-
mssampathms
- Newbie | Next Rank: 10 Posts
- Posts: 4
- Joined: Sun May 06, 2007 9:35 pm
- Location: Bangalore
- Thanked: 1 times
- GMAT Score:680
"Some have argued that the salaries of corporate executives should be linked to those of their lowest-paid employees. This, they argue, will improve relations between management and workers, reducing costly labor disputes and increasing worker productivity. What these people overlook, however, is that these high salaries are necessary to attract the best managers, the individuals whose decisions have the greatest impact on the overall well-being of the company."
Which do you find more compelling, the contention that worker and executive salaries should be linked, or the response to it? Support your position with reasons and examples from your own experience, observations, or reading.
My essay:
Off late, the salaries of corporate executives have been highly scrutinized in public. There are a lot of people who view with anger the 'obscene' salaries that these executives are paid. After the recession of 2008--2009, there has been a call to curtail the high salaries of executives, or to keep it in 'reasonable' limits. One might suggest that the salaries of corporate executives should be linked to those of the lowest paid employees. However, this is definitely not a practical idea, which can be implemented across industry, given the nature of such executives' jobs.
The compensation that an organization sets aside for its employees depends largely on the value that an employee adds to the organization. It can definitely be said that every employee contributes to an organization in a different way. Hence the value added, in terms of efforts put in, or the skills that he brings to the company is unique. Corporate executives typically contribute in critical leadership roles and provide a direction to the organization as a whole. The company's future and that of all the employees depends on the work done by these executives. As such, they bring a far greater value to the company than other categories of employees. Linking these executives' salaries to that of the lowest paid employee might actually be detrimental to the morale of the executives.
Additionally, compensation is also perceived as the reward for an employee's efforts, and as the worth of a person's skills. This is often contained in the bonus or variable component of the employee's salary which is paid out depending on the accomplishments or achievements by the employee, his team or the company overall. Without a sizable reward put forth, there would be little motivation for anyone to go the extra mile to outperform. Hence, there is no justification in linking the salaries of executives to the lowest paid employee, or any form of salary normalization.
Sometimes, we come across some examples of executives who voluntarily take a cut in their salary. The most recent example is that of Mr. Vikram Pandit, the CEO of Citigroup NA, who announced that he will take an annual salary of $1 until Citigroup makes profits. However, such decisions are voluntary, are taken at the highest level of an organization, and are typically used to show the commitment on the part of the leadership to steady the course of their organization. Another example is that of Lee Iacocca, who took a cut in his salary when Ford Motors was in a rough patch. However, he did this primarily as a negotiating strategy to force other employees to agree to a salary cut.
We can reliable conclude that the salary of any employee should be determined by their worth and by the value he will add to an organization. A good salary is in itself a powerful motivator for an employee to perform to the best of his abilities and to contribute his skills to the organization.
Which do you find more compelling, the contention that worker and executive salaries should be linked, or the response to it? Support your position with reasons and examples from your own experience, observations, or reading.
My essay:
Off late, the salaries of corporate executives have been highly scrutinized in public. There are a lot of people who view with anger the 'obscene' salaries that these executives are paid. After the recession of 2008--2009, there has been a call to curtail the high salaries of executives, or to keep it in 'reasonable' limits. One might suggest that the salaries of corporate executives should be linked to those of the lowest paid employees. However, this is definitely not a practical idea, which can be implemented across industry, given the nature of such executives' jobs.
The compensation that an organization sets aside for its employees depends largely on the value that an employee adds to the organization. It can definitely be said that every employee contributes to an organization in a different way. Hence the value added, in terms of efforts put in, or the skills that he brings to the company is unique. Corporate executives typically contribute in critical leadership roles and provide a direction to the organization as a whole. The company's future and that of all the employees depends on the work done by these executives. As such, they bring a far greater value to the company than other categories of employees. Linking these executives' salaries to that of the lowest paid employee might actually be detrimental to the morale of the executives.
Additionally, compensation is also perceived as the reward for an employee's efforts, and as the worth of a person's skills. This is often contained in the bonus or variable component of the employee's salary which is paid out depending on the accomplishments or achievements by the employee, his team or the company overall. Without a sizable reward put forth, there would be little motivation for anyone to go the extra mile to outperform. Hence, there is no justification in linking the salaries of executives to the lowest paid employee, or any form of salary normalization.
Sometimes, we come across some examples of executives who voluntarily take a cut in their salary. The most recent example is that of Mr. Vikram Pandit, the CEO of Citigroup NA, who announced that he will take an annual salary of $1 until Citigroup makes profits. However, such decisions are voluntary, are taken at the highest level of an organization, and are typically used to show the commitment on the part of the leadership to steady the course of their organization. Another example is that of Lee Iacocca, who took a cut in his salary when Ford Motors was in a rough patch. However, he did this primarily as a negotiating strategy to force other employees to agree to a salary cut.
We can reliable conclude that the salary of any employee should be determined by their worth and by the value he will add to an organization. A good salary is in itself a powerful motivator for an employee to perform to the best of his abilities and to contribute his skills to the organization.
