The problem with executive comp: Employees are paid too little
"The problem may not be that executives are paid too much, but that employees are paid too little," writes corporate consultant in Donald P. Delves in the most recent issue of Directors and Boards, a trade magazine that focuses on corporate board governance.
The problem with executive comp: Employees are paid too little
Jane M. Von Bergen, Inquirer Staff Writer
"The problem may not be that executives are paid too much, but that employees are paid too little," writes corporate consultant in Donald P. Delves in the most recent issue of Directors and Boards, a trade magazine that focuses on corporate board governance.
In his column, Delves credits a reporter for prompting him to think about why so many people complain about executive compensation, when, in fact, there are increasingly more trends that link pay to performance. That's all well and good, the reporter said to Delves, but what about the regular worker whose pay has not increased in real terms for decades?
Delves said he didn't mean that everyone should get a big raise. But, he said, companies put so much thought into how to compensate the top dozen executives that they haven't turned enough attention to the rest of the group.
"What if we used some of that talent and creativity to design incentive programs for all employees? What if the board focused a portion of its time on making sure the company was getting the best out of all employees and giving them the opportunity to contribute and share in the gains?"
I think he's on to something. Of course everyone would like more money, but the opportunity to contribute matters as well. How many times do employees make suggestions, offer to help and try to participate, only to be told, subtly or not so that they can participate by doing their jobs.
What a waste.
"It is not just senior executives," Delves wrote, "who have natural business abilities, entrepreneurial spirit and the ability to think and make productive decisions."
Delves is the president of the Delves Group, based in Chicago. Thanks to the editor of Boards and Directors, Jim Kristie, for sending me a link to Delves' article. Congratulations to him on his 32d year with the magazine.
Not news - just opinion.
Inquirer - please hire actual writers and not those who just repurpose.— Nipsey Russell- Nipsey: If papers are suppossed to write ONLY news, then why have travel, comics, lifestyle, etc., sections? Not the mention the OPINION section!— phillyrican48
- @Nipsey, it is definitely news and newsworthy. Click the link or read "Winner Take All Politics". Income growth for Fortune 500 CEO's far outstrips that of the vast majority of Americans, even high income earners (over $200k/year). It's not usually tied to a the price of stock, which is not atrue measurement of comapny performance.
B
http://energyecon.blogspot.com/2009/08/distribution-of-real-income-growth.html— MCC1701 
Per the financial press, the CEO of a major Rx chain, which is losing million$, gave himself a 400% increase last spring, and his friends did well too, with 100% to 300% raises. He rewarded himself for stopping almost all hourly increases, and decimating the medical plan. Most employees make do with less than 1%/year. Shareholders were hosed too, as the stock is in the tank.- Tony,
You are either lying outright or simply are ignorant about how publicly traded companies operate. a CEO in a publicly traded company can't "give himeself a 400% raise". Only the board of directors can increase the CEOs compensation. And if the shareholders don't like the CEO's performance (or his compensation), they can vote to remove the board (and, by extension, the CEO).— john reilly - I have worked at many non-profit, public health agencies where the CEO is usually paid about $500,000.00 dollars a year. The lowest paid employes make about $8.00 dollars an hour. The directors of the programs have little to no contact with clients and the lowest paid have the most contact with those served. The boardroom folks know business practice but know nothing of the problems or needs of those served and make all the decisions. The hands on workers have many ideas, having worked so closely with clients, on the clients needs but usually have no outlet for suggestions. I agree with the assertions made in this article, believing that the best companies/agencies are when everyone has a feeling of belonging through compensation as well as respect of ideas.— stan123
- At my company, we all have incentives in that if corporate goals aren't met, we get no annual bonus. Of course, the higher ups get a much larger bonus. I knew about wage disparities when I decided to get into the corporate world. I'd rather not sacrafice family time to move up the corporate ladder so I spend less than I make and re-invest in other revenue streams (stocks & rental properties). In 2 years I will be earning more than my managers and directors but have 1/3 the stress. Also I have little fear of a job loss since I'll have the means to stay afloat until the next job which will be only needed for medical benefits.— Niko
- No matter what the reason or justification, it is extermely selfish for any CEO to take that much. It is a much greater percent than 50 years ago, totally unacceptable. That is why I stopped entering any WalMart eight years ago. It is a lot the fault of customers wanting things cheap, but I would rather pay double to a business that treats their employees correctly.— marvinlzinn
