Scandals at companies like AIG over bonuses and some inexplicable and indefensible extravagance by executives from a company receiving $85 billion in bailout money brought the subject of executive compensation and perks to the forefront. Again. Princeton University provides a wonderful definition of profligacy that is particularly appropriate here: dissolute indulgence.

Despite the lead-in, this is not really a piece on CEO salaries, separation pay or stupid spending. Enough forests have been laid bare and countless terabytes expended on these subjects. Instead, I would like to write about those pour souls being sucked down these ethics and financial holes, caught in the swirl of all this dirty bathwater.

They are the middle managers and senior managers who execute the corporate will: department heads, directors, even vice-presidents. (Note: Some people would remove VPs from this discussion. In many ways, though, VPs do the same work as those directly below them but with an added layer of corporate responsibilities. They also have more information to keep them awake at night and more meetings to attend.)

There are a few things you have to understand about middle management.

First, they are indeed in the middle. They are the spokes of the corporate wheel. They are the messengers, bringing the news, good and bad, to and from the field. They bear the brunt of both CEO wrath and employee frustration. They have to translate corporate strategy into action, overcome internal weaknesses and face down external threats. They take their work home with them, tethered to their laptops, always on call. And they, more than anyone, pick up the slack when front line workers are let go.

Arguably, for what they do, they are hardly overpaid. Those below them in the corporate hierarchy imagine large salaries, bonuses, perks and privileges that simply do not exist. When it comes to reward, in fact, these managers are far from the middle.

How far? William J. McDonough, Chairman of the Public Company Accounting Board (a creation of the Sorbanes-Oxley Act of 2002) attacked the excesses of large company CEOs in an article on corporate greed.

In 1980, the average large-company chief executive officer made 40 times more than the average employee in his or her firm. By 2000, the multiple of the average CEO’s pay over that of the average worker in the firm had risen, according to some studies, to 400 times. “There is”, said McDonough, “no economic theory, however farfetched, which can justify such an increase. In my view, it is also grotesquely immoral.” (Note: Remember, McDonough is talking about large companies. CEOs of small to medium sized companies have more modest ambitions.)

How much of that largesse trickles down? The answer is, simply, not much. And not far. In most companies, the salary gap starts becoming pronounced at the VP level. On the other hand, says Todd Milbourn, finance professor at the Olin Business School at Washington University, “there’s still a pretty significant gap between, say, a senior vice president and a CEO”. My experience is that, in most companies, especially small and medium sized companies, VPs make something in the order of two times middle managers who, in turn make only percentage points better than the senior members of their respective staffs.

Bonuses tend to be somewhat more skewed. Perks – in my opinion, at least – are generally small potatoes, usually taxable and, anyway, beside the point.

For the increment in pay, the middle manager is also every bit as vulnerable as his employees. More so, when new management appears, either in a changing of the guard or merger / acquisition.

In the recently published The Truth About Middle Managers (Harvard Business Press), Paul Osterman, professor of human resources and management at M.I.T.’s Sloan School of Management, points out that for the last 20 years, white-collar workers and managers have been vulnerable to layoff. “What’s happened in the last six months”, he says, “is just a little more intense than what’s been going on since the mid 1980s.”

The word ‘delayering’ has entered the vocabulary as a good thing. Taking out middle managers, say the human resource gurus (if not the HR managers), streamlines the organization, enhances communications and facilitates rapid decision making. I believe it does exactly the opposite. This pendulum, swinging way to the right, has a very sharp edge indeed.

So life is increasingly difficult and the times particularly rough for middle management. It is nigh impossible to move up these days and, arguably, unwise to do so anyway. They are truly, and incorrectly, between a rock and a very hard place.

You see a lot of advice these days on how to survive the recession. Financially, the first order of the day – as always – is cash flow and that means, first and foremost, keeping your job. Investments are for later; working is for now. We need to eat.

To that end, I humbly put forward, for your consideration, five suggestions for surviving the cut. Admittedly, I am not alone in providing free advice. The First section of the December 8, 2008, issue of Fortune magazine, for example, also offered up five tips, four for keeping your job (though only three are useful) and one in case you don’t.

My credentials: I have lived through – and, indeed, helped organize – large scale layoffs. It is a troubling process – even for the most human with the best of intentions. It damages the soul, leaving scars that – in my case, at least – will never heal.

That said, I have learned things going through the process that are worth sharing. I have learned, for example, that there is a jockeying for resources. The number of cuts are usually fixed (by someone in Finance!), but the nature of the cuts is often up for debate and the specificity of the cuts, in most cases, comes down to the individual. The good news is that there are generalities that can be observed, generalities about who gets cut first, who, unbeknownst to them, balance ever-so-delicately on the bubble, and who survives without question. Even when whole departments are shut down, there are those plucked from the anonymity of the group. It is worth understanding why.

1.    Find a mentor. That is, find someone in a high place who likes you and who thinks what you do is valuable. Someone besides your boss. In the layoff planning sessions, lists of names will be bandied about. You want someone to say, “Woah! This name should not be on the list. If anything, I can find a place for him.” It will be costly. Names do not get removed from lists; they get substituted. So your benefactor will have to give up something to get something.

How do you find a benefactor?

2.    Get noticed. Most people think that lying low is the best strategy for survival. Keep your head down, they say. Never be the first one over the hill. This is incorrect. In my opinion, it is exactly the wrong strategy. Working hard, in itself, is not enough. Toiling in obscurity is not nearly enough. Starting early – like today – get involved in a high-visibility project. You have to bring something to it, of course. A specialty. A skill. One of the people I know who was designated for termination was a brilliant analyst who was always the first choice of every project team leader. Her value was widely known. She was simply in the wrong place - a department being eliminated – at the wrong time. The Finance department had no idea she was even on a list. When it became known she was to become a ‘free agent’, they happily reached out for her.

On the other hand…

3.    Avoid not-for-profit projects. Surprisingly, being a good citizen carries no weight. Working on the company’s United Way campaign, for example, pays zero dividends. Organizing the Christmas party…ditto. I have actually heard it said, to nodding faces, “Yes, she’s a fantastic person…always involved…but that has nothing to do with the business.” If you have to get involved in a project, make sure it is one that moves the business, not civilization, forward.

4.    Be self-sufficient. Don’t count on your boss to hold your hand; he has problems of his own. If he has to give you work, you are almost certainly expendable. If he has to help you get your work done, you are vulnerable. Faced with a down-sized department, your supervisor will look for a self-sufficient, self-starter whose hand he doesn’t have to hold.

5.    Do not be self-indulgent. Do not be a contrarian. These are tough times for everybody. They are about to get worse, so there will be plenty to complain about. The last thing your supervisor needs is a whiner. I had one employee who had too many principles for her own good. On several occasions, she considered suing the company for imagined wrongs. Everything down to the air she was breathing was subject to debate. Not surprisingly, so was the opportunity for advancement. When it came time to prepare ‘the list’, imagine whose name was near the top.

So there you have it: five things that will help save your job. Please note the word ‘help’. In a sweeping layoff that reaches triple and quadruple digits, even the best can be swept out to sea with the bathwater.

One more thing: these tips will be of service, cuts or no cuts. Right now, you have to think about your job but, remember, your career is just around the corner. So keep your head while looking ahead.

Good advice at any time.

In November, 2007, the online business journal of the University of Pennsylvania’s prestigious Wharton School looked into the subject of succession planning (CEO Succession: Has Grooming Talent on the Inside Gone by the Wayside?) This is a delicate subject that pops into the corporate consciousness and onto business mag covers whenever a corporate giant goes outside for its CEO.

In the Knowledge@Wharton case, the stimuli for discussion were executive hires at financial megalosaurs Merrill Lynch and Citigroup. Stanley O’Neal (Merrill) and Charles Prince (Citi) were asked to leave their respective companies subsequent to the mortgage securities fiasco. In December, John Thain, CEO of NYSE Euronext and a former president of Goldman Sachs became Merrill’s chairman and CEO. Citi, however, went inside, tapping Vikram Pandit. Then again, Pandit was hired by Prince just a few months earlier so he barely qualifies as an insider; he was Citigroup’s investment banking head before his new appointment.

(Subsequently, Merrill was acquired by Bank of America. Pandit, meanwhile, faces major restructuring challenges at Citi; check out Gary Weiss’ article in the September issue of Portfolio magazine.)

The Wharton discussion takes place at two levels: the issue of going inside or outside in key executive searches and the importance of succession planning in general.

CEO Selection

The selection of CEOs is as much a politically-motivated, risk-mitigating, investor-sensitive decision as anything. Boards, like those at Merril and Citigroup, go outside to let the investment community know that they recognize there are internal problems and that a change in direction – and a changing of the guard – is merited. It would be impossible to advance anyone associated with the old regime.

It is risky (Wharton’s words) to bring in someone at the height of a crisis. There’s a huge learning curve to understanding a company’s strategy and culture. A CEO who comes in from the outside is very dependent for information from and vulnerable to the perspective of those left …an irony in itself.

But what about lower level executive positions? The consensus seems to be that this is the most appropriate level for leadership training and succession planning because this is where the likelihood of selecting internal candidates is highest.

Indeed, Peter Cappelli, management professor and director of Wharton’s Center for Human Resources feels it is better to focus on skills improvement in general than to groom people for specific positions. “I don’t think the idea ought to be to develop people for a particular job,” Cappelli says, “because the odds of using them in that way are pretty small. Both the person and the job have to be lined up too exactly for that to happen.”

Unfortunately, despite the supposed emergence of workforce planning, most firms seem to have abandoned the systematic management of talent, not only as a priority but as a core human resources activity.

Planning Pros and Cons

They argue that businesses operate in fast-paced, highly-competitive, increasingly-global environments; it, therefore, only makes sense to access the broadest base of talent available when seeking specialized skills and technical knowledge. The internet makes tapping into this base easier and faster than ever. To boot, the needed skills and knowledge can be acquired on a contractual basis, reducing long-term overhead cost commitments. Finally, bringing in new talent at all levels on an ongoing basis maintains freshness and brings to the organization new perspectives needed in an ever-changing world.

On the other hand, I would argue that a company should be diligent in maintaining and leveraging the intellectual capital of its organization. I have always been a big believer in the value of experience, codified process knowledge, and intellectual property (brands, trademarks, patents and licences). These are all best home-grown.

I also believe that self-fulfilment, not self-gratification, is the prime motivator of success. There is no better motivator of people – especially in the upper levels of a company – than the opportunity for advancement. It is, of course, an opportunity that must be earned, not given. But developing talent coincident with the strategic mid- and long-term needs of the company, enhancing leadership and management skills, and substantively encouraging upgrades in education to ensure employees are fully-conversant with the latest technologies are all cost-beneficial.

Finally, rather importantly, stuff happens. People resign, retire, become ill. Some fail to adapt to changing circumstances, management, or technology. Assuming their responsibilities cannot be reassigned – a big assumption – they must be replaced. Without diminishing the value of and need for new blood, there is also value in and need for continuity, connectivity (relationships with stakeholders) and chemistry.

Whatever their approach, companies should take as much of the drama out of the succession process as possible. Employees – especially senior ones – should understand their respective company’s policies going in and their own potential for growth on an ongoing basis. That their company goes inside or outside to fill the CEO position - or any management position, for that matter - should never come as a surprise.