Introduction
Many business owners and managers today fail to acknowledge the true effects of motivation on their businesses and hence it is necessary to understand factors which determine positive and negative motivation in the place of work. Some of the motivational acts in the places of work are marred with ethical questions that beg to question the morality of such (Anderson, 2015). For instance, is it ethical for high ranking employees to earn more than other employees? Does the system employ a valid system of distribution? Well, the following paper discusses whether it is right for CEOs to earn more than other employees and how the reward gap affects motivation of employees at the workplace.
Executives in big companies get handsome rewards as compensation for their work. However, the gap between how much they earn and that of other employees remains a burning issue (Anderson, 2015). Indeed, motivation depends on the performance and input that a person puts in the organization or business rather. In this regard, it is well to say that yes it is ethical for CEOs to earn more than the other employees at the lace of work because they set the mission, vision and objectives of the firm (Anderson, 2015). Moreover, they give direction to the business to enable it grow and remain in business avoiding failure. In other words, they brainstorm to come up with ways of keeping the other employees at work. Therefore, it is well that they earn more.
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Despite the idea that CEOs are worth more pay or reward than the other employees, it is best to ensure the gap between their pay and that of the rest is not so wide. According to Lipman (2013), the best approach to handling employing motivation without having issues with the gaps in pay between them and the executives is to align the economic interests of the individuals with the performance of the company. Therefore, programs of incentive compensation that give all employees in a business the chance to benefit from the prosperity of the company can improve the motivation of employees by making the assumption that individual performance must be the base for financial rewards (Lipman, 2013). However, there needs to be a progressive increment in rewards to all employees especially when the company performs well or better rather.
Apart from the question of ethics in pay differences between executives and other employees, there is the question of whether or not a standard system of distribution is used. According to Glassdoor, the average CEO pay of most companies is $13.8 million per annum compared to the average mean of other employees that is $77,800 per year (Dishman, 2015). The numbers suggest that the CEOs earn approximately 204 more than the other employees. However, there was a problem in calculating the income distribution due to the nondisclosure acts and also the lack of a systematic mechanism in place for the same (Dishman, 2015). However, the SEC considers the total compensation for employees as inclusive of base pay, bonuses, tips and commissions as well as other means of pays. The CEO pays on the other hand include stock options, bonuses and other pays that go beyond the salary (Dishman, 2015). According to the report findings by the SEC, most employees do not appreciate the details of the nonsalary options.
Conclusion
Finally, it is well to insist that the pay of CEOs and the upper management in general is subject to ethical considerations considering their work involves giving a greater input to the company or organization rather. Moreover, it is imperative that the company settles on means of reducing the gap between the pays of CEOs and other employees to ensure persons are equally motivated in the place of work.
References
Anderson, S. (2015). This is why your CEO makes more than 300 times your pay . Fortune.com . Retrieved 23 September 2017, from http://fortune.com/2015/08/07/ceo-pay-ratio-sec-income-inequality/
Dishman, L. (2015). Does A Huge Pay Gap Between CEO And Staff Affect Employee Satisfaction?. Fastcompany , 1-7.
Lipman, V. (2013). 5 Easy Ways To Motivate - And Demotivate - Employees. Forbes , 1.
