Debate Report
CEO salary should be 1000 times more than the Subordinates
OPPOSITION’S STANCE
Over the past 40 years, Chief Executives Officers have seen their pay grow by 1000%. The
wealth disparity has accelerated since the financial crises and 350 organizations in US alone
are reported to have an extremely high CEO-to-Worker pay ratio. Disparity between
executives and the broader workforce has been a hot button issue as he gap has widened over
the decades. So much so that authorities have felt the need of regulating public disclosure of
corporate pay sets considering the harms it is bringing to employees betterment. Few of the
reasons to why pay disparity should be reduced or to rephrase: Why CEOs should not be paid
1000 times more than the subordinates are as mentioned below.
First off, in firms where the CEOs are overpaid by 50% compared to the industry norms and
general managers are underpaid by 50% the turnover rate is reported to be 18 times higher as
compare to firms who have equitably set payrolls. Pays should be justified otherwise it would
lead to high turnover rate that is incredibly costly because organization would have to search
for new people and train them, plus there would a short-term decline in productivity.
Moreover, a CEOs salary should not be 1000 times more than the subordinates, as a CEO
wouldn’t have to do their jobs if it wasn’t for their workers. The workers contribute in the
company’s revenue way more than any CEO. All the transactions and the decisions are taken
by the workers and the CEO takes all the credit in the end which is not fair by any means. All
the revenue that a company makes should be transferred to the workers who actually make a
good contribution for the company’s success. In addition, Why is so that when a company
performs poorly CEOs compensation goes p rather than coming down like with that of all
other employees? This disproportionality creates unrest amongst the employees again causing
decrease in productivity.
An organization who’s CEOs acquire multiple times their normal representative's
compensation are seen as less alluring to work for, and to work with, as per another UC
Berkeley study. This open dislikes for high CEO-to-Worker par ratio results into problematic
recruiting as well as investor hunting.
Furthermore, CEO pays should not be 1000 times higher than a subordinates pay due to the
reduction of productivity. Productivity is an output of factors such as motivation and
satisfaction. If employees thinks that they are being treated unfair due to the major difference
between a CEO’s and a subordinates pay scale, they could get demotivated which could
turnout in less productivity. Extreme cases could be where employees leave the organization
due to feeling unfair organizational justice. A study done by Ethan Rouen shows that
companies that have a major difference between CEO pays and subordinate pays,
productivity is half there as compared to companies who have less pay difference.
Another significant reason for why there shouldn’t be an extreme pay inequality is that where
CEOs are paid 100-1000 times more than their workers, in these organizations median
employees are paid below the poverty line (Hess, 2019). Apart from other cases where
question was upon fairness and transparency, here the matter is about employees not being
given social security and being deprived of their basic needs which as explained by Maslow’s
Hierarchy of Needs, will result in least employee motivation and unsatisfactory labor
productivity. This will consequently harm the entire organization.
All in all, CEO shouldn’t be paid 1000 times more than the subordinates because much large
pay gaps demoralize workers. People working in an organization want fairness and equity as
they are key components of a motivated individual. The higher an individual's perception of
equity, the more motivated they will be and vice versa: if someone perceives an unfair
environment, they will be demotivated, will reduce their output and eventually leave.
Companies should consider reducing the salary gap between the CEOs and other employees
big companies like Google and Facebook have low CEO-to-worker pay gap and we can
count this as a significant factor for their apparent success. It’s true that business executives
make more money than lower-level employees but only when pay disparity between CEO
and subordinates are perceived as fair the workers will be happy and satisfied.
