Executive pay, a bonus to a paycheck for CEOs of a company, only provides direct benefits to the owner instead of the occupants working for the boss. This is form of compensation is, however, beneficial to the company as a whole. With the CEO receiving a high salary, they will ultimately have more money to pay their employees more and even possibly be able to hire more people which really aids in the dwindling current economy. This however does provide some positive and some unfortunate side effects with morale, ethics, and the way it affects the performance of the workers.
Everything about this issue usually ties back to the employee morale. The way an employee acts, and performs their work, relays back on the executive pay; if they know they will receive greater benefits with the compensation, the more willing they are to put more effort into doing their jobs. According to Christina Pomoni, “Organizations are emotionless…Organizations are atrocious…Organizations are stiff”. If people were to view organizations in this way, then the level of work they perform will not affect them in a positive way. People who have this view point tend to disrupt the organizational performance and well as the overall morale of all the employees, as well as the ethics the employees follow, thinking negatively of the corporation. The organization is what ultimately receives the output of its employees. If the workers are not performing the work they were hired to do at the level they were assigned, in due course it will be reflected into the quality of the product or business offered by the company. The workers are what make the company. Also stated in the same article, “...the most important factor is human element. No people, no profit. No people, no ambition. No people, no firm” (Pomoni). Even though the employees affect the image of the company, it is because of them that the company may or may not receive the bonus to their paycheck. According to PwC,...
Cited: "Making executive pay work: The psychology of incentive: PwC." PwC: Audit and assurance, consulting and tax services. N.p., n.d. Web. 29 Oct. 2012. <http://www.pwc.com/gx/en/hr-management-services/publications/making-executive-pay-work-the-psychology-of-incentives.jhtml>.
Pomoni, Christina. "How employee morale affects a company - by Christina Pomoni - Helium." Helium - Where Knowledge Rules. N.p., n.d. Web. 29 Oct. 2012. <http://www.helium.com/items/2051640-how-employee-morale-affects-a-company>.
"Why businesses should tie executive bonuses to organizational performance | YES Partners Industry Updates." YES Partners/ Global Executive Search. N.p., n.d. Web. 29 Oct. 2012. <http://www.yespartners.com/news/compensation-trends/why-businesses-should-tie-executive-bonuses-to-organizational-performance/>.
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