For example, it would make perfect sense if a dean made less than one of their Nobel-prize winning professors. Or a coach that makes less than their olympic athletes.
i'm sure there are other examples.. Stating "Your direct reports should never make more than you" as fact seems a little overreaching :)
Generally, a manager is a force-multiplier and should get compensated for making everyone better. This generally means that managers get paid more, and directors more, and c-suite even more. This is just a generality though. It falls apart all over the place.
> How can you be the boss of someone who is defacto more valuable then you (even as they lack the responsibility you bare)
Easily? Your role as a manager is to enable your direct reports to do their best work. That is orthogonal to pay differentials. I've seen business founders work on teams under a manager. Strange power differential there! And the pay difference was insane - the founder _owns_ the business and can be worth millions. But it works. It is the same reason why a younger person can manage an older person, or someone less skilled in programming can manage a programmer.
Also, in many professional sports, coaches make less than the members of the team they coach.
It's similar to sports team management - sure the manager is rare and more experienced, but they're not burning their mind off trying to meet irrational deadlines. The stress of management mostly comes from team issues, so I'd think paying them more would solve a lot of problems.
But it's also sort of a hierarchy thing.
To answer the question, I’ve been in this position and it can happen especially when the manager is in a less well paid city/location. Didn’t create tension but did make me realize location/market matters so much more than skillset with respect to compensation.
Let me guess, you're a programmer.
Programming actually seems to pay better in third world countries, though, as there's a shortage for specific skill sets, as opposed to developers with 20 years experience who can put together a full stack PHP site or build telco systems, but haven't done Angular.
The money side didn't bother me because they were more experienced and in specialist roles that I definitely couldn't do (at least when I took over the team). If anything it worked out to my benefit as my boss felt a bit guilty about it so I received a promotion and a hefty pay rise at the next year end.
It also helped that none of the team had wanted the role so there was no slight implied.
There were some odd moments. At one point one of the team, with more than 10 years more experience than me, asked me for career advice. But mostly it wasn't much different from other team lead roles I've had.
ICs can be specialists, and there are rare / valuable specialist skills that can command far higher comp than a generic manager or director.
There's nothing about comp itself that would cause a report making higher comp to undermine a manager making less. And a good manager will defer to the report on the topics the report is an expert on.
(Tho in a pathological organization or if the report is an asshole, it might be an indicator that the report is more valuable to the organization and could go over the manager's head to undermine the manager if they wanted to.)
Life is short--I moved on.
Essentially you have a very valuable individual contributor who is good at what he does, and he wouldn't be as valuable if he was forced to be a manager.
The manager above him understands this.
