HVS Executive Search Compensation Trends Now, about that Raise,… - Article by Keith Kefgen and Stephen Goebel
A dollar just isn't worth what it used to be. As a matter of fact, it's worth just a little bit more! According to the American Institute for Economic Research's Cost-of-living-Calculator, $100 will buy $2.85 more today than it did in the year 2000, and $6.30 more than in 1999. For those of us who have grown up through years of runaway inflation, that is a startling piece of news.
Having just completed our 2001 Hospitality Compensation Exchangeã survey of the gaming industry, we wanted to make some period comparisons to our 1999 version. We chose three of the top property-level positions for our review: CEO/General Manger, Senior VP Operations and VP Sales & Marketing.
With the current negative inflation index, casino GMs have seen their relative buying power increase, even though compensation hasn't increased much in the past two years. The median salary for a casino CEO/General Manager is $226,000, or just 2% more than the $221,103 of the 1999 survey (see table I, 50th percentile). GM's at the 25th percentile fared slightly better having gained almost 6%, or an increase of $9,077, and perhaps reflecting the excellent numbers produced in many of the so-called secondary markets. The 75th percentile actually shows a 2% drop, or $5,505 less than the 1999 survey.
Perhaps they took their money at bonus time? It appears that some did and some did not. At the 50th, and 25th percentiles, bonus payments increased 4%, and 3.6% respectively (see table II). However, the CEO/GM's at the 75th percentile seem to have recovered their salary losses with bonus compensation increasing 14.2% from $105,765 to $120,790.
Discarding the minimum and maximum as anomalies, we found that the VP Casino Operations enjoyed double-digit salary increases at every survey percentile. The median VP Operations made $14,131, or 12.8% more than in our previous study (see table I). That increase was consistent at the 25th and 75th percentiles as well, gaining 11%, and 13.5% respectively.
Pay got even better for the operations execs at bonus time, with the median bonus growing 45.5%, or $12,024 (see table II). The 75th percentile did not fare quite as well, but still gained 24.6%. The exception to all this happiness was at the 25th percentile where the typical bonus was actually down $1,813 from $8,613 to $6,800.
On a percentage basis, the marketing gurus fared best of all in salary increases. Though the 50th percentile gained a modest 5% over our previous study, the 25th percentile cracked the six-figure barrier, gaining 12% from their previous $89,183 (table I). For the 75th percentile, life was even sweeter, having gained an average of 22%, or $31,755 in base salary.
However, bonus time did not reward them quite so richly. In fact, at the 25th percentile, the average bonus payment decreased 16.6%, or $2,053 since 1999. At the 50th and 75th percentile, bonus pay was more normal, with both experiencing minimal gains.
We predict that compensation trends will continue to be haphazard and will be more positional and market oriented. In down markets, operations and marketing executives tend to be highly coveted, while interest in growth positions such as finance and development wane.
Keith Kefgen (above) and Rosemary Mahoney-Browning are president and vice president, respectively, of HVS Executive Search, the Mineola, NY-based human resources consulting firm. Keith is a frequent lecturer on industry-related issues and has written more than 90 articles on the topics of executive selection, pay-for-performance, corporate governance and executive leadership. He is the founder of two e-commerce initiatives,
HVS Executive Search provides human resource expertise to the restaurant, lodging, and gaming industries. Core competencies of the firm include executive search, compensation management, corporate governance counseling, employee assessments, and on-line recruiting. For more information go to
20 20 Skills™ is an internet-based assessment tool specifically designed for service industry professionals. The site provides a state-of-the-art solution for assessing performance characteristics and cultural compatibility. 20 20 Skills™ was authored by professors Florence Berger and Judy Brownell of the Cornell University School of Hotel Administration. The assessment profile has three unique levels: senior, mid-management and line. For more information go to