Last week a New Zealand Herald front page article revealed that after dipping briefly following the global financial crisis the average pay of New Zealand’s top executives is rising once again. The bosses of the country’s largest firms received an average total remuneration - including base salary and incentive payments - of $1.4 million in the 2013 financial year, a 4 percent increase on 2012.
Our highest paid chief executive last year was ANZ’s David Hisco, on $4.1 million, a 14 per cent rise on 2012.
Nice money if you can get it.
The reaction from the Herald readers was swift and vicious and a branch of the ANZ staff, who were in pay talks, threatened strike action. Understandable; I was angry myself when I first read it, particularly when it has been reported of late that thousands of New Zealand children are going to school without breakfast. I remembered too that economist John Kenneth Galbraith once said: “The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”
These hitherto undreamed of salaries are the preserve of the favoured few, but for the rest of us, perhaps we are our own worst enemies.
I think our problems probably start with all the clichés we’ve been told about money.
As kids we were taught that money is the root of all evil. What the Bible actually says is that the love of money is the root of all evil. And we were told money isn’t everything and that money won’t buy you happiness. In fact to emphasise that belief someone once said: “There is nothing in the world more reassuring than an unhappy lottery winner.”
I’ve often wondered whether these statements weren’t circulated by people who have money, to keep those that haven’t, in their place.
The truth is that money is a warm home and healthy children; its birthday presents and a university education; it’s a trip overseas and the means to help older people and the less fortunate.
There is little doubt that education is the answer to our money woes. In our society, a highly skilled person is worth more money than someone who is not highly skilled and can easily be replaced.
American motivational speaker Earl Nightingale would often quote the disparity of incomes between a janitor and a heart surgeon. He was not suggesting that one person is any better or more important than any other person. The amount of money each will earn will be proportional to the demand for what they do, their ability to do what they do and the difficulty of replacing them.
In a few weeks a person can be trained to clean and maintain a building and replacing that person is not difficult. Meanwhile a heart surgeon spends many years learning his profession, often at great personal sacrifice, and at an extremely high cost, and he cannot easily be replaced. As a result the surgeon might earn as much money in a week as a janitor might earn in a year.
Of course this example is an extreme case, but it shows the relationship of income to demand, skill and supply. You will inevitably find that a person’s income will be in exact proportion to the demand of what that person does, the ability to do the task and the difficulty of being replaced.
In a year a top jockey will earn a great deal of money, which will represent about 5 per cent of the winnings of the horses he or she rides. You might say riding a racehorse serves no useful purpose, but, useful or not, the demand is there. It’s the same with stars in show business like Dolly Parton or sports stars like the All Blacks. Their income will very accurately reflect the demand for what they do.
While this may sound elementary, you’d be amazed at the number of people who want more money, but don’t want to take the time and trouble to qualify for it. And until they qualify for it, there’s no way on earth for them to earn it. It’s like the person who wants a good-looking figure, but doesn’t want to change their eating habits.
When I was a kid there was a poem that in part said: “I bargained with life for a penny, and life would pay no more.” And that’s it in a nutshell. The world will pay you exactly what you bargain for - exactly what you honestly earn - and not a penny more.
People who refuse to do more than they’re being paid for will seldom be paid for more than they’re doing. You may have heard someone say “Why should I knock myself out for the money I’m getting?” It’s this attitude, more than anything else that keeps people at the bottom of the economic pile.
We must however keep money in its proper place. It’s a servant, nothing more.
It’s a tool with which we can live better, see more of the world; it’s the means to a happy, carefree retirement in later years and it allows us to give our children the education they need and a good start in life, but we need to keep it in perspective.
You need only so much food to maintain good health and you really need only so much money to live comfortably, securely and well. Too much emphasis on money reverses the whole picture; then you become the servant and the money becomes the master.
It’s good to have money and the things money can buy, but it’s good too, to check up once in a while, to make sure you haven’t lost the things that money can’t buy.
Our highest paid chief executive last year was ANZ’s David Hisco, on $4.1 million, a 14 per cent rise on 2012.
Nice money if you can get it.
The reaction from the Herald readers was swift and vicious and a branch of the ANZ staff, who were in pay talks, threatened strike action. Understandable; I was angry myself when I first read it, particularly when it has been reported of late that thousands of New Zealand children are going to school without breakfast. I remembered too that economist John Kenneth Galbraith once said: “The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”
These hitherto undreamed of salaries are the preserve of the favoured few, but for the rest of us, perhaps we are our own worst enemies.
I think our problems probably start with all the clichés we’ve been told about money.
As kids we were taught that money is the root of all evil. What the Bible actually says is that the love of money is the root of all evil. And we were told money isn’t everything and that money won’t buy you happiness. In fact to emphasise that belief someone once said: “There is nothing in the world more reassuring than an unhappy lottery winner.”
I’ve often wondered whether these statements weren’t circulated by people who have money, to keep those that haven’t, in their place.
The truth is that money is a warm home and healthy children; its birthday presents and a university education; it’s a trip overseas and the means to help older people and the less fortunate.
There is little doubt that education is the answer to our money woes. In our society, a highly skilled person is worth more money than someone who is not highly skilled and can easily be replaced.
American motivational speaker Earl Nightingale would often quote the disparity of incomes between a janitor and a heart surgeon. He was not suggesting that one person is any better or more important than any other person. The amount of money each will earn will be proportional to the demand for what they do, their ability to do what they do and the difficulty of replacing them.
In a few weeks a person can be trained to clean and maintain a building and replacing that person is not difficult. Meanwhile a heart surgeon spends many years learning his profession, often at great personal sacrifice, and at an extremely high cost, and he cannot easily be replaced. As a result the surgeon might earn as much money in a week as a janitor might earn in a year.
Of course this example is an extreme case, but it shows the relationship of income to demand, skill and supply. You will inevitably find that a person’s income will be in exact proportion to the demand of what that person does, the ability to do the task and the difficulty of being replaced.
In a year a top jockey will earn a great deal of money, which will represent about 5 per cent of the winnings of the horses he or she rides. You might say riding a racehorse serves no useful purpose, but, useful or not, the demand is there. It’s the same with stars in show business like Dolly Parton or sports stars like the All Blacks. Their income will very accurately reflect the demand for what they do.
While this may sound elementary, you’d be amazed at the number of people who want more money, but don’t want to take the time and trouble to qualify for it. And until they qualify for it, there’s no way on earth for them to earn it. It’s like the person who wants a good-looking figure, but doesn’t want to change their eating habits.
When I was a kid there was a poem that in part said: “I bargained with life for a penny, and life would pay no more.” And that’s it in a nutshell. The world will pay you exactly what you bargain for - exactly what you honestly earn - and not a penny more.
People who refuse to do more than they’re being paid for will seldom be paid for more than they’re doing. You may have heard someone say “Why should I knock myself out for the money I’m getting?” It’s this attitude, more than anything else that keeps people at the bottom of the economic pile.
We must however keep money in its proper place. It’s a servant, nothing more.
It’s a tool with which we can live better, see more of the world; it’s the means to a happy, carefree retirement in later years and it allows us to give our children the education they need and a good start in life, but we need to keep it in perspective.
You need only so much food to maintain good health and you really need only so much money to live comfortably, securely and well. Too much emphasis on money reverses the whole picture; then you become the servant and the money becomes the master.
It’s good to have money and the things money can buy, but it’s good too, to check up once in a while, to make sure you haven’t lost the things that money can’t buy.
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