Gaps in Executive and Worker Compensation as an Organizational and Management Challenge

Donovan A. McFarlane ()
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Donovan A. McFarlane: Westcliff University

Journal of Entrepreneurship and Business Innovation, 2015, vol. 2, issue 1, 1-15

Abstract: This paper examines the gaps in chief executive officer (CEO) and worker compensation by exploring the vital data of 10 corporations as uncovered in a study by NerdWallet.com on the differences in hourly compensation between CEOs and average hourly workers or employees. The author examines the problem of excessive compensation for CEOs as a major organizational challenge that affects perceptions of fairness by stakeholders, especially employees or workers whose contributions to organizational performance and success are not being adequately rewarded, but instead transferred to CEOs and other executives as companies increase revenues and profits through the sweat and toil of ordinary workers. The author argues that executive compensation should be linked to organizational results and performance, and examines the standards and considerations for determining fair wage and compensation, and from examining vital data on CEO compensation and average worker compensation, explores the implications for organizational change, including consideration of quality work life (QWL) investments. Several recommendations are made for meeting the challenge of excessive CEO compensation to include the following: (1) developing new approaches or methods of compensation that take worker rewards into consideration; (2) limiting CEO or executive compensation relative to established multiple of the average worker’s wage; (3) intervention and petition from governmental and administrative agencies including workers’ rights organizations for change; and (4) more compassionate leadership and management by organizational CEO and executives with increased concern for workers’ well-being.

Keywords: Employee Retention; Employee Satisfaction; Excessive Compensation; Executive Compensation; Fair Wage; Organizational Citizenship Behavior (OCB); Quality Work Life (QWL); Stakeholders (search for similar items in EconPapers)
Date: 2015
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