Wage Gap Question

2

Comments

  • swanyswany subscriber Posts: 0
    Bark,
     
    You obviously have never owned or have run a company.  I have since 1993.  I have moved our company from nothing to over $5 million in sales in one year.  Being an experienced employer with a monthly expense that would frighten most people, I know from years of putting up with the complaints, the lying, the steeling, the cheating, and eveything else that you could think of, it is not easy.  A CEO/founder deserves to make 150-500 times more then the lowest paid employee.  A typical employee has no equity in the business, they don`t have their house on the line to get things going, they don`t have to skip a paycheck because a client didn`t pay you this month, they don`t have to negotiate new rentals/purchases, they don`t have to do close to anything a CEO/founder has to do.  They just have to show up for work and do a reasonable enough job to get by.  I joke around with people that ask me what the hardest part of being the CEO of my company is, I respond "babysitting".  Employees need to be babysit, they wine when things aren`t going well, they make faces if their bonus is not greater then the year before, they complain when you have to take their gas card away, they bitch about having to stay late and finish something. 
     
    Having said all of that, I have to end with a couple of thoughts.  Employees are the best and worse thing a CEO/founder has to deal with.  Most companies could not make it without employees.  You just have to realize that at the end of the day, everything that happens good or bad is reflection of the CEO/founder.  Hire and fire to make as many things as you can turn out good.
     
    Every American should own a company once in there life time and then they would know that money doesn`t grow on trees and that it is earned everyday, rain or shine.  So many employees think that money grows on trees or they deserve more then they are being paid.  I recently spoke to a Police officer on an airliner and he said something very interesting.  He said that all the cops in his department are not writing tickets any more to speeding drivers, I asked why?  He said because his department has not given anyone in over 2 years a raise.  I asked, how does that make it better.  He said that they see all the summons with just a warning and they will eventually get the idea on how much money they are missing out of.  I found that incredible, that he and his fellow officers were punishing the township with not writing tickets because they haven`t had a raise in a while.  That is why every person needs to won and run a business.  If he did he would have understood that the more money that comes in, the more can go out in bonuses and wage increases.
     
    Most employees think they punish the business owner by not performing, they punish everyone within that company.  A dead weight drags everyone down.
     
    A CEO/founder should be able to make 100s of time more then lowest paid employee because they have to put up with everyones situation and everyones job.  Not just a single job responsibility. 
  • cyplesmacyplesma subscriber Posts: 0
    bark,
    I myself don`t have a corporation of my own, still working for the man. your intentions are well founded. personally I believe those 400% wage gaps are the difference between the scrooges in life and the other guys (Fezziwig). I myself call those 400% wage gap kind of companies sweat shops. Keep in mind there is no data cause as one can read above many people seem to think that just because they own the business they can be a scrooges when, where, and how they want. Why we have laws that govern so many areas of business. It`s a real shame that many businesses only care about their workers safety for example because they have to.  There are no laws that mandate wage gaps, but I do remember a documentary on walmart their highest ceo pays himself 12% above the highest paid hourly wage earner. Or so he claims. I do know many executives in walmart complain about as much as the hourly workers about their low pay. but no one is forcing them to stay either.
    Their are those who want to sell 10 items for 100 dollars each, and there are those who want to sell 100 items for 10 dollars each. There are people who refuse to pay 100 dollars for something they can get for 10 dollars but beware there are those who will not pay 10 dollars for fear of their egos being bruised if they find out they could buy it for 100 dollars thinking they are better then the jones.
  • gsamadgsamad subscriber Posts: 2
    Way to go BurninGreen!  I`m glad someone brought up the "c" word before I did.  The communist system failed because why would anyone want to go to the effort of getting a college degree, going to medical school, and training for several more years to become a doctor, only to be paid the same as the high school dropout janitor?
    Why should your minimum wage deserving employees aspire to anything better if you pay them $100,000 per year for minimum wage work?  The disparity in earnings for more education, training, risk taking, etc. is there for a reason.
    Don`t get me wrong, money isn`t everything.  There are certainly other satisfying rewards for running a successful company, such as being your own boss, the pride of producing a high quality product that people really want to buy, and so on.  But limiting your income to 4 times the janitor`s so that your employees like you more just seems bizarre to me.
      Gary
  • barkwheatsbarkwheats subscriber Posts: 3
    Just got wind of this CEO discussion. Barkwheats, I believe you are focused on CEO`s from very large companies. did you ever consider that an entrepreneur or small business person who runs their own business fits the definition of a CEO?
    I know that yo9u have said that you are not demonizing CEOs, but to those reading your bent, you are.
    I am the regional director of an organization that re-branded it`s name to CEO Space in 2006. Many of our members were very upset that we changed the name. Why? They had a similar mindset as you. Whenever you mention a CEO you think of the greedy SOBs that run the large corporations, the ones that have been ruining the economics of this country.
    Our orgainzation works with the CEOs of small to mid size businesses to help them accelerate business growth. They work from a cooperative model not the greed infested competative model. Often, as start-ups they are the only "employee".  At that level, if you didn`t dig enough to see what you are truly dealing with, that greedy little bastard gets 100% of the earnings. Can you imagine that? That CEO gets 100% of the earnings of thir own company. Of course that may only be $30 to $40 thousand/year. Not to mention that there is a very high % of small businesses that don`t ever make it. They fold before they ever get a chance to be greedy.
    It would assist those reading your posts if you began to qualify what CEOs you are actually focusing on. Are these the CEOs of the large corporations? If you were able to develop a full spectrum of CEOs from Start-ups to large coorporations, I beleive you would see a great deal of difference.

    Thanks for the reply.  I`m in no way trying to "demonize" anyone.  I`m simply asking for others` input on the subject, as it`s something I hadn`t ever thought of before I started my business.
    As for who I`m focusing on... I would say I`m focusing on the mid to large size companies, as that`s where I want to grow into and make sure my policies are in place.
    Thanks again!
  • barkwheatsbarkwheats subscriber Posts: 3

    Dear Barkwheats, Thank you for thinking this way about your business. Thanks for posting about it and for standing up for your position in the face of what, to me, was surprising criticism. I was interested and glad to read some thoughtful reflections as well, especially the part about unintended consequences.  Good luck with your business. Hopefully the biscuits will come to a retailer near me (or online) in Ohio. I`m sure that my little dog will love them too.

    Thanks Jemba!
    I`m glad to hear others` responses as well.  It does me no good to hear from all the people who agree with me, and does me all the world of good to hear from people who think differently from me. 
    And... you can certainly buy my biscuits online    And if you have a store that you purchase from, let me know their name and I can see about getting our biscuits over there!
    Thanks
  • barkwheatsbarkwheats subscriber Posts: 3
    BurninGreen... nice, I like your ideas.   And thanks Diego.  Swany, thanks for your input.  And yes, this is my first company, but my family has grown many multi-million dollar businesses in the past.  To each their own.
    Thanks Spiderman.  That last question is the most important one, that`s true. 
    Also, BurninGreen... your last post was wrong on the math.  If someone is making 8 dollars an hour, 400 times that is $3,200an hour, or about 6 million dollars a year.  Just wanted to clarify that for folks.
  • TinaTTinaT subscriber Posts: 0

    I run my company a little differently.  Everybody that works for me gets minimum wage.  However, not me.  I`m always the last to get paid, if at all.  Period.
    Then I add in bonuses for being on time, staying at the job all week, skill level required by the job, performance and quality of the work done, customer satisfaction, no rework/recalls.
    Bottom line is everyone gets to set their own salary by the way they perform the job assigned them.  Nobody makes minimum wage for long.  They either produce or leave of their own accord.

     
    BurninGreen - you DO run your company different.  I love that idea, can I use it?
     
    As for the rest... I think it`s a fine line.  In our society, a law restricting CEO wages would never last for long - that does smell of communism to me, too.  Not exactly endearing to people wanting to start a new business... or grow an existing one.
     
    I think the boards are the ones that need to wake up (or whoever it is that decides compensation packages for big corp CEO`s) - for some reason CEO`s of large firms have been given incentives to just sit in their chairs.  Their compensation does not appear to be related to the performance of the company.  When a CEO gets a bonus for leaving - after the company goes bankrupt... ah... I think something is wrong.
     
    But, if the CEO gets a $6 million bonus out of company profits, well, that CEO must have done something right, and hopefully deserves that bonus!
     
    As for smaller companies... I`d go for a profit-sharing model.  Pay decent wages (or pay-for-performance with the BurninGreen model), and the rest gets shared with everyone - (with a weight factor based on responsibility level).
     
    I`m hoping that we at least get some transparency out of the current mess we`re in.  If all CEO`s had to share their compensation package details with the entire company (if not the public) - would that help?  Employees could then choose to leave if they thought things were unfair.  Most CEO`s should know that finding good employees is not easy, and keeping good employees is good business sense.
     
    Many of the posters here at SUN are aspiring to be that 400x big-money CEO, so we`re not going to say too many bad things about it!
     
    I think I`ll go see what Barkwheats are all about... I`m sure my two dogs would enjoy them too! 
     
    Happy Holidays Everyone!
     
  • jrlittle86jrlittle86 subscriber Posts: 0
    Barkwheats,
     
    Why do a study? Just do it. It`s your company. What you`ll find is that you and your plan will evolve and you will edit it, modify it, qualify it and/or trash it down the road. None of these options is either good or bad. It`s just what businesses have to do as they go and grow.
     
    Also, Burnin` Green said 400%, not 400x. 
     
    There is a small, mathematical clarification that needs to be made when talking about %s of pay. You said in the initial post "...the CEO of the company doesn`t earn more than like 400% of the smallest wage earner..."
     
    If  in your mind your statement means that 400% = 4x then, Burnin` Green was correct at calculating a CEO pay of $32.00/hr ($66,560/yr) if the smallest salary is $8.00/hr.
     
    If, in your mind, you meant that the CEO pay should be 400% ABOVE the smallest wage earner then the math is a little different:
     
     With an $8.00/hr salary...
     
    100% increase in salary would be an increase of $8.00 which equals $16.00/hr
    a 400% difference would be 4 x 100% or 4 x $8.00 = $32.00/hr above the $8.00 salary which equals $40.00 an hour ($83,200/yr)
     
    I know this is nitpicky but oftentimes this type of clarity is necessary when putting together a plan. And, for a small business the difference between $65K and $83K between a profitable year (for the company) and non-profitable one.
     
    With that said, nearly everybody on SUN is either a startup or a small company. I personally don`t think that establishing some sort of limit on CEO pay makes a hill of beans difference for small companies, especially one with a single employee. For the record, I would never, ever consider making a policy like this for my company - I just don`t know what surprises the future holds in store and would not like to have a policy like this to shackle our flexibility.
     
    But again, as you grow your plan will evolve - make those adjustments accordingly. In the meantime, and I suspect that your initial post was exactly for this purpose, just learn what other companies do and be ready to implement whatever you choose when the time comes.
     
    Good luck.
  • gsamadgsamad subscriber Posts: 2

    As for who I`m focusing on... I would say I`m focusing on the mid to large size companies, as that`s where I want to grow into and make sure my policies are in place.

    Um, barkwheats, I`m not sure you understand what a small, medium, and large U.S. company are.  The U.S. government defines a SMALL company as one that has more than $100 Million in sales per year.  Most entrepreneurs bail out before reaching this size.  Medium sized companies have revenue between about $100 Million and $1 Billion per year.  Large companies (the S&P 500) have over a billion dollars per year in sales.
    There is no way you are going to be able to hire the CEO of an S&P 500 company for 4 times the salary of the janitor.  So, in my humble opinion, I don`t think you should worry about making policies for your one man company that you think will have any meaning at all for an S&P 500 company.
      Sincerely,
      Gary
  • barkwheatsbarkwheats subscriber Posts: 3
    Gary, what I meant to say at the beginning was 400 times, not 400%.  I would never expect someone to run a large company at 4 times what the lowest wage earner made.  Not even Ben & Jerry`s went that low.
    And why the condescending tone?  Just because I want to explore options for fair compensation doesn`t mean that people should fire away at me... just MY humble opinion.
    And also I don`t know where you got your sizing standards from, but the SBA government website doesn`t have that value of 100 million dollars in revenue for the definition of a small business.  Check out the site herebarkwheats12/17/2008 4:28 PM
  • barkwheatsbarkwheats subscriber Posts: 3
    jrlittle..  thanks for that clarification.  What I was talking about is 400 times, not %.  That`s for clearing that up.
  • ladderlessladderless subscriber Posts: 3
    This thread will continue to take a nosedive quickly.
     
    The way I see it, barkwheats asked a question about fixed wage percentages, and what`s available in terms of information.  There are some companies that do this, and a few have been pointed out.
     
    Barkwheats gave a few numbers, the first "Like 400%" I don`t think was a fixed number... Later it changed to 40 times to 150 times, and just now to 400 times.
     
    Does anyone on this forum have the benefit of perspective?  Who has started a company, and grown it to a multimillion dollar organization, and purposely shoved any potential profits back into paying each employee a significant amount over prevailing wages?
     
    We are all talking theory here -- Barkwheats has great intentions, and clearly wants to have the company mature into a warm, fuzzy sort of place at which to be employed.  But that is now, and clearly just an intention... There`s not much that needs to be set up.... Heck, I bet early on, the CEO will earn LESS than the lowest paid person... That`s the price for starting your own company.
     
    It`s a matter of personal belief, and there are going to be differing opinions.  Personally, I believe that profit sharing is a better way to go, in that it provides incentive, and a sense of ownership.  A fixed, artificially high wage eventually creates an entitlement environment.
     
    Also - A fixed percentage wage MIGHT have to drop if the company goes through tough times.  A CEO/Owner can usually weather that (especially as income jumps), but how would a lower wage earner do?  With profit sharing, that drop is a bit more transparent, being a drop in a "Bonus" type of pay.
  • barkwheatsbarkwheats subscriber Posts: 3
    Thank you ladderless.  I really appreciate your time in that response, and you outlined clearly what my intentions were.  To learn from others about wage gaps and how they are implemented and all that`s good and bad about them.
    It`s good to have a place where lots of people with differing opinions can come and shed light on what they know or hypothesize on, though doing it in a constructive way is the way to do it. 
    So, thank you once again for thoughts.  I think I`ve gotten a lot out of this thread and I`ll move on to my next quest for knowledge.
  • gsamadgsamad subscriber Posts: 2

    Gary, what I meant to say at the beginning was 400 times, not 400%.  I would never expect someone to run a large company at 4 times what the lowest wage earner made.  Not even Ben & Jerry`s went that low.

    Sorry, but this entire thread has been based on myself and many others refering to the 400% that you used, and you haven`t pointed out that you meant 400 times until now.
    Here is your quote from your second post:I personally am sick of the huge wage gap in the US where CEO`s can earn 300-400 times the lowest earner.  To me, that`s a huge part of our economic woes.
    If you had said 400x in the first place, then the conversation whould have been completely different.  In fact, I think that if you had a written policy that the CEO would make 400x the lowest paid employee, it would really p*ss them off, not make them happy!
      Garygsamad12/17/2008 10:23 PM
  • swanyswany subscriber Posts: 0
    Nelson,
     
    I responded to this thread days ago and it seems to be a hot topic.  There is something that I afforded my employees years ago called a SEP.  Whatever percentage an owner takes as his bonus in this goverment supervised bonus you have to give to your employees.  So, if you take a bonus of 25% of your yearly salary, you have to give your employees of 3 years or more the same percentage bonus you take of their salary.  Any employee that qualifies for this bonus would get a bonus of 25% of their yearly salary.  A $40,000/year employee would recieve a $10,000 bonus.  It works well except when you have an off year.  Let me explain.
     
    Employees that have not owned or have run a company before think that money grows on trees and they do not realize that it is earned everyday by every employee.  One year I gave every employee the max amount of 25% of their annual salary in a bonus.  The next year was a little leaner and we had to drop that amount to 15% of thier annual salary.  I am sure you can imagine what happened, some employees got very upset with the decrease in the bonus recieved from one year to the next.
     
    One employee that was with me for over 8 years became a problem after that, stating that she was planning on at least the same amount that she received last year and that this bonus was unacceptable.  I tried to help her understand, but she just couldn`t.  I explained how much we made the year before and explained what we made that year, but it went on deaf ears and she wanted her money or she refused to work.  Needless to say, she lasted another 2 months and I had to fire her for becoming increasingly difficult to work with.
     
    That is the difference between an employee and a CEO/founder.  An employee just doesn`t get it and they should be paid for what they did that day and nothing more.  If they contribute to a great year, bonus them only for that past year, but do not pay them anything more then that job is worth because at the end of the day the CEO/founder created the success and share that years bonus if they should be that lucky.  That is why a CEO/founder needs to make as much as the company can afford to pay them, an employee is just there for selfish reasons and not willing to take any risk and want all the benefits. 
     
    I really do believe in fair pay and sharing everything with the right people as I have done.  I hope you see through some of my experience that being generous to the employee mind set sometimes comes back to haunt you.  Good luck and Merry Christmas to all who read this.
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