Ratio of CEO pay to worker payAKA I’m putting on my capitalist hat

I have been reading so much lately on the CEO to worker pay ratio numbers, and frankly it’s making me sick. I’m channeling the devil-may-care attitude of Tim Sackett today, so I’ll probably make half of you mad at me. You’ll get over it and we can still be friends. Promise. :-)

There are several common threads to the stories about the ratio of CEO pay to worker pay, fairness and envy being the most often. I think the arguments are irrelevant at a minimum and an attempt to stir up class warfare at worst. Let’s look at each of the issues above and how they play into the CEO to worker pay disparity discussion.

Hint: life isn’t “fair”

Some calculations put the CEO to worker pay ratio at 300+ times the average wage earner. While that might on its surface seem unfair, consider the fact that the CEO of a company like Wal-Mart makes decisions on a daily basis that impact the future profitability of the company. The average worker does manual labor or customer service work. Not exactly an apples-to-apples comparison.

I don’t work there and never have, but I would much rather have someone running the organization who brings more value than they cost the company. Trying to use the executive pay ratio is just an easy way to stir up the masses at the low end of the pay scale.

Don’t hate ’em, join ’em!

The (easy) and popular thing to do is talk about how selfish and greedy corporate executives are.

So. What. 

The majority of the time it’s just some guy (or gal) trying to work and do their job well. Yes, they get paid a considerable amount of money for what they do, but in the end they are still people who have hopes and dreams when it comes to the work they do. Instead of trying to use envy as a wedge between “us” and “them,” why not seek out ways to become like them?

That brings to mind a  quote I’ve heard before: jealousy is wanting what someone else has–envy is wanting to take it away from the other person because you think it’s out of your reach.

Not everyone is motivated and driven to become a highly compensated executive. But you shouldn’t hate those who are. If you’re that jealous of what they have, learn how they became successful and follow in their footsteps.

That goes for nonprofits, too

I often read the work of Harvard Business Review author Dan Palotta. He recently wrote “An Executive Pay Witch Hunt,” detailing New York Governor Andrew Cuomo’s attacks on nonprofits for paying their executives “high” salaries. I look at it this way: if a nonprofit can help a thousand homeless people in their current operating state, but they can hire a better (and more expensive) CEO whose leadership and guidance allows them to help ten thousand homeless people, then why ridicule them for making that choice? Again, this ignores the small percentage of organizations and people who defraud others and behave unethically, because that’s an entirely different discussion.

All said, I’m a fan of the government staying out of the way as long as a business is operating within the confines of the law, and that “staying out of the way” involves executive compensation and the CEO to worker pay ratio, too.

Let the comments begin! :-)