The gap between the pay of the executives and the rest of the company employees’ pay has grown to a vast difference.
Executive pay is excessive, but I think I can understand why executive pay continues to rise. Companies desire to be the leaders in their market, which means that they are unwilling to be below average in the salaries that they offer. The knock-on effects that compensation has on their ability to hire talent and experience means the companies are trapped in the need to continue trying and being a part of the top twenty-five per cent. The excessive pay for executive roles is something that I think will continue to become more and more excessive unless something is done to try to stop it or balance it out.
I think the pay is excessive due to how large the gap is between the executives and the rest of the employees at the company. Having watched the video, the amount that some of the top CEOs are being paid is excessive not only in terms of how the company is performing but also in terms of being able to live. In some cases, making multiple times that of an employee in middle management would make in a lifetime.
As I mentioned above, I believe that one factor contributing to the rise of executive pay is the drive to be competitive within the market. The job market is competitive, and it can be hard to find the perfect fit for a role such as executive of a company. These “perfect fits” know their worth and the offers they can get from different places. For a company to offer them something below any other companies would be at the loss of the company, as prospective employees would go to the better offer.
A change that could be made to executive pay is that the salary fluctuates with the company’s performance, as that is the measurable element of their role. They have to be able to take ownership of the performance of the company as a whole, the good and the bad. I think this would positively affect the CEOs to work for what they earn the motivation to make sure they are moving the company forward.