The Ceo Pay Gap - Motivating or Demoralizing?
Essay by gerontzv • May 1, 2019 • Creative Writing • 849 Words (4 Pages) • 643 Views
We all know CEOs of big companies are much more than well paid for their
work. They are paid a lot more than their average employees and this has been an
issue for quite a long time. The truth is that CEOs actually contribute to the
companies they manage. So seen this way someone might say that it’s really worth
paying someone that is going to bring the company some extra billions. Some people
though wonder whether CEOs salaries are extremely high from a social point of
view. Their salaries are a lot of money in anyone’s eyes.
As explained by (Minnick, 2016) we have to answer some other questions first
before trying to find if this gap between CEOs and employees’ salaries is ethical. We
should consider what industry is the company in, if the employees are skilled or
unskilled, how significant is the gap and whether the employees know about it or not.
He explains that it’s not fair for employees working full time in companies like fast
food chains to see what big checks their CEOs get. This can be even worse when the
CEOs continue to get such salaries when the company is not performing well. He
also says that due to the fact that nowadays there is transparency in salaries so the gap
is seen by everyone there is more need for something to be done so as it gets smaller.
As stated by Edmans(Edmans,2017) the main issue is that CEOS are
considered to be disproportionately rewarded at the expense of other workers. He
believes that CEOs salaries should be reformed but he expresses concern that if not
done correctly it may hurt bottom line workers as CEOs may try to reduce the gap by
outsourcing low paid jobs, hire more part time workers or invest more in automation
than in labor. Edmans explains that CEOs and employees operate in different markets
so the comparison between their wages might not be a good idea after all.
It is difficult to answer if this practice uses a valid reward distribution system.
According to (Kasperkevic, 2018) there are studies saying that CEOs make 200 times
the wage of an average employee in their company but there is no evidence proving
they add 200 times value to it. However this argument is used by many directors who
take decisions about wages and believe that only by offering such big salaries they
can attract the qualified candidates. These people think that the CEO job is difficult
and only a few people are able to do it. They believe that because they are hard to be
found CEOs deserve their big salaries. On the other hand some will argue that not
only CEOs should be rewarded for the success of a company. This is the result of
the efforts of a great number of people who perform their job flawlessly .
I think that it would be wise for companies to consider ways to reduce the gap.
Although CEOs do make big decisions they are not the only ones who are responsible
for the success. Gederman says that if the CEOs salary is not justified to employees
the firm performance may suffer. It can lead to worse than just unhappy workers. It
can interfere with the company’s performance. It is critical for the company to be able
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