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Senior Management and Worker Compensation


   

The Myths
Workers object to a large difference between their earnings and the earnings of senior management; to survive in today's fiercely competitive marketplace, companies should keep wages as low as they possibly can

The Findings
It is a common belief that workers resent the very high compensation that senior executives often earn. But the authors find this is not an issue when the organization is doing well and the workers feel that they are also benefiting from that success: "Let him earn as much as he wants -- he deserves it and it's been good for me." Resentment becomes acute when the company is doing poorly, workers are suffering in their pay and job security, and senior levels continue to rake it in.

As regards the level of worker pay, the research findings strongly suggest that wages paid to workers should be competitive (not "as low as possible") and, if at all possible, somewhat above competition. The long-term returns to the company in increased performance will, everything else being equal, exceed the cost.

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