Bok Writes on Salaries

Is it fair that Lee Iacocca makes 100 times as much as Bill Clinton or a that a senior law partner can make 10 times as much as a Supreme Court justice?

Derek C. Bok does not think so.

The former Harvard President laments the fact that such a financial discrepancy exists between the salaries in the private and public sector in his new book, The Cost of Talent: How Executives and Professionals Are Paid and How It Affects America.

The book, recently published by The Free Press, argues that certain lucrative fields, such as law, medicine and business, are depriving other less-paid professions, such as teaching and public service, of talented and able people.

While Bok acknowledged in an interview yesterday that the well-paid professions all need well-qualified and talented people, he cited the problems which occur in these fields when the highly-skilled person enters the work force.

"In medicine, we need a greater balance between the generalists and the specialties, but the talent is going in to the specialties...Buying and selling bonds gets more talent than it needs," Bok said. "Law gets five times their prorated share of the most able people."

The consequences of this imbalance, according to Bok, are that less lucrative positions are being deprived of qualified people.

"We don't get as much as talent as need inteaching and public service. The quality of schoolteaching and the quality of people going into thepublic sector has really decreased," Bok said.

Bok cited two decades in the twentieth centurywhere this emphasis on the private sectorincreased, the 1920s and the 1980s. Bok said thatthese two decades were "periods in history wherebusiness and entrepreneurship were highly valuedand where the stock market was doing well."

Bok said that these decades began to create anatmosphere which the highly paid job was desiredand where less lucrative positions were demeaned.

"The well-celebrated figures were beginning tomake huge salaries and this began to affectpeople's attitudes as to what was appropriate andthen salaries began to take off," Bok said.

However, Bok said that although compensationfor work in the private sector increased, workerdissatisfaction in the '70s and '80s decreased. Headded that the emphasis on salaries which occurredin the '80s "did not help the workers or society."

Bok, who earned $213,389 in salary during hislast year at Harvard, said that the discrepancybetween salaries of administrators and faculty hasseveral causes.

"[Administrators] get paid a little more,because they don't have summers off and they can'tdo any consulting on the outside," Bok said."However, sometimes we have to pay what the marketrequires in order for them to do a good job."

Asked about the discrepancy between his ownsalary at Harvard and that of the University'shighly paid money managers, some of which are paidclose to $1 million per year, Bok said he didn'thave control over Harvard Management Companysalaries

"We don't get as much as talent as need inteaching and public service. The quality of schoolteaching and the quality of people going into thepublic sector has really decreased," Bok said.

Bok cited two decades in the twentieth centurywhere this emphasis on the private sectorincreased, the 1920s and the 1980s. Bok said thatthese two decades were "periods in history wherebusiness and entrepreneurship were highly valuedand where the stock market was doing well."

Bok said that these decades began to create anatmosphere which the highly paid job was desiredand where less lucrative positions were demeaned.

"The well-celebrated figures were beginning tomake huge salaries and this began to affectpeople's attitudes as to what was appropriate andthen salaries began to take off," Bok said.

However, Bok said that although compensationfor work in the private sector increased, workerdissatisfaction in the '70s and '80s decreased. Headded that the emphasis on salaries which occurredin the '80s "did not help the workers or society."

Bok, who earned $213,389 in salary during hislast year at Harvard, said that the discrepancybetween salaries of administrators and faculty hasseveral causes.

"[Administrators] get paid a little more,because they don't have summers off and they can'tdo any consulting on the outside," Bok said."However, sometimes we have to pay what the marketrequires in order for them to do a good job."

Asked about the discrepancy between his ownsalary at Harvard and that of the University'shighly paid money managers, some of which are paidclose to $1 million per year, Bok said he didn'thave control over Harvard Management Companysalaries