Pay inequality is a sensitive subject. This is mostly due to a world full of bad actors who have consistently underpaid women and minorities.
But, in some cases, paying people differently than their peers for doing the same job makes a lot of sense.
Take the case of Cristiano Ronaldo.
In case you don’t follow soccer, Ronaldo is often referred to as the world's greatest soccer player. In August of 2018, "Ronaldo" left the world’s most successful soccer club Real Madrid to join an Italian team known as Juventus.
While Juventus has been quite successful on the global stage, the club is valued at less than half the commercial value of Real Madrid.
As you might imagine, Juventus landing Ronaldo cost them a lot of money. To be specific, Juventus paid Real Madrid a $116M "transfer fee". This is just a club-to-club administrative fee for the right to buy the player. In addition to that, Ronaldo will cost Juventus around $35M per year in salary.
Just for fun, that's about $17,000 per hour or $675,000 per week!
In terms of pay inequality, these figures are over four times higher than Juventus’ highest paid player who, today, earns a paltry $8M per year.
While the world is shaking their head over how a club could pay one player so much money when a soccer team is made up of 11 players, I actually believe that he’ll be underpaid when you look at the value he brings to the club and to the Italian league as a whole.
For example, it's estimated that in 2017 his social media accounts alone generated over $900M in value for his sponsors according to HookIt. While this doesn't directly benefit his club, you can imagine that his 276 million social media followers must have an impact on the value of Juventus when you consider ticket sales and other merchandise sales like team jersey’s. Then consider the trophies that he’ll help them win and the TV rights they’ll gain since all eyes will want to see him play. And from a recruiting perspective, think of all the great players who will want to play with him which will make the club stronger.
As proof of his exponential value, the share price of the club jumped 33% on the announcement of his transfer.
But the world and even some of his teammates were quite vocal that the club overpaid for a player who some people suggest has already peaked.
Fast forward six months; however, and Ronaldo is well on his way to silencing his critics. Since Ronaldo has joined his new club, they sit 9 points ahead in first place in the Italian league, they finished first in the European Champion’s League group stages and, according to Footballdatabase.com, they are the number one ranked soccer club in the world. All this while his former team has struggled tremendously without him. Real Madrid sits in 5th place in the Spanish league and dropped from 1st to 8th in the global club rankings.
So what does this have to do with your business?
Well, have you ever thought about who you could hire who would have a similar impact on your company?
Who are you NOT hiring because they're "too expensive".
In what ways does your rigid compensation structure prevent you from hiring people who can truly change your business?
And lastly, why are you so focused on pay equality when not everyone contributes at the same level?
Give these questions some serious thought. Or more directly, start looking for or talking to your industry's Cristiano Ronaldo.
And instead of considering "What it's going to cost you" to bring that person on board, starting thinking about what it's costing you to NOT have that person on your team.