THE MAGAZINE

Raising the Bar

By Mike Moran

Public or Private Sector

Among private-sector respondents to the 2008 survey, more than half were employed at privately owned companies, while 25 percent were in publicly held companies. Just 14 percent of this year’s respondents were employed in government or law enforcement agencies, with 7 percent in a federal agency, 3 percent in state government or law enforcement, and 4 percent in municipal or other local government or law enforcement.

The private-sector employees, including publicly held stock companies and privately owned companies, had median compensation of $92,000 in 2008, up from $86,000 in 2007. Average compensation for this sector rose from $95,000 to $106,000.

In 2008, median compensation rose 5 percent for security professionals in the federal government sector to $106,000 in 2008. Those in state government lag far behind in compensation, reporting a median rise of just 4 percent to $83,000 and those in local government reported a median compensation of $86,000, an increase of just 2 percent over 2007. By contrast, median compensation for security professionals employed by publicly owned companies was $104,000 and average compensation was $121,000.

Median v. average. It is instructive to look at the difference between the median compensation—the number that falls at the midpoint between the highest and lowest reported incomes, regardless of how many people fall at one point or another—and the average, which is the sum of all reported compensation divided by the number of participants.

In all of the government sectors—federal, state, and local—the average compensation was relatively close to the median: it came to about $113,000 for federal employees, $90,000 for state, and $80,000 for local in 2008. Essentially, this convergence of the median and the average shows a greater parity between those with the most experience and qualifications and those with the least.

The compensation parity in the government sector is not necessarily bad for security professionals just starting out, as those in the lowest 10th percentile of state government employees earn greater compensation than those in the bottom 10th percentile of their colleagues working in private industry.

In the private sector, the situation is quite different. The gap between the average and the median is appreciable, exceeding $18,000. This shows that with a freer hand to compete for top talent, private industry is paying its most qualified employees substantially more than state governments can offer.

Specifically, the 90th percentile in publicly owned companies pulls down an average compensation of $200,000. The 90th percentile of security directors employed in federal agencies earns $160,000. In state government, that 90th percentile demarcation is at just $112,000.

Industry Sectors

The 13 major industry sectors established by the U.S. Bureau of Labor Statistics were well represented in this year’s survey. Compensation for security professionals continues to vary widely depending on the sector served. The best compensated are in Natural Resources and Mining: though reporting a median rise this year of only 4 percent, they earned a median $120,000 and an average compensation of $136,000.

Both the Transportation and Utilities sector and the Health Services sector reported the highest percentage rise in median compensation of 11 percent. But the increase has to be seen in context. In Health Services, for example, the median income—even with the hefty percentage boost—was the second lowest in this year’s sample at just $85,000. By contrast, the Transportation and Utilities sector, which reported a median compensation just below $97,000, was the fifth most highly compensated sector in the 2008 survey.

The Wholesale and Retail Trade sector was the second most highly compensated, reporting a median rise of 3 percent to $107,000 and a remarkably close average compensation of $108,000. Indeed, this sector featured the flattest compensation curve in the entire survey, but this may be due more to the fact that it had the highest percentage of respondents with the fewest years of experience than to any unique compensation curve for the sector.

The Financial Activities sector, by contrast, had the greatest disparity between median and average compensations despite having the second fastest growing median income, rising seven percent in 2008 to $96,000. The average compensation reported in the Financial Activities sector was $124,000, approximately a third higher than the median.

A notable distinction of the Financial Services sector is a far greater use of performance bonuses as part of overall compensation, with nearly 80 percent of respondents receiving a performance bonus. Though most in this sector report bonus values comparable to their colleagues in other industries, 13 percent reported substantially higher average bonuses.

Twenty-four percent of this year’s respondents were in the Professional Services industries, which includes security services of all types. Median income for that group was $95,000 for 2008, up from $90,000 in 2007. The average compensation of $108,000 indicates that opportunity exists to earn far more than the median.

This sector is dominated by privately held businesses, accounting for fully 74 percent of respondents. Such companies typically have fewer employees, lower gross revenues, and smaller security budgets than corporations. But there are large companies in this sector, and typically these are where the higher compensation rates tend to cluster. 

Twenty-six percent of the companies in this sector had security budgets in excess of  $1 million compared to 39 percent overall. Of the 9 percent in this group who reported security budgets higher than $10 million, they reported security director compensation of more than $130,000 on average in 2008.

A substantial percentage of the smaller firms in this category are security consultancies. While their businesses may be small, this is a well-compensated group.

The median compensation for security consultants in the Professional Services category was $119,000 for 2008, rising 10 percent from the year prior. The 90th percentile earned a median $200,000. As this category does not seem to afford many opportunities for entry-level employment, it also has relatively high compensation rates even at the low end of the spectrum, with the 10th percentile earning an average of $65,000.

Forty-five percent of all respondents in the Professional Services sector report directly to the CEO of their company. This is more than twice as high as the 22 percent rate among  respondents as a whole.

Generally, security directors who report directly to the CEO were among the most highly paid in the survey. In the Professional Services sector, those reporting to the CEO earned a median compensation of $114,000 in 2008.

The Manufacturing sector reported a median 2008 compensation of $92,000, slightly below the overall median and rising slightly slower at just 5 percent over the year prior.

The security professionals in this sector were most often security managers, rather than directors of security or vice presidents, although titles don’t correlate to duties (more on this later). In addition, their departments were more likely to report to the human resources (HR) department—28 percent compared to 8 percent overall. In addition, even when compared to security managers in other sectors who reported directly to HR, those in manufacturing were not paid as well.

In Manufacturing, the median compensation for those reporting to the HR department was $94,000, compared to $106,000 among those from all sectors organized under HR.

Conversely, fewer in Manufacturing reported directly to the CEO—10 percent, compared to 22 percent in all sectors. Yet they were much more highly compensated than those reporting to CEOs in all industries, with a median of $129,000 compared to $105,000.

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