Wage Gap Question

barkwheatsbarkwheats subscriber Posts: 3
Hi all,
I`m trying to find some information on wage gap in the workplace, but not as it references gender wage gap, but more of CEO to lowest earner wage gap.  Does anyone have any experience with setting something like this up where the CEO of the company doesn`t earn more than like 400% of the smallest wage earner?
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Comments

  • barkwheatsbarkwheats subscriber Posts: 3
    Thanks Stan,
    I wouldn`t be limiting my own income.  If I wanted a raise, I can give myself a raise.  The lowest earner would just also get a raise proportionate to mine.  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 the CEO of a large company was paid just say 150 times or like in most other countries, around 20 times the earnings of the lowest paid employee then everyone benefits.
    My company is a Certified B Corporation, where the B stands for benefit.  I`m not out to make myself the only benefactor in my company.  I designed my company so that all stakeholders benefit, be it the farmers who grow my ingredients, the shareholders who invest in my company, the Earth.... I don`t believe in 1 person seeing all the gain, no matter if I had the larger vision or not.  Why would someone want to limit someone elses growth is my question?  I don`t believe in limiting anyone, and those limits that get placed on people are the problem with the world.
    If the incoming receipts don`t leave enough for me.... then so be it.  Since I`d be getting paid more than the others, I have the ability to save for those kinds of times.  I want my company to be a place where people want to come and work because of the work we do, what we sell, and the mentality of equality.  I don`t want people coming to work for me because it`s just "another job" that they can toss away if something comes along that`s better.  I guess it`s really striving for employee retention.
    Figure it this way.  How much would one spend on training an employee, maybe having to pay some moving expenses to get the right person out there for the job.  Lots and lots go into that whole thing.  The interview process, the follow up calls, all the reviewing of applications...  if you don`t have to do that often then there`s a lot of money you`re not spending on that, and can instead pay that money to the qualified person you`ve hired for that job to make them not want to take any other job.  To me, that just makes sense. 
  • nevadasculnevadascul subscriber Posts: 3 Member
    I think there is a problem when we demonize people who do well in business.  Granted, we would all like to see the guy / gal at the bottom of the totem pole make a good wage.  But, consider the investment most CEO`s have made in there education and life style changes.  Many CEO`s have spent a small fortune on their education and sacrificed time with family to build a business.  High paid CEO`s also bring a considerable amount of experience to a business that the average wage earner doesn`t have.  And, many CEO`s are not the demons portrayed on T.V.  They are honest hard working individuals.  They also are the ones willing to make the hard decisions to keep a business alive.  Most average wage earners would have a hard time for instance deciding who to keep and who to let go if a business falls on hard times.  Trust me, it`s not an easy decision. nevadascul12/11/2008 12:22 PM
  • barkwheatsbarkwheats subscriber Posts: 3
    Thanks.  I`m not "demonizing" CEO`s, first of all.  I simply wanted some info on the wage gap that`s ever increasing.  Are people not aware that there are lots of CEO`s who get paid very handsomely and then the other 98% of Americans who can`t get paid enough to put food on the table for their families?  All I want to do, and what I think all companies should do, is treat their employees well. 
    Sure, a CEO can bring lots of experience to the table that a lower wage earner might not have.  That begs to ask the question...why doesn`t that lower earner have that experience?  Maybe because their parents were low income workers and couldn`t afford the same education afforded to the CEO.  And if the CEO`s of those companies that the parents worked for had a policy in place to limit the wage gap, could those lower wage workers have had a better education to do better for themselves, to open more opportunities for the marketplace and increase everyone`s wealth?  I think so!
    Maybe I`m just in the wrong place to be asking about equality issues, because not many people around here seem to really understand what I`m wanting to accomplish.
  • barkwheatsbarkwheats subscriber Posts: 3

    Personally I find in todays world to many want to point up and say give me some I deserve it because I`m here, it is the people that contribute to the company day in day out without complaining that should be rewarded.

    To this I`d ask why would the employees be complaining if they knew their earnings were directly related to the CEO`s earnings with an appropriate wage gap?  So often the employees complain because the CEO has a 10k sqft garage with 15 porsches and a private yet, and they`re stuck doing the "dirty" work feeling unappreciated.
    In my opinion with all the information available in todays world at anyones finger tips, for free, there is a hole in the whole my dad was poor so I am poor story.
    Sorry, but you`re absolutely wrong about that one.  Just because there`s internet access doesn`t mean a kid will be able succeed in the world.  When I went to college for music production and engineering and graduated near the top of my class, that is what enabled me to work in Nashville.  That was what enabled me to work for one of the largest music retailers in the world.  I could never have gotten that kind of education by reading forums and online articles.

    As for me personally I don`t want to be surrounded with content employees I want them pushing for more from and for themselves. I think I accomplish that while providing a friendly, good natured environment.

    You can most certainly have content workers with incentives for them to strive to do more.  I don`t think having an appropriate wage gap would make workers become complacent.  I would most certainly want to have content workers because that makes employees actually care about the work they are doing and do it better.  It`s so hard for me to believe that someone would think they don`t want to have content employees.  Content doesn`t mean lazy.
    Bottom line with a wage gap limit the best anyone has to be is the minimum.I suggest you consider a "fast track" program for those that aspire, a daily or weekly "town meeting" (depending on your company size) sharing your goals for the company and reporting how far the company advanced in the last week, share the fever, not all will jump in, then consider limiting yourself  because you feel indentured to a middle of the road employee.I respectfully disagree that a gap limit is not in any way insirational, nor motivational.

    I respectfully disagree with your disagreement.  I think that when one would have a wage gap limit it would make employees feel more connected to their job and when someone is more connected to their job, they want to do it the best they can.  No matter what, when someone is doing their job the best they can, everyone will move forward.  Now, having a wage gap limit doesn`t mean there can`t be other performance based incentives.  I just think that it prevents CEO`s from going out of control in their salaries and leaving sour tastes in other employees mouths, not feeling connected to the company as a whole.barkwheats12/9/2008 2:24 PM
  • ladderlessladderless subscriber Posts: 3
    Interesting conversation.
     
    Are we talking about salary?  Or complete take-home?
     
    I am firmly of the belief that you get paid for a job, and rewarded for taking risk (That succeeds).  Those are two different things, and should be kept separate.
     
    I have no problem with capping a CEO`s wages for a job performed to a multiple of someone else`s wages for a job they do, but if the CEO is the one who started the company, and took the risk, then there`s a separate issue.
     
    So you have wages for a job done, and profit for taking the risk to start the company.
     
    I think this is why profit sharing is a decent way to go...  Make everyone win and get rewarded for having a successful company.
  • skvigneshskvignesh subscriber Posts: 0
    Hi,
    In Indian Government Sector, the highest paid executive (who might have taken equal or more risk than few of the CEOs in their Administrative positions and spend more than 2-3 years of their lifetime thinking about nothing other than the Civil Services Exams) gets just 12 times the salary of the lowest paid executive.
    Infosys chairman Narayanamoorthy was quoted as saying a 1:50 ratio would be healthy.  But we are talking about balance between socialism and capitalism here, neither did Russia succeed in Communism, nor did US sustain its capitalistic claims (when they are "almost" nationalising banks).  Even in a company I beleive we cannot be 1:12 or 1:20 which would be socialistic, and we cannot be capitalistic and say, hei.. lets not look at his salary he is above us... I think I will go with 1:50 (this being a strict ratio including perks and benefits)
  • Anthony813Anthony813 subscriber Posts: 0
    To answer your wage gap I have a startup firm that I do not get paid at all only my employees do.
  • snoonansnoonan subscriber Posts: 0
    To be honest, this has unintended side effects.  Compensation is a VERY complex topic and requires an enormous amount of careful thought in order to prevent serious problems down the road.  If your CEO is earns $200,000 a year and your receptionist earns 50,000, then you`re doing a good thing, right?  Well, what happens if you go under?  Your receptionist may not be able to earn enough to afford the house, car, college educations and everything else she`s funding.  You`ve actually ruined her life!
    What happens when the company is earning 2x more in profit?  Who gets to keep that?  Is it spread around among the employees as a bonus and/or is it paid to the stock holders? Is it simply donated to charity? Would your employees want their hard work donated?  What`s the incentive to work harder next year if they don`t get to keep it?  If they do keep it, how can they not become accustom to getting paid many times market rates?
    Imagine the case where you have someone with basic office skills pulling down $100k a year and spending like it. They`re completely and utterly dependent on you.  They have no other way to earn that money except through your good graces. That is a VERY bad thing.  It`s a kind of high paid slavery and can destroy lives, even if the intention was good.
    So, you really should not pay people too far above market rates for their skills.  So you have role inequity, but not market inequity.  See what I`m saying?  In a perfect world, I`d run a company with 100 equal partners all at my level and ALL bringing in huge value.  We`d share it evenly.  Each could go off and run their own company and earn close to the same income if they wanted.  We`d be together for mutual benefit.  But if the market rate were TOO far off the mark, then those people would be attatched and cling to the business for fear of losing their lifestyle.
    Just saying, be careful here.. deeply analyze the consequences of every compensation model.
  • DynamicSolutionsDynamicSolutions subscriber Posts: 0
    Very good point snoonan.  Bark... I do love your charitable spirit though.  I have owned my own company for several years now.  We are not rolling in dough but just barely getting by but my dream is to "pay my employees well" if and when I can.  I don`t plan on capping myself but I do want them to be paid above what market is because I personally don`t think that is enough.  I commend you Bark for being willing to share in the wealth you may one day create.
  • mbkitchenmbkitchen subscriber Posts: 0
    ".....and then the other 98% of Americans who can`t get paid enough to put food on the table for their families?  "

    I`ve told you a million times not to exaggerate!
    I believe the term CEO, used at a forum called "Startup Nation" might be a little presumptuous.  If you are paying yourself  20, 30, or 40 times (as "CEO") the least paid worker--then you have one hella business and I would like to invest.  Current minimum wage is $6.55/hour.  This would be a "CEO" wage range of  $131 to 262 /hour. (or 250-520K /year).
    If you are paying the bills and paying yourself that kind of salary--good on you. 
    As a former cubical/dilbert/software/employee--I did not worry about what the owners of the company made.  They took the risk and started the company--and gave me a job.  What they did to make working there enjoyable was, profit sharing, yearly bonus, and a very, very, large 401K match (2 to 1 - the one being my dollar).  Also, they had a very relaxed work environment.  It was a pleasure to work there.  (then the company got bought out-sigh).
  • barkwheatsbarkwheats subscriber Posts: 3
    Thanks all for the great replies!!  Of course, snoonan, I do think about the overpaying thing.  I wouldn`t want someone to be reliant upon my business.  If I`m paying a little above the market wage for an area for the lowest paid employee, then that helps to bring the whole community up.  What happens if the company goes under?  Well, that doesn`t matter if there`s a wage gap in place or not.    I do see your points and appreciate the input.  Thank you!
    Ladderless...I`m talking about the salary only right now.  Maybe I`ll look into this for the entire take home pay...maybe not.  I`m just exploring right now to see what others do.  I believe, too, in wages for a job done being different from taking on a risk.  Thats a good question on how to merge the idea into the entire earned income...or not.
    DynamicSolutions... THANKS
    skvignesh, thanks for your input.  Good to know what other countries do, too.
    smile999, had no idea about Costco!  Pretty darned cool, I`ll have to look it up.
    And mbkitchen... I do hope you were kidding about telling me a million times not to exaggerate.  I don`t know that we`d ever conversed before.  And why would you say that using the term CEO on startupnation is presumptuous?  It`s a title that has to be written in the articles of incorporation or organization (for those llc`s). 
    For what it`s worth, I don`t have any employees right now.  I`m wanting to make sure I build my business right from the start and implement the correct strategies as I grow the business.  I would have no plans of paying just minimum wage, but rather pay a living wage for whatever area I`m hiring in.   Minimum wage to me is a complete load of BS. 
    Thanks all for the replies! 
  • RobAdams4CEOSpaceRobAdams4CEOSpace subscriber Posts: 1
    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.
  • JembaJemba subscriber Posts: 2
    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.
  • DiegoDiego subscriber Posts: 0
    Hi Bark,
    First of all, congratulations! I believe yours is the right perspective for what you are trying to accomplish, which is to grow a small business (less than 100 Million in Revenues). Second, it is also a smart strategy.
    What I suggest is that instead of focusing on the gap between the lowest and the highest earner, you implement a well designed compensation system that is aware of the market values of the different  "roles" in your organization, and that has a multiple of components that keep alive the drive for performance and also pulls those no so self-motivated to achieve more.
    I have implemented several performance based systems and my recommendation is always that, all, including the CEO, are subject to performance when it comes to compensation. If you have a board, I will also include the board.
    If you would like some assistance in setting-up a performance based compensation system in your organization contact me directly at [email protected].
    Best regards,
    Diego
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