GMAT Essays (AWA)

Hi All

Can someone pls rate this response on Analyis of an Issue. The response has been under timed conditions.

Analysis of an Issue
"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."

Response

In the recent past, there has been a general trend towards piiloring top corporate executives for the astronomical salaries that they make. This has been increasingly true with the economic slowdown of recent times and subsequent labor retrenchments or labor disputes. However, those who make such demands ignore the reasons that go behind high salaries for top notch executives in any industry. Here, I will present views on why salary of a lowest paid & salary of top management cannot be linked to each other.

First of all, salaries for a position in the company are decided by market factors. And like any other parameter which depends on demand & supply in the market, salaries too cannot be controlled and regulated. In a company, typically the lowest paid worker performs the lowest skill jobs as well. For example in a manufacturing unit, the lowest skill worker maybe performing the job of say, packaging a good. Now this definitely does not require much education or qualification. So, abundance of such skills in the market is high and since options for each vacany are numerous, salaries are driven down. This is not the case with top management. The corporate executive is expected to play mutliple functions which are critical and his performance can influence course of the company. Typically, he would be a highly educated, qualified, experienced and with leaderhip and quick decision making capabilities. People with such aptitude and attitude are not easy to find. And since they are scarce in supply, the remunerations offered for them are high. High salaries are infact one way to attract the best talent in a scarce market.

The second point is about paying people for what they do & what they deserve. The top management execuive in a company has greater burden to carry. He needs to take critical decision under high pressure, is expected to perform mutliple tasks, has to lead people and when things go wrong, take flak. The risks that he carries with such a job is high. Add to it, the pressure of responsibilities that causes mental anguish and impacts his overall personal well beng.Moreover, such an executive would have come to this position after years of toiling, both for education and for corporate career growth. Under these circumstances, it is only fair that he gets the best compensation for his job.

Lastly, the thought that linking the pay of lowest paid employee to top executive in the company can resolve labor unrest, is far-fetched. There are many other factors for discord between management & workers for example working hrs, working conditions, insurance benefits, facilities & safety standards at shopfloor etc.

All in all, there is no incentive for linking up compensations of lowest paid employee with that of top management. The top corporate executives perform critical functions in any organization and considering the responsibilities and risks associated, they need to be paid the best.