The ExecRanks is Now AdvisoryCloud - Click Here to Read the Announcement

February 13, 2019

Employee-Induced Headaches

Brent Hultman

Brent Hultman
Partner & Program Facilitator/Strong People Systems

Share This Post

Low levels of engagement, poor retention, the multigenerational workforce, a lack of loyalty; all common employee induced head-aches reported by senior executives and often the topic of conversation in trade publications and other media.  In “CEO Pay Is an Underrated Risk to Stocks” (Bloomberg Opinion, Feb. 1, 2019) Nir Kaissar shares that the Russell 1000 reported that the average CEO-to-worker pay ratio for these top companies is 248-to-1.  In 1965 that ratio was 20-to-1. 

According to the Bureau of Labor Statistics (December 2018), the average American worker makes $24.57 per hour.  Based on that, the difference between the average worker and their Russell 1000 company CEO would be $24.57 per hour versus $6,093.36 per hour.  That means the average worker puts in over 6 weeks to make what the CEO gets in 60 minutes.

Here’s a question to consider; is there a chance that one cause of the common concerns listed above is that average workers know about this huge gap in compensation in corporate America?  Average, middle market and small business executives do not typically earn $6,093.36 per hour.   The Balance reports that small business owner annual salaries range from $29,462 to $160,606.  Doing the math on that; the top end of the scale is receiving just over $77 per hour (slightly more than a 5-to-1 ratio if employees are paid $15 per hour). 

Here’s a problem; we live in a society where the 248-to-1 is accepted and happening, so a widely held perception is that business owners and CEOs all exploit their workers and are making a lot more money than they are.  Most small business owners that I know don’t think what they earn is any of their employees business.  Perhaps, but in the absence of information, people tend to make stuff up.  If they are making up a storyline that has you earning huge money while they struggle, all of the employer head-aches listed in the first paragraph are inevitable.

If you have a business, and you are not exploiting your employees, having open books could be an element of building a culture where you increase engagement, improve retention, discover that you have a workplace where multiple generations actually communicate and work well together, that you have loyal people, and that you don’t go home with a headache every day!  You may be thinking that this is too good to be true and, besides, what I earn is no bodies business!  If you send out an email telling the staff what you make, you’re right, it is unlikely to make a difference.  On the other hand, if you begin to communicate in ways that are open and include explanations as to why information is being shared, and you actually want to create an engaged, high-performance team, open books may be part of the plan. 

Each business is unique and has different employee and culture issues.  If you are curious to discover how a different approach may benefit your business looking at how to reduce the damage caused when your people are left to make stuff up you may want to talk to someone who can help you to design and implement a plan to create a positive, engaged culture.

Comments? You can contact me directly via my AdvisoryCloud profile.

Share This Post