November: Sales and Marketing Executives

This Month: Laboratory & Technical Managers

When he began seeking a technical director for his North Kansas City, Mo., company last year, Richard Howell of Jesco Resources knew what he wanted.

We set clear criteria, said Howell, president of the independent lubricant and grease manufacturer. We needed someone who knew their chemistry – thats particularly difficult for greases – and also could communicate with customers and be a good representative for our company. We wanted someone with industry experience and in managing a staff of at least five or six people, and with demonstrated abilities in research and development work. A team player, who could work with our sales force, and also who could take budget responsibility for their area.

For the first three or four months, Howell added, our search went nowhere. We tried going through the usual network of colleagues and friends, hoping to find someone available through attrition or retirement from a bigger company. But nobody seems to be moving right now; theres so much turmoil in the industry that experienced people dont seem to want to rock the boat, to risk their pensions or change their lives.

In fact, it would take in excess of nine months and the assistance of executive search consultant and 76 Lubricants veteran Tim Tomasso of Optimum Business Solutions, in Erie, Colo., before Jesco landed Carl Kernizan, a PhD chemist who came to the company from Lubrizol. Kernizan was looking for a new challenge and, with a thumbs-up from his wife and children, made the leap to Missouri and the 55-employee company at the end of the summer. His first steps were to beef up Jescos laboratory staff and start exploring new directions for its products.

This story had a happy ending, but it highlights the difficulty of hiring R&D management talent in the lubricants industry. The search requires patience, persis-tance and the promise of a secure future.

And it may take an increas-ingly large salary, indicates LubesnGreases 2006 Salary Survey.

Crunchy Numbers

Seventy-nine laboratory, R&D and technical managers responded to our 2006 Salary Survey, reporting they make an average of $107,000 a year in compensation. Thats 17 percent higher than the level reported in 2004, and 25 percent above 2002s reported average. All of the respondents work at lubricant manufacturing companies. The median salary for this group of professionals is $98,000 – that is, half of them make more than that, half make less – and also has risen sharply, from $88,000 in 2004 and $79,250 in 2002.

What kind of person has risen to hold this job? The typical R&D manager responding to LubesnGreases survey is 49 years old, and has 22 years of relevant industry experience. He or she supervises a staff of 11 people, and has been with their present employer for more than 15 years, including seven years in their current position. Men greatly outnumber women, by about 9 to 1. The highest salary reported for this job category was $240,000 – not your normal paycheck, but plausible in rarified cases such as a major lubricant brands top research official or someone whose compensation is tied to the companys profitability, commented Jason McAuliffe, vice president and recruiting consultant at Energy Recruiters Inc. in Bonita Springs, Fla. In his experience, proferred salaries for R&D managers in the petroleum refining and lubricant manufacturing industry range from $80,000 to $140,000 a year, depending on experience, management responsibility and education level of the candidate.

We dont see research people moving around a whole lot, so employers have to be competitive on salary, trying to draw out the best employees, McAuliffe remarked. It helps if the employer is willing to look at technical experience from other industries, such as paint and cosmetics, because specific lubricants industry knowledge is going to cost. You have to put a lot of carrots out there to attract the best people – and you will pay a premium if the job applicant knows the business and has a real desire to grow the business. You usually cant find this kind of person through normal sources like networking and job listings.

Tim Tomasso, who helped Jesco with its search, agrees that its a sellers market now. There arent as many people around today with the credentials and experience that employers need in this position, he said. In part, this may be because of mergers and acquisitions, and the general downsizing that the lubricants industry has endured. There are fewer companies, less opportunity in some organizations, and less job-hopping than we saw before, Tomasso said. It takes very aggressive networking to find the right candidates. But some do want to move, theyre eager for the opportunity to advance and progress.

Size and Location Matter

While all of the technical managers responding to the 2006 Salary Survey are with lubricant manufacturing companies, their employers range in size from very small (10 or fewer employees) to large outfits employing more than 500. Not surprising, compensation tended to rise with size of company, with the lowest average salaries ($73,000) reported from those working at companies with fewer than 11 employees, and the highest earners (average: $141,000) toiling at companies with more than 500 employees.

Compensation also rises with the number of people that a laboratory/R&D/technical manager supervises. A little more than half – 53 percent – of the survey respondents say they supervise five or fewer people, and they make an average $100,895 for their efforts. Those supervising six to 12 employees made up 22 percent of the respondents, and they scoop up $122,224 on average. When the head count goes to 13 people or more, reported compensation averaged $139,278.

Geography makes a difference too. The 8 percent of our survey respondents who are in the Southwestern United States earned bragging rights for the best salaries, reporting an average of $165,000 in pay. Second-highest compensation was seen in the Southeast, where the average was $110,000 (median: $128,500).

Glaring Gaps

Just 11 percent of the respondents in this job area were women, and the average salary reported by female respondents was $104,778 a year; for men the average was $107,413. However, the median compensation for our female respondents reached only $83,000 a year, which suggests that a few very highly compensated women pulled up the average number. Median salaries for male respondents, by contrast, was $100,000, a premium of 17 cents on the dollar.

Another finding of the survey was that lab/R&D managers who hold Certified Lubricant Specialist credentials from the Society of Tribologists and Lubrication Engineers dont seem to be making that certification program pay off, at least in terms of higher take-home pay. STLE started the certification program 10 years ago to spotlight those individuals who have demonstrated knowledge and training about lubricants and lubrication – which would seem like a slam-dunk for lab and R&D managers. One in five of our respondents in this professional area holds CLS credentials, yet as a group they reported lower average salaries than those without it. CLS holders average $101,088 a year; those without it $108,765.

By contrast, sales and marketing executives who hold CLS credentials are paid 6 percent more than their non-CLS counterparts. (See Novembers issue, page 16.) Why isnt a similar benefit seen by research managers?

McAuliffe in Florida was quick to suggest that the data may be anomalous – it doesnt ask the right questions to explain the difference between the two groups.

And he went on to speculate that, for the professionals who direct a lube companys technical programs, other factors such as advanced degrees, proven managerial abilities and industry knowledge out-weigh any advantage that CLS may confer. CLS measures lubricant knowledge, but not proficiency in formulating new products or managing a budget and staff, he pointed out. These latter skills are what his clients ask him to focus on in searching for an R&D manager.

CLS is a common request for sales and marketing job searches, but I dont think they ever ask for a candidate in this area to have it, he said.

Making Your Move

About two thirds of the respondents in this job category have held their position for more than five years – but the one-third who said they have switched jobs in that period picked up some significant earning power, drawing 22 percent more than those who stayed put. Managers holding their jobs for more than five years earn an average $99,566 a year, while those who have moved to new jobs in the past five years report an average $121,700 a year.

Finally, 87 percent of lab/R&D managers responding to this years survey said they had received a raise in the past year. Only 68 percent said they had in 2004.

When it comes to other compensation, 68 percent said they expect to receive a bonus this year (vs. only 50 percent who did two years ago), and 13 percent say theyll get stock in the company and/or a commission. In 2004, only 8 percent expected these fringes.

The use of profit sharing as a form of compensation also seems to be rising, with 29 percent of respondents in 2006 saying theyll get it, while 21 percent did in 2004.