Do CEOs Deserve to Be Paid the Big Bucks? Do You?

Do CEOs Deserve to Be Paid the Big Bucks? Do You?

August 11, 2015

The SEC will soon finalize a ruling which will require public U.S. companies to reveal how much more their CEOs are paid than their typical employees. The pay-ratio rule is certain to create negative noise and anger in the workplace of many companies. On the other hand, the rank and file at certain companies might not be bothered at all. Why will some workers be upset at the CEO differential and others feel the high pay is deserved? The reasons may vary, but they lie in how employees feel about the CEO and his leadership of the company.

CEOs at Vistage Advisory Board meetings, like the one I lead in New York City, discuss issues like leadership, strategy and culture on a regular basis. The one thing they talk about most is leading their people to maximize profitability and employee retention. Most research shows employee engagement plays a big role in driving profitability and makes the CEO’s role more effective.

One might think it’s the free food, espresso, beer and nap stations that attract and retain the best employees. But according to a recent article in Fast Company “The 50 Most Liked CEOs in the U.S.” it’s not that at all. The declared winning CEOs are those who “boost engagement and loyalty” and foster a culture of transparency. Bureaucracy is a big negative and a company with a clear vision and goals expressed by the CEO and the senior leadership on a regular basis is an attribute of the top 50. Another motivating force is communicating to employees the roles they play in reaching the company’s goals. These result in employee satisfaction and fulfillment. Another hot topic is how to retain millennials. The answer is all of the above. In fact, this is what most employees want. The main difference is that millennials are young enough to feel safe to leave when their desires are not met. Gen X and earlier generations want the same as the Millennials. They are just less willing to risk picking up their family photos and walk out the door.

Companies won’t hear too many complaints about high CEO salaries and bonuses when employees are fully engaged and are motivated to contribute. Angry workers might be working for CEOs who are running companies from the back seat with the employees in the trunk. With the pay ratio on the horizon, CEOs have a choice – either reduce their pay or start following the example of the top 50 most liked CEOs. Larry Page at Google, Mark Parker at Nike, Charles Butt at HEB Grocery Stores, Mark Zuckerberg at Facebook and others who practice a new kind of leadership – it starts with engaging your workforce!
— Leslie Grossman is a VISTAGE Chair of a New York City CEO Advisory Board, an executive coach, speaker and author of LINK OUT: How to Turn Your Network Into a Chain of Lasting Connections (Wiley).