Are CEO's Paid Too Much?
OUTLINE
This report explores the issue of the pay that top executives make, and the reasons why they do. It also suggests improvements that can be made to make the system better. High Pay Seems Small When Compared To Company Profits Many companies pull in profits that are extremely high. When an employee of such a companies salary is compared to the amount of profit that the company earns, it starts to seem reasonable. It only makes sense that if the employee is directly responsible for the success of their company, then they deserve to get their payback. It seems ironic, but many salaries even look small once compared with a companies profits. Top Executives Are Under A Lot Of Pressure Being the CEO of a company is not an easy job. There is all kinds of pressure for a person in such a position to succeed. If they do not, then it is their job on the line. Therefore, they deserve to receive a large sum of money for the work that they do. It is the only way to compensate these employees for the tremendous strain that their job puts on them. It is essential that the employees get paid the amount of money that they deserve. Pay Should Reflect Performance When CEOs are being given big paychecks, they are expected to perform at a high level. There success is impeccable. However, this does not always happen. There should be some way of connecting pay to job performance. The best way of doing this would be to award bonuses to those workers who are at the top of their class. This would not only motivate workers to do a good job, but also reward the employees that do succeed.
TOP EXECUTIVES DESERVE THE MONEY THAT THEY MAKE
INTRODUCTION
It is a well-known fact that many people holding high positions in companies make an exorbitant amount of money. Some, however, say that they do not deserve the amount that they are paid. They feel that for the amount of work that is done by these executives, their paycheck is simply too high. Also, they believe that these high paid workers often do a mediocre job, while still managing to reap the benefits of being an executive. While these are viable arguments against this issue, the other side of the spectrum shows that this is not so. There is an equal amount of evidence, if not more, that suggests that executives earn every penny of their paychecks. The CEOs of companies are under an extra...
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...oopholes.
3. The world on a whole, should agree on a standard level of pay for executives. It
is not fair that people in countries other than the US, receive 1/3 of the pay,
for doing the same job. This would help to give the executives around the globe,
the amount that they should be getting.
4. It should be easier for a corporation to get rid of an unwanted employee. Right
now, many are tied into contracts that require a large sum of money be paid if
the employee is released early. There needs to be escape clauses if that
employee performs lower than expectations. This will keep only the best
employees running businesses, meaning that these companies will be more
successful.
If all of these ideas are implemented, then the world of high paid executives will surely run smoothly, without controversy and dispute concerning amount of pay.
BIBLIOGRAPHY
1. "Rich-Baiting Time," National Review, 62 May 5, 1996
2. "Random Numbers," MacLean’s, 42 May 9, 1994
3. "Giving Capitalism An Obscene Reputation," National Review, 35 May 9, 1994
4. "On The Right," Economist, 62 June 3,1995
Time and time again we hear politicians and office holders preach the need for a powerful middle-class. You may then be surprised to hear that “about 82% of America’s net worth belongs to the top 20%, the next 80% of people only own about 18% of America’s wealth” (UCSC). Some may argue that this disproportion is the beauty of capitalism, the chance to create an empire. I argue that the proportions are simply unfair. Why is it that “ the average CEO makes 350X as much as his/her employee” (UCSC)?
Mujtaba, B. G., & Shuaib, S. (2010). An Equitable Total Rewards Approach to Pay for Performance Management. Journal of Management Policy and Practice vol. II (4), 111-121.
secretaries, for example). Today, most Americans support equal pay for work of comparable (not merely identical) value. It is past time to ensure it is achieved.
The company Steel Co, which has been established for around 30 years, has been in a steady decline during the current recession and although a Divisional Director has been employed by the owner the fortunes of the company have not improved. The staff is unhappy, unproductive and unimpressed by the Human Resource system that currently exists in the company. The pay structure that currently exists within the organisation has been much debated among employees who feel it is unsatisfactory. The Business Adviser will research Performance and Reward management tools in order to help the company develop a more suitable Performance and Reward system to use. A variety of sources will be used in order to evaluate the system and tools against other organisational frameworks. The pay structure within the company will also be looked at in order to identify any possible changes that could be made.
Sumo, V., & Weitzman, H. (2013). Are CEOs overpaid? The case against. Retrieved from Capital Ideas: http://www.chicagobooth.edu
This will lead to increased workplace efficiency and will help businesses in the United States increase their profits. Additionally, pay transparency has already helped lower the wage gap in several countries. Britain, Austria, and Belgium have all signed laws requiring employees working in the countries to report their wages.
The United States has one of the highest gender pay gaps among the developed countries. In the country, the gender pay gap is measured as the ratio of female to males yearly earning among workers in full-time, year round (FTYR) earnings. In 2009, female FTYR earned 77% (0.77) as much as the FTYR male workers (US Census Bureau, 2013). The history of Gender Gap earning reveals USA has made big strides towards reducing the gender pay gap from 1980. For instance, in 1980 the gender pay gap ratio was 0.62 while in 1990, the gap stood at 0.72. Further from 1990 to 2000, the gap reduced to 0.73 and then to 0.77 in 2009. Currently, the gender pay gap stands at 0.76 and continues to persist (US Census Bureau, 2013).
Author Greg IP, describes real pay as the amount an individual makes in monetary terms after accounting for inflation. The logic behind this theory is that “the more a worker produces for his employer, the more he’ll earn” (Ip, 2013, p. 58). Greg Ip, provides an example of this theory and its dilemma in his book titled The Little Book of Economics: How the Economy Works in the Real World. Greg Ip, states that “someone with a backhoe can dig more than someone with a shovel”, therefore it may be expected that the employee who produces more is compensated respectively (Ip, 2013, p. 58). However, the employment world does not always guarantee that the highly productive employee will benefit more than the employee with less productivity and often it is the “employer” who gains the capital profitability in this employment agreement and other times it is even the consumer of the product or
they are not paid equally. Study shows that in 1900 one of the five people in the U.S. paid work
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