4 ms·
I think this makes a lot of simple sense. Say you are a service company. You have 20 employees, and one manager. The manager makes twice as much as the emplo
by zeidrich 12y ago
I think this makes a lot of simple sense.
Say you are a service company.
You have 20 employees, and one manager. The manager makes twice as much as the employees, because customarily managers make more than their subordinates.
In a small business, the manager is the owner, and his salary is twice as much as the average worker.
Now say you are a bigger business, and you have multiple outlets in the region. Your regional manager manages 20 outlet managers, the 20 managers each manage 20 employees. Your regional manager makes twice as much as the outlet managers because managers make more than their subordinates.
Now say you are a national business, and you have 20 regions each with 20 outlets per region. Your national manager manages 20 regional managers. Your national manager gets paid twice as much as the regional managers.
And say you're an international business, and you have a presence in 20 countries each with multiple regions with multiple outlets. You manage all of the national managers, and so you get paid twice as much as them.
The small business has a situation where the business owner makes twice as much as the employees.
The international business has a situation where the top of the management chain makes 32 times as much as the employees.
That's using a really simplified model, but the larger the business, the more layers of management will likely exist, and we have a system where management expects to get proportionally more money than those they manage. That's discounting any human or sociological factors that might contribute.
I think the biggest change that could correct this issue would be to do away with the idea that your boss makes more money that you is just a given.
- notahacker 12y agoWith public companies it's more a case of what a remuneration committee - itself composed of multimillionaires - has to take all this into account when approving the salary package when their preferred candidate for CEO has requested an additional $X million If the less preferred CEO candidate is marginally less efficient in maximising profit it costs the firm $XX million. A botched acquisition costs $XX-XXX million. Misguided strategic changes could cost $Xbillion over the next few years and be irreversible. If the markets disapprove of the less-preferred CEO candidate their appointment might even wipe $XX million off the share price overnight, before they've even had a chance to act. How much the lower echelons of staff able only to affect the performance of their own department earn doesn't even enter the calculus, except perhaps to note that the new CEO can certainly justify $X million more if he's really good about identifying which areas those staff need to be cut.