The Golden Ratio of Corporate Pay...

Everyone has heard of the golden ratio used by artists and architects, even in math and science, but have you ever heard of the "Golden Ratio of Corporate Pay"?

Today over lunch, my colleagues and I stumbled across this crucial ratio. It was a mind bending and life altering epiphany. I will describe it next:

First, find out how many people are in between you and your CEO. Mine looks like this:

L.Bear ...> DottedBoss -> Boss -> BigBoss -> VP -> Senior VP -> Super Senior VP -> CEO

Then next, our conjecture:

Everytime you go up a level, the pay is doubled. Or if you go the other direction, every step away from the CEO, the pay halved. This is also a classic case of geometric progression.

So our CEO's pay and compensation is 1.3 million USD. This is found in Forbes.com. CEOs are given a LOT of bonus and the pay usually doesn't reflect how much he really gets in compensation. There are also disputes on why badly performing companies still pay their CEOs loads of money. If you're interested in that, Google it. Plenty of articles online on that.

1.3 million USD is roughly RM 400k per month. Using the conjecture, my monthly pay calculated is:

400k * (1/2)^7 = 3125.

With this number, my dotted line manager is 6.25k and his manager is 12.5k. That's not quite close to reality. My pay and the two people above me. So let's instead, solve for the ratio itself. A slight error in ratio can cause a big error on my pay because of the ^7 in the equation.

My company's minimum pay for a senior engineer is RM4.4k. So using this number, we solve for the ratio, R.

400k * (R)^7 = 4.4k

R = 0.525

Wow! Quite close to half. Not bad. So now my dotted line manager is 8.38k and his boss is 16k. That's much closer to reality.

There we go, I've found the Golden Ratio for my company. Why don't you look for yours?