In this episode Matt Kelly and I take a deep dive into a fascinating paper from Harvard Business School. Boris Groysberg and George Serafeim, worked with a global recruitment firm, to study more than 2,000 executive-level job placements from 2004 to 2011, examining a wide range of job placements and pay data since 2004. They found that the stigma of listing a discredited company on your resume, even if you had nothing to do with the misconduct there, leads recruiters at your next employer to pay you less.
Some of the numbers Groysberg and Serafeim calculated:
- Overall, executives with a restatement in their past received a salary 4.6 percent lower than those without one;
- Executives with a restatement in their recent past saw an even larger discount: 5.6 percent; and the professors defined “recently” as within the last nine years;
- Executives specifically in the finance function saw a 9.9 percent discount compared to others without a tainted work history.
We consider the long-term salary effects by reference to tables put together my Matt which show how such an initial reduction would impact your overall compensation on a 15 year basis.
It’s not news that listing tainted employer on your LinkedIn profile can harm your career. This study, however, is one of the first that tries to quantify exactly how much that “stigma effect” can harm your salary career on a go-forward and long-term basis. It is yet another way to convince senior executives and other colleagues that a strong compliance program matters: misconduct at the company can trim the salary offer those people might get at their next job — by 4.6 percent or more, apparently. executive’s career in dollar terms.
For more on the topic see Matt Kelly’s blog post The Salary Penalty for Misconduct
For more reading, see the article by Sarafeim and Groyberg, Does Financial Misconduct Affect the Future Compensation of Alumni Managers?
The stigma of listing a discredited company on your resume often leads to less pay at your next job.Click to tweet