s comparable study of CEO pay scales.

Russell Wangersky is TC Media’s Atlantic regional columnist. He can be reached at russell.wangersky@tc.tc
Twitter: @Wangersky.

For me, the current winner is the C.D. Howe Institute’s “Value for Money? Teacher Compensation and Student Outcomes in Canada’s Six Largest Provinces.” (The institute is one of the country’s many charitable-institution policy think-tanks that do research to suggest public policy directions that governments should take.)
You can find it here: http://bit.ly/1lswxO4.
Its argument is an inverted one: basically, it takes the position that British Columbia’s teachers make comparatively less than teachers in some other provinces, yet have better results, according to some performance indicators.
Therefore, there’s room to limit salaries and pensions in the other provinces and still be able to attract qualified people to the professions.
The conclusion?
“The policy implications are fairly clear. There appears to be room to reduce the growth of teacher compensation relative to other occupations so that teachers in other provinces end up in similar salary percentiles to teachers in B.C.”
That’s because “The B.C ... results suggest that, despite considerably lower levels of overall relative compensation, B.C. attracts persons to be teachers who produce high-quality outcomes.”
It’s a beauty of a battle-for-the-bottom strategy: having found a bottom level with some measurable success, we should drag everyone else down to that point. It’s far from a guarantee of success, but it’s a delightfully simple justification for cutting someone else’s salary. (Even better, it’s cutting salaries to teachers, a job that plenty of people seem to love to hate, but at same time, are unwilling to do.)
But hold that thought about considerably lower levels of compensation.
For years, companies like those that fund the C.D. Howe Institute and receive tax receipts have been arguing the exact opposite when it comes to compensation for their executives, saying that executive pay has to remain competitive.
In fact, major companies often have human resources committees like that of Stellarton, N.S.’s Empire Company Ltd. - owners of Sobeys - which expressly set compensation by averaging up to industry standards.
This is from a recent annual report: “In reviewing executive compensation, the HR committee considered the publicly disclosed executive compensation of the following group of large Canadian publicly traded companies, which are considered by the HR committee to be industry comparators.”
But using the C.D. Howe research, well, that would be a failed metric.
What’s missing is that the HR committee isn’t looking for the people who are running companies better, but for far less pay. (The fiscal measures of success are handily available in everyone’s annual reports.)
To use the C.D. Howe report’s logic, what executive compensation committees across the country should be doing - given that higher pay doesn’t equal success - is looking for the most successful companies with the lowest paid CEOs, and then modelling their executive pay packages on those much lower-paying success stories.
Because “considerably lower levels of overall relative compensation” would still attract CEOs “who produce high-quality outcomes,” right? The “proof” is merely that lower-paid successful CEOs, like lower-paid successful teachers, exist.
See how much fun comparisons are? I await the institute’s comparable study of CEO pay scales.

Russell Wangersky is TC Media’s Atlantic regional columnist. He can be reached at russell.wangersky@tc.tc
Twitter: @Wangersky.

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