I’m so sorry to bother you. I know how important you are, but it’s critical for you to hear this message.
Given that there are only a handful of positions at the top of any organization, anyone who achieves that level of success should be congratulated. No one gets that far as a result of luck. It requires exceptional talent, tireless hours, and personal sacrifice. As such, executives should be compensated handsomely for their performance. Period.
BUT, even the most talented people in the world depend, in part, on the team that surrounds them. In fact, chances are that the organization was thriving well before the executive arrived on the scene, and it will continue to prosper long after the executive leaves.
So why do some executives feel that the sun rises and sets with them? — At least that’s what their compensation implies.
Here’s the rub. It’s disconcerting that on the one hand, some executives tell valued employees that the organization can’t afford raises (and may resort to layoffs), but on the other hand, those same executives award themselves obscene compensation packages.
I’m sure this double standard has a direct impact on employee morale and probably even diminishes respect for the executive. More importantly … it’s simply not right.
It may be difficult for some executives to remember what it was like before they made it to the top, so here’s a reminder: Most employees work pretty hard. They can’t afford luxuries; often, they earn just enough to satisfy their basic needs. In fact, some folks literally lose sleep because of the uncertainty of tomorrow. Some people even work two jobs to make ends meet.
Many executives refer to their business as a family. Could you imagine any father or mother gorging food at the dinner table while letting his or her kids go hungry? Well, that’s essentially what these executives are doing. Have they no shame?
I’m sure most executives justify their compensation packages as being carefully benchmarked against industry peers, but do two wrongs make a right?
I’m NOT saying that we should legislate executive compensation. I’m merely saying it’s time to listen to your conscience. Executives should receive everything that they’re due, but they should also consider the hardworking folks who support their company’s efforts each and every day.
My hope is that one day, all executives will be as proud of making a difference in other people’s lives as they are of enriching their own. Think about it. You have to live with yourself for the rest of your life.
Sleep well.
Additional Reading:
Ever Hear the Excuse “Everybody Does It”?
Hey, It’s Your Conscience Talking
Are Role Models Becoming Extinct?
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Another great article Frank!
Your conclusion states “My hope is that one day, all executives will be as proud of making a difference in other people’s lives as they are of enriching their own. Think about it. You have to live with yourself for the rest of your life.”
Many executives believe they are already doing what you envision via their “corporate responsibility” programs. They not only get lots of “do good” media attention, but also win awards. It’s their way of “giving back” in the most public of ways, rather than quietly and in the ways that matter to those whose desks are a few floors down from the ivory tower.
Hi Barbara
You raise a very important point. “Do good” corporate responsibility programs adopted merely to gain media attention are poor form. It is much preferred to do the right thing quietly. Good deeds speak for themselves.
Thanks for your comment and for advancing the conversation.
Best,
Frank
Love this article. I have long watched Board Compensation Committees who engage Executive Comp Consultants, who magically provide justification for whatever decision they think the CEO wants to hear. Compensation studies are, at best, a piece of information that is important to know. On the flip side, they are seriously flawed and those who use them in compensation decision-making can make the numbers say whatever they want them to say. One of my first projects as a new Comp Analyst in the late 1980s was to “price” the CFO job. We have every state of the art survey and I did what I had been taught – analyze the data consistently across the organization. I learned that “across the organization” didn’t apply to the executives. There, we added on 10% for taking responsibility for Treasury, another 5% (I’m making this up since I don’t remember exactly, but the process is the same) for having to manager Facilities, etc. It didn’t take too long for the CFO salary to end up way higher than my data analysis suggested.
From my perspective, those external comp consultants who advise Comp Committees have escalated executive pay exponentially, by pricing to the ever-growing market…ever growing based on their recommendations.
Of course there is a bit of blame too for the CEOs who accept this “business intelligence” but if faced with a real nice pay increase, most people probably would rationalize.
Hi Carol
I hear you. Leaders with character set the standard for excellence. They live their life as an open book teaching others important lessons through their words and deeds. Everything else being equal, talented people would rather work for –– and customers would rather buy from –– companies that do right by their people, customers, and communities.
Have an awesome day!
Best,
Frank
Bravo. Your message makes me remember the days when the person at the top received no more than 10 times the salary of the lowest paid staff person. And holiday bonuses were about two weeks to a month of your salary. Then there was the lovely holiday party to celebrate our accomplishments. In that world, at that time, you came back to start the New Year with enthusiasm and worked to show your appreciation for the appreciation given you. But that was in the days when the “social contract” lived. The downsizings of the 80s ended that and has resulted in a business environment that is so different–and unhappy. The world of business has changed–and not for the better.
Hi Bev
Thanks for your thoughts.
One of the messages that great leaders send is that we’re all in this together. When times are bad we [leaders] should be the first to take a hit. And, when times are good it’s time for everyone to celebrate. When leaders act this way it engenders trust, respect and loyalty.
Have a wonderful day!
Best,
Frank
Well said. Bravo…Now is anyone listening?
Hi Danny
You make a very important point. The people who should be reading this post probably aren’t. But as the saying goes, “I alone cannot change the world, but I can cast a stone across the waters to create many ripples.”
Have an awesome day!
Best,
Frank
Thanks for poking this issue – it can’t be done enough. Ethics and good policy require executives provide their boards with unbiased compensation surveys. I did so annually – from CLA, ECFA, AGRM and sometimes CA Assoc of Nonprofits. I always took part in surveys when the opportunity arose (so I could get the results free of discounted).
When approving the 2nd budget of my tenure I gave. The board the survey data but declined any raise, in order to reorganize staffing and salaries for internal equities. In my 6th year when struggling with the recession I asked my senior team to make any adjustments they were able to make — and we cut budget by $22k and it was quite the staff meeting when we announced we kept the benefits flat and were able to keep fully paid family medical. (I announced that the SLT had voluntarily made cuts, without saying which ones did or the individual amounts). The next year I didn’t have the budget to give my newly promoted associate director a pay bump so I gave 2.5% of my pay to him (on top of my recent voluntary cut).
I share this not as an ego boost, but that leaders must do what is needed and lead with the example.
I never donate to a nonprofit without first checking the org’s 990.
Good for you Jim. There IS a correlation between integrity and the bottom line. I’m certain that your deeds paid dividends over and over again. As a bonus, it enabled you to sleep well.
Best,
Frank
Frank your post is outstanding!
I liked your answer to Danny Kahn, “’But as the saying goes, ‘I alone cannot change the world, but I can cast a stone across the waters to create many ripples.’” Your interaction sparked a few “ripples” in my heart.
Many years of major financial losses, the economic chaos have pushed “the ones who deserve most of the praise and higher compensation” in the corner of indecision and inactivity. The incredible unpredictability of the “depressed” market created major life changes for people. Navigating through life’s arbitrary shifts to survive is all some of us can do. Apathy is a very high price to pay, especially for people who planned their life’s course and worked hard all their lives to make their goals reality.
I especially appreciated your description of leaders in your answer to Carol Anderson. “They live their life as an open book teaching others important lessons through their words and deeds. Everything else being equal, talented people would rather work for –– and customers would rather buy from –– companies that do right by their people, customers, and communities”. Excellent!
Frank, there will be a time when people wake up from the shock of tragedy and claim back their lives. I believe that there is much goodness and honesty in the world. People were created with free will, and they do listen. If practiced by everyone everywhere, transparency can be a wonderful thing. Life is unpredictable and people have endured it for centuries. How is that we repeat the same mistakes again and again is an enigma!
Can’t believe we had snowflakes in Chicagoland today!
Have a fantastic rest of the Day!
Eleni
My heart goes out to everyone who continues to be affected by the economic downturn. I too am optimistic that things will get better. As I said in an earlier piece (What Do Tough Times Say About You?), “It’s easy to look like a star when times are good, but when times are tough, your true character comes into full view. Be strong. Don’t compromise your integrity; don’t lower your standards; and above all, don’t quit.”
Best,
Frank
It’s hard to believe how selfish well-to-do people have become, and how far the ‘social contract’ has collapsed. Years ago, when people had less, there was much more of a common ‘we’re all in this together’ attitude.
Today’s society is decidedly more ‘it’s everybody for himself’ and it has lost a lot in the process.
Government could do a lot more to level the playing field and increase opportunity by supporting public colleges (rather than cutting their budgets) and by making student loans more affordable. Remember that, until the mid-1970’s, college education was tuition-free at New York City’s public universities.
Unfortunately, our politicians and even judges have proven themselves easily corruptible, capitulating to the money and wishes of the rich and well-connected, often cutting benefits to the less fortunate.
At some point, our apathetic public needs to wake up from their television shows and become active and energetic, to consistently make their voices heard. That’s something that Frank is doing– setting the example, and we thank him greatly for that.
What kind of society we’re leaving our children and grandchildren ?
Hi George
American families have to sacrifice every day. With that in mind, the waste of taxpayer money, “pork,” is not simply distasteful, it’s nauseating. Our government should find ways to eliminate wasteful spending and reallocate that money to high priority areas. It would not only be more productive, it would also help build trust in government.
Best,
Frank
I hate to say this, legislation is seeming to be what the kids need. They certainly are not listening to any rhetoric or moral criticism. You are right on every point but this insanity needs punitive measures to become effective, not belly aching as some like to call it.
Hi Thomas
I personally don’t feel legislation is the answer. I know many organizations that treat its employees fairly. As I like to say … just because one person commits a crime doesn’t mean that we should throw the whole town in jail. It’s important for me to emphasize that executives should be compensated handsomely for their performance. My concern is the hypocrisy of asking employees to sacrifice while they line their own pockets. That’s poor leadership. Period.
Thanks for your thoughts. Have a wonderful New Year.
Best,
Frank