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The Ceo Pay Gap - Motivating or Demoralizing?

Essay by   •  May 1, 2019  •  Creative Writing  •  849 Words (4 Pages)  •  402 Views

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           We all know CEOs of big companies are much more than well paid for their

work. They are paid a lot more than their average employees  and this has been an

 issue for quite a long time. The truth is that CEOs actually contribute to the

 companies they manage. So seen this way someone might say that it’s really worth

 paying someone that is going to bring the company some extra billions. Some people

 though wonder whether CEOs salaries are extremely high from a social point of

view. Their salaries are a lot of money in anyone’s eyes.

            As explained by (Minnick, 2016) we have to answer some other questions first

before trying to find if this gap  between  CEOs and employees’ salaries is ethical. We

should consider what industry  is the company in, if the employees are skilled or

unskilled, how significant is the gap and  whether the employees know about it or not.

He explains that it’s not fair for employees working full time in companies like fast

food chains  to see what big checks  their CEOs get. This can be even worse when the

CEOs continue to get such salaries  when the company is not performing well. He

also says that due to the fact that nowadays there is transparency in salaries so the gap

is seen by everyone there is more need for something to be done so as it gets smaller.

          As stated by Edmans(Edmans,2017)  the main issue is that  CEOS are

considered  to be disproportionately rewarded at the expense of other workers. He

believes that CEOs salaries should be reformed but he expresses concern that if not  

done correctly it may hurt bottom line workers as CEOs may try to reduce the gap by

outsourcing low paid jobs, hire more part time workers or invest more in automation

than in labor. Edmans explains that CEOs and employees operate in different markets

so the comparison between their wages might not be a good idea  after all.

           It is difficult to answer if this practice uses a valid reward distribution system.

According to (Kasperkevic, 2018) there are studies saying that CEOs make 200 times

the wage of an average employee in their company but there is no evidence proving

they add 200 times value to it. However this argument is used by many directors who

take decisions  about wages and believe that only by offering such big salaries they

can attract the qualified candidates. These people think that the CEO job is difficult

and only a few people are able to do it. They believe that because they are hard to be

found CEOs  deserve their big salaries. On the other hand some will argue that not

only CEOs should be rewarded  for the success of a company. This is the result of  

the efforts of  a great number of people  who perform their job flawlessly .

      I think that it would be wise for companies to consider ways to reduce the gap.

Although CEOs do make big decisions they are not the only ones who are responsible

for the success. Gederman says that if the CEOs salary is not justified to employees  

the firm performance may suffer. It can lead to worse than just unhappy workers. It

can interfere with the company’s performance. It is critical for the company to be able



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