A thriving economy fueled healthy pay increases last year for jewelry store owners and employees alike, according to JCK’s annual salary survey. Thanks to strong 1997 sales nationwide, retailers could afford to boost employee compensation even as their own paychecks swelled. But a bigger factor was a shrinking unemployment rate, which meant that store owners had to ante up to attract and retain talent.
“It has to do with the fact that quality people can go to work anywhere,” says store-operations consultant Kate B. Peterson of Performance Concepts in Plainfield, N.J. “Yet, most retailers are in a situation where, despite pay scales being up significantly, turnover is not going down.” Maybe so, but if pay increases had not kept pace last year, the talent flight in many locales may well have accelerated.
The latest JCK review of compensation levels and benefit plans among retail jewelers found significant gains across virtually all job categories during the calendar year 1997. That reflects a nationwide trend. Real wages among all American workers last year climbed 3.8%, while wages for workers in all retail segments were also up 3.8%, according to the U.S. Bureau of Labor Statistics.
A rising tide. Incomes for just about everyone – owners/presidents as well as technical staff and bookkeepers – went up last year, in some instances more than 20%. Yet, although men and women alike enjoyed sizable gains, a wide gender gap persists in many job categories.
At the top of the heap, owners/presidents earned a median total income – base salary plus commissions and bonuses – of $60,000, up 20% from the year before. That comes as a welcome increase, since the 1996 median total pay remained flat from the previous year. Incomes ranged widely, from $18,000 to $225,000. (The figures for owners/presidents are limited to men, as the sample size for women was statistically insignificant.)
Jewelers/gemologists likewise whistled a happier tune last year. Both men and women in this job category enjoyed a 23% jump in median total pay. But a yawning gender gap remains. If you’re a man, your median pay as a jeweler/gemologist last year was $43,200, compared with $33,000 for women. That gap was $1,950 wider than the previous year’s figure. The high end of the pay range also reflects this dichotomy: $82,400 for the best-paid man vs. $49,000 for his female counterpart.
Other job categories showed lusty salary gains, even as a considerable gender gap obtained there as well. In 1997 male sales associates saw their median total pay climb 26% to $26,520, while women’s median income was $20,800, an increase of 7%. Here, too, the divide between men and women widened, from a difference of $1,625 in 1996 to $5,720 last year. And while female benchworkers in 1997 enjoyed a greater percentage increase in median pay – 25% vs. 7% for men – in absolute dollars they still lagged behind, taking home $30,000 vs. $33,500 for men at the bench.
Nowhere is the gender gap more glaring than in the store manager category. Men in this group earned $50,000, up 25% from 1996, while women’s median pay remained flat at $36,000. That gap more than tripled from that of the previous year.
To get an idea of regional differences in pay scales, the JCK salary survey this year compared store manager incomes from the Northeast, South, Midwest, and West. Highest paid were those in the West, where the total median income was $50,750, with a range of $18,000 to $80,000. At the bottom end were Southern store managers, who took home a total median income of $37,875, with a range of $19,100 to $60,000.
As you might expect, high-volume stores were more likely than smaller ones to offer generous benefits packages. For example, 58% of stores with sales of $2.5 million or more offer 401(k) plans; just 9% of stores with a volume of less than $1 million provide this benefit. Employees at high-volume stores are also far more likely to get paid sick leave (offered at 92% of such stores), financial assistance for education (75% of stores), and health insurance (100% of stores). Merchandise discounts remain a popular benefit no matter what the store volume.
If it ain’t broke… Most respondents said they made no changes to their compensation policies last year. In a typical store, employees earn a salary and/or commission based on a percentage of individual or total store sales. In some places, commissions are based on a share of the store’s profits. One respondent, requesting anonymity, changed the basis of commissions at her store from 3% of individual sales to 1% of total sales to avoid conflict when two or more employees might contribute to a sale.
Beyond that, many stores offer individual or group bonuses, as well as other incentives such as dinners and time off, to reward employees who surpass sales goals. One store owner, also requesting anonymity, last year installed a fishbowl containing incentives to encourage big-ticket or add-on sales. Surprise rewards include cash bonuses of $3 to $100, as well as dinners or television sets.
One store owner established a so-called pay-for-performance group bonus to reward employees when monthly sales goals are met from July through December. In that case, each full-timer gets a $200 bonus, while part-timers receive a prorated figure based on the number of hours worked. Staffers can earn an extra $50 if sales are more than 10% above the monthly goal. The program has been a “great incentive,” says the respondent, who requested anonymity. “Everyone loves it, and it creates good teamwork.”
Unable to afford generous benefits in the past, Southampton, Pa., jeweler John S. Cryan last year turned to an employment-services agency to staff his store. He now pays a flat fee to the agency, which in turn pays the employees’ salaries and benefits. “We ‘rent’ all our employees so we can offer benefits like the big boys,” says Cryan. This approach is increasingly prevalent among West Coast retailers.
The fruits of their labor. Does generous pay help the bottom line? Most of our panelists think so. Some 64% of respondents feel that their compensation policy has an “extremely” or “very” strong effect on encouraging sales productivity. Only 4% believe their level of remuneration has no effect “at all” on spurring sales. Meanwhile, 76% of store owners say their employees
are “extremely” or “very” fairly rewarded for the work they do. Here, too, just 4% think their employees are “not at all” fairly rewarded. As you might expect, there’s considerable overlap between those who answered positively on both points.
In some cases, though, fair pay may have little to do with motivating sales productivity. A case in point is William Kingoff of Kingoff’s Inc. in Wilmington, N.C., who says his employees are “very” fairly compensated. For all that fairness, though, his compensation plan is “not at all” effective in encouraging sales productivity.
Kingoff offered his employees incentive commissions on diamond sales in August and September, only to see those sales dip $40,000 below the same period last year. The commissions, meanwhile, reduced his gross margins on whatever sales were made. Now, Kingoff has soured on commissions. “I’m from the old school, and I’ve always thought that to pay somebody extra for what they’re already paid to do – that just bothers me,” he says. “My approach to salaries is that we should [offer] what is a fair salary and get on with it.”
Let the good times roll. To the extent that salaries reflect ongoing economic trends, this time next year salary figures are likely to be higher. Most retail jewelers are having a good 1998. First-half retail jewelry sales were up 9.2% over the same period in 1997, according to the U.S. Department of Commerce. Some 86.2% of jewelers surveyed in August told JCK they expected the rest of the year to be “good,” “very good,” or “excellent.” Meanwhile, the unemployment rate hovers at a low 4.5%.
With numbers like those, paychecks are only likely to swell all the more. Whether the still-yawning gender gap will narrow anytime soon remains an open, and troubling, question.
Commissions and Bonuses
|President, owner (men)||$13,000||$2,000-$98,000|
|(Sample of women too small)|
|Vice president (men)||$10,000||$2,000-$30,000|
|Vice president (women)||$15,000||$10,000-$70,000|
|Store manager (men)||$9,000||$3,000-$62,000|
|Store manager (women)||$5,000||$1,000-$24,000|
|General sales (men)||$5,000||$600-$50,000|
|General sales (women)||$3,000||$300-$42,000|
|(No responses from men)|
|Office staff (women)||$2,000||$1,000-$5,000|
|(Sample of men too small)|
The Benefits Package
(% of Stores Offering Each Benefit)
|Paid sick leave||70%||59%||63%||92%|
|Defined pension plan||19%||18%||21%||17%|
|401(k) savings plan||26%||9%||26%||58%|
|Education financial assistance||45%||32%||42%||75%|
|Short-term disability insurance||17%||9%||21%||25%|
|Long-term disability insurance||13%||5%||21%||17%|
|Unpaid maternity leave||36%||14%||53%||50%|
Store Managers’ Median Salaries by Region