Salary Sense for Military Veterans and Retirees

February 2004

by

Randall Scasny

This past month a retiring Marine Corps E-9 wrote me for advice about his career transition. He told me this:

What type of position am I looking for? Great question. And the best answer I can give you is one that pays really well. It would be really nice to find something that pays in the mid to upper 70's.

Salary, while a major concern of most job-hunters as well as employers, should not be the primary emphasis at the beginning of a career transition. When you go after the money at the start, you will miss opportunities along the way. You will develop unrealistic expectations. More important, you will lose the chance to control your career over the long term.

However, in defense of this vet, I will admit I've reviewed his resume. It is very good. He also has a Master's degree. In the right market, he could be very competitive, especially in sales.

Oops. I forgot to tell you one more thing. This vet ended his email to me with this line:

"My best answer [for a position] would be a Project Manager, Program Manager, Plant Manager, HR Manager, Financial Analyst. NO SALES, oh did I mention NO SALES."

My eyebrows moved quite high when I read "No Sales." Did yours? They should have because everyone "sells" in private industry! Private industry is financed by "sales." It's what makes their world go around. Sales revenues is what Wall Street looks at to determine whether to buy or sell a stock. Sales is the focus of all business. It's capitalism pure and simple.

Sure, some workers may not be calling on customers, per se, but they are selling their product through their work, services, etc.

Effective salespeople are compensated very well because they are at the forefront the business; they are the front line deal-makers of any business.

I've found that as you remove yourself from the deal-making end of a business to an operational, adminstrative or maintenance function, salaries generally decrease. Middle managers are paid middle salaries this very reason.

High-level executives, on the other hand, top the salaries of even the best salespeople. They not only participate in the deal-making of the most important customers, but also can increase sales revenues by their leadership style.

My point is that you must have realistic salary expectations. A compensation package (salary plus benefits) is a reward for a worker's economic value to an organization. This value sometimes depends on years of experience (like years in grade in the military) but more often than not it nowadays depends on one's knowledge (technical savvy) or business development panache (sales).

What are workers being paid in private industry? The U.S. Department of Labor, Bureau of Labor Statistics conducts studies on this very subject. Here are a few facts from some recent studies:

  • Private-industry employer compensation costs averaged $22.84 per hour worked. Wages and salaries averaged $16.46 per hour, while benefits averaged $6.38 (September 2003).
  • White collar pay averaged $21.09 per hour, blue collar pay averaged $14.51 per hour and service occupation pay was $10.32 (June 2003).
  • Average hourly earnings ranged from $31.16 for executive, administrative, and managerial workers to $10.32 for service workers (June 2003).
  • Pay was higher for union workers, $20.65 per hour, than for nonunion workers, $16.42 per hour (June 2003).
  • Average hourly earnings ranged from $14.19 in the East South Central region to $19.79 in the Middle Atlantic region (June 2003).
  • Earnings were higher for workers in metropolitan areas than for those in non-metropolitan areas, averaging $17.56 per hour and $14.20 per hour, respectively (June 2003).

Since most U.S. workers earn less than $50,000, is our Marine Corps E-9 being unrealistic? Not necessarily.

His resume is filled with many achievements that will make him very competitive for a high-income, management position. But these types of positions more often than not depend need, networking and good old mother luck. While not impossible, scoring a top position in a retiree's first job hunt is a challenge.

. . .

Let's look at another veteran. He is a Navy E-5, seeking working as a maintenance electronic technician. With two months to go before he separates, he has two job offers.

A Cherry Hill, NJ-based wireless industry company has offered him a salary between $55,000-58,000. He also has an offer from a Springfield. VA-based defense industry contractor at a salary of $46,000.

Which one should he take?

Like most people, he was leaning to the higher paying job. Why? He was concerned about higher housing costs in these geographical areas. This is understandable. But, in my experience, it is putting the cart before the horse. Let me show you why.

After a little research, I found that the wireless industry company had earned in sales about $80 million in the previous financial quarter; the defense industry contractor has earned about $300 million in sales during the same time period.

(Eighty million dollars in quarterly revenue is just not a lot of money when you talk about American business. Remember, employers have to pay for all those high salaries, benefits, insurance--all from sales.)

The wireless company also was seeking a stock offering from Wall Street to finance its expansion. Basically, they need more money to fulfill their business objectives. On the other hand, the defense industry company is already a public company with no apparent new capital needs. It has been the recipient of numerous defense and homeland security contracts.

Finally, companies in the wireless industry, whose customers are every day people like you, experience up and down swings, depending on fickle consumer demand and fashion. Conversely, companies in the defense industry have only one conservative, predictable customer to satisfy--The U.S. Government.

Recent Department of Commerce statistics say the U.S. Government's investment in national security is one of the major reasons the country pulled out of its recession so quickly. Most analysts would agree the U.S. Government will continue to invest in this area. So, the defense industry is at the beginning of a long boom period.

While the wireless industry company has offered our vet more money, it may be less stable employment than the defense industry company. Job security has value. It should be taken into account when you are accepting a new position.

One final point. The benefit packages are similar for both companies and both are very good. But the lifestyle issues are quite different. The wireless company would have our Navy vet travel a 4-state region to maintain equipment; the defense contractor claims little or no travel. Business travel is another reason why the wireless company may need to offer a higher salary.

In my experience, heavy travel schedules and time away from family is one of the leading causes of job changes. Sometimes a lower salary with a saner work schedule is preferable to a higher salary where you collect thousands of frequent flier points with little time to enjoy them.

If you seek employment with the federal, state or local governments, your salary schedule will be similar in design to the military's pay rate system. This is not necessarily the case in the private sector. While salary ranges are common for established positions, actual salaries may not abide by these ranges.

A year after I had left a technology company, I had learned from a fellow co-worker (who was no longer with the company as well) that she had earned $20,000 more per year than I had (with a very handsome salary myself), all for the same job and position!

When I learned this, I paused to stem my envy. Then I ordered her a drink and we talked about it. We concluded that her 11 years experience at a major national newspaper was a financial boon to her. For the technology company to build its "brand" and appear more competitive to its customers, it had to attract employees with national exposure.

The company was willing to pay her so much more money because they had to.

. . .

A Coast Guard retiree wrote me this month about salary negotiations for a start up company he wanted to work for. What's notable to mention here, the negotiations were not about a salary but his commission rate.

In the military, there is nothing like compensation by commission. So it is little wonder that military veterans shy away from this kind of compensation.

But commissions are very common and they are the preferred compensation choice by many start up companies.

This was the case for our Coast Guard retiree.

Prior to separating, he started his job search early, primarily because he was moving to a non-metropolitan area that had few employers in his area of expertise. His research lead him to the town's local newspaper where he read a story about a technology company moving into town. He thought he saw an opportunity and jumped on it!

He called the company and after a few calls, he talked to the company's President. He had a lukewarm response until he thought he had an idea of how to market the company's products.

He emailed the President and within 48 hours he received a response with instructions from the President who forwarded them to the company's sales manager:

Would you please enter into a dialog with [the vet] at this time and explore how he could develop a sales channel for our [new product] and benefit him (sic) with a sizable commission for his successful efforts?"

The company does not want to offer him a salary. But they are more than willing to offer our Coast Guard vet a commission that, if he is successful, would be very attractive, perhaps even larger than a straight salary.

How does someone who has never worked for commission make sense of this example? Well, it isn't as bad or uncertain as it sounds. Most companies have a "draw" that is billed against the sales you make. And once you establish a new customer account, it is yours. Commissions for repeat business by that account are generally yours to keep. And it only takes one big account to make your salary!

Always remember that compensation by commission is all about attitude and negotiation. You have to want to take up the challenge. And you have to make pretty sure that you negotiate hard and reward yourself with a great commission rate.

. . .

Simply said, salary sense is about two things: avoiding unrealistic expectations and realizing that in private industry there are many factors that come into play in determining your salary. Think about the advantages and the trade offs before you go after the money.

Finally, always remember, in private industry, you are no longer working for (or being paid by) your commander, rather, the customer and the purchases he or she makes is your boss.

References

Note: These references are links to articles or websites I've discussed in this article.


Disclaimer
All opinions, advice, statements or other information expressed in this article are solely the author's and do not necessarily express the opinions of MilitaryHire.com or the publisher.

Copyright 2003 Randall Scasny. All rights reserved. This material may not be published, rewritten, or redistributed.