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Why Is It Ethical To Employees Paid?

670 Words3 Pages

According to Lawrence Mishel’s study “The state of working America 2005, 2006), it shows that back in 1965, the ration between CEO pay and average company employee’s pay was 24 to 1. It went up to 40 to 1 by 1980, and it has been increasing yearly, that by 2000, it was 300 to 1.
“If CEO’s compensation is primarily driven by competitive markets, then how come the ration was only 24 to 1 in 1965m and is about 300 to 1 in 2000?” Does that mean that presently, some CEO’s compensation rate to employees in 2015 would be about 1951 to 1? (Dishman 2015)
Some school of thought believes that is not unethical. They say it is largely the result of a healthy stock market and also point to the fact that a large majority of shareholders, those who want to …show more content…

Are CEO’s today really worth that much more than their comparable peers were worth just few decades ago?
Is it ethical for CEOs to have higher pay? If performance and worth of good CEOs is the driving force of this huge gap in CEOs and other employees pay, why shouldn’t the other employees’ ratio alongside their CEOs also increases also? Are we saying that they are not performing? No wonder employees moral, performance and loyalty are fading away in many …show more content…

They need to realize that it is a free market. If an employee is not happy with the reward distribution system, he or she is free to seek employment elsewhere. And it all sense it cost the companies more, because of the investment in the employee, the cost of employing a substitute, cost of training, etc.
People want to be treated fairly. The concept of fairness should come to play in determining appropriate compensation policies and structures. When it comes to ethics, there should be transparency. All employees cannot be on the same pay grid. The differences in pay can be explained with regard to increased responsibility as well as greater skill, and education required to perform at that level.
I do not think CEO and upper management salaries are subjected to ethical consideration. The high and excessive compensation linked to operational goals and performance induces unnecessary risk taking and increases the probably of unethical, possibly unlawful behavior. There are lots of ethical issues with this high compensation, such as if they are compared against provision of service and whether the process is compromised by inadequate transparency negotiation (Perel 2003; Moriarty

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