Performance-based compensation is quite a popular and also another well accepted strategy. In this strategy, employees have direct control over how much they are paid. Having control really helps to motivate employees to work harder and achieve new financial goals and maximize their own income. Having an organization that is a high performing organization helps to make an organization more competitive. The downside of this approach is that you create a more competitive environment…
CEO’t t t s make millions of dollars in executive compensation and have come under fire for getting paid too much? Is it ethical to give executives large compensation packages?…
A compensation strategy is one of the many human resources (HR) tools that organizations use to manage their employees. For an organization to receive its money’s worth and motivate and retain their skilled employees, it needs to ensure that their compensation system is not an island by itself. Not only is it important for an organization to link compensation to its overall goals and strategies, it is important that its compensation system aligns with its HR strategy. Let’s face it, if an organization is not paying its skilled employees what they are worth or at least the industry average, the chances are they will find an organization that will pay them for their talents.…
There are times at which companies show their appreciation to their employees by giving them bonuses and pay increases. These bonus/pay increase amounts are determined by: how long one has been with the company, what level that one works at the company, the overall performance of the individual, and this is also determined by how much the company is able to spend (that is within the company’s budget.) Usually upper management tends to receive the largest amount of these bonuses when they are awarded. These employees are at the top of the company and hold the highest positions.…
Executive compensation has been at the forefront of discussion for a long period of time. Analyzed by academics, highlighted by the media, questioned by Congress, and scrutinized by the general public, the topic warrants much debate. In the 1990’s, total executive compensation increased substantially as companies began offering stock option programs; CEO’s of S&P 500 saw an average increase of 150%.1…
s the overpayment of CEOs and the effects these high base salaries have on businesses. Understanding that well compensated CEOs are generally quite productive and well deserving; there are those that seem to drop the ball and the business suffers. CEOs are hired in with contractual compensation packages, which do not give stipulations to cover incidents such as decreases in stock value, company downsizing, or bankruptcy. Many argue that CEOs are not compensated enough for the pressures they endure, that they are generally they first to receive pay cuts when the company is facing financial distress, and in some cases are first to be dismissed in order to save others in the lower echelon. Because of these compensatory packages given when hired, when the company’s financial stability is no longer solid, the CEOs are still guaranteed pay increases and incentives that they continuously accept. The Board of Directors may believe that their hands are tied and still feel obligated to compensate for past performance, or feel the need for continuous compensation for the purpose of retaining the employees. Regardless of their reasoning, the Board of Directors, are under pressure to make cuts that trickle down to the average workers. I will present, and offer support for my argument, that top executive’s over compensation is unethical during times when the company is in a financial struggle.…
A CEO’s compensation package affects everyone within a company. Often it can be considered the yardstick by which all other employee benefits and bonuses are measured and negotiated.…
A company’s fundamental purpose and objective of compensation is to provide adequate and equitable rewards to employees at a level that matches theirs skills, abilities and contributions to the company (DeNisi, Angelo S., Griffin, Ricky W., 2008, p. 284. Para. 1). Compensation is the human resource management function that deals with every type of reward that individuals receive in return for performing work – including financial and nonfinancial rewards. Financial rewards include direct payments (e.g. salary) plus indirect payments in the form of employee benefits. Nonfinancial rewards include everything in a work environment that enhances a worker’s sense of self-respect and esteem by others (Cascio, 2006, p.418, Para. 1).…
Companies today should mirror their compensation and benefit programs with their long- term business strategy and organizational culture. According to Casio (2010), “Pay systems are designed to attract, retain, and motivate employees” (p.421). The most important objective is fairness or to achieve internal, external, and individual equity; and maintain a balance in relationships between direct and indirect forms of compensation, and between the pay rates of supervisory and nonsupervisory employees. Employers must perform job analysis, develop job descriptions, evaluate the value of job/position in the organization, develop pay structure and pay levels to create competitive employee compensation and benefits (Cascio, 2010).…
As a result, employees are upset over their compensations when they compare their salary to work colleagues with similar job function. The incident could affect employee morale within the company. For instance, the lower paid employees would reduce their productivity to meet what they reckon are a reasonable substitute for their compensation. On the other hand, higher paid employees would feel the pressure from their work colleagues because they earn more thus must produce more which would create a more stressful workplace environment.…
No, Chief Executive Officers (CEO’s) are not paid what they are worth. Finding data to support this argument was rather difficult. Most of the data available supports the belief that CEO’s are overpaid. Data used to support the statement that CEO’s are paid what they are worth is from companies listed on the Standard and Poor’s 500 (S&P 500). The Society for Human Resources Management (SHRM) (2014) website suggests that not all CEOs receive multimillion dollar salaries. CEOs for companies such as Nike, EBay, and Starbucks have million dollar annual salaries, cash compensations, stock, and options (CNN, Money, 2013). These companies are part of the .002 percent that allow people to believe that CEO’s are overpaid.…
CEO pay is an indicator of how well a company performs and can be considered as a measure to negotiate employee benefits and bonuses (“Why do CEOs make big bucks?”, 2011). An establish pay structures to executive can give a good reputation to the company. Looking at the competitor, American Red Cross has compensation and management development committee to make sure executives compensation is reviewed and approved. Their CEO is paid $500,000 a year, a fair amount considering it’s a non-profit organization.…
An article from the Society for Industrial and Organizational Psychology documents a SIOP conference panel discussion . SIOP member, Brian O’Leary asks “Why are CEOs being rewarded at a level that doesn’t seem to be commensurate to their contributions to the organization, especially in cases where they are running failing organizations?”. Edwin Locke, the Dean’s professor of Leadership and Business at the University of Maryland argues that “Some people think there is an intrinsic amount of pay that is correct for a job. The problem is, there’s no such thing” (Schings). He goes on to say “I would not say executives with high pay are overpaid just because they are paid…
In a recent editorial in the Seattle Times, the editors complained that the executives of a public company, Simon Property Group, should have their salaries determined by the shareholders. Among the many things wrong with this piece is first, how do shareholders know anything about the performance of the executives in question? They don’t. They don’t work beside them on any kind of basis. They do not know what kind of challenges the company faced and whether the executive responded superbly or poorly to some change in the business environment. An executive could have responded with perfect decision making in a company whose destiny was determined by technology. Think Kodak or Xerox. Even then the company might show poor results even though all the right decisions were made. The world changed and buyers are fickle. Think of how many restaurant chains went from being the hottest item on the stock market to bankruptcy. Customers are faddish, they go for something for a while and then change allegiances when another fad comes along. Sure, it would be nice to think that some magical CEO could have done something about the changes, but most likely, even God could not have prevented the disaster.…
In this essay, I will attempt to reason why in my understanding high CEO pay are unjustified given the rising economic inequality. I will use references from many different philosophical papers concordant to my interpretation of the pivotal concepts depicted in them to support my statements. Before I set out to argue why high executive compensations are not justified given the rising economic inequality, the first part of this essay will explore why I believe the current level of CEO compensations are excessive and unjust in itself and in the second part of the essay I will try to show the implications of higher CEO pay and its role in increasing the economic inequality which makes it unjustified.…