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Executive versus Worker Compensation Disparity Report (Assessment)


Abstract

Successful human livelihood is characterized by high achievements in social status. Having a high social status depicts a better livelihood to the person. Social status can be defined as the achievements that make an individual rise above the average social levels in society. Therefore, this status gives an individual the power to lead an independent life and authority over others in the low-level social status. Social status is subject to material wealth, knowledge, skills, work levels, and powerful positions in society. The individuals in the low-level social status feel oppressed by those in the higher social status in various ways. Hence, social disparities create conflicts between the low and high social status individuals in social environments. This paper looks into social issues in the workplace and societal parameters that arise from the compensation disparities between the executive and workers.

Introduction

Social status is an important phenomenon for establishing a person’s achievements in life. Without social status, there can be no desire for any achievements that bring about success in life. Hence, social status marks the level of achievement concerning the average life standards of the majority of the people in a given population. In the workplace environment, social status is established by the level of work position held by an individual regarding the lowest ranked position in an organization. The benefits accrued to the work position level are mainly regarding monetary compensations. Money is the greatest motivating factor in human livelihood.

Hence, differences in compensation levels between executives and workers create internal competition amongst employees in a workplace. Therefore, the compensation disparity is an important factor for enhancing productivity in the workplace (Balsam, 2013). However, some problems are associated with differences created by the income disparity where highly paid executives assume higher social status as compared to their counterparts thus creating a disparity in social status.

Workplace Issues

Compensation disparity between executive and workers creates conflicts in a workplace set up. First, executives feel more powerful as compared to their counterparts in lower-level positions in the job hierarchy. Therefore, they execute their mandates with authority over the workers. This aspect exerts pressure on workers, which in turn brings about negative interpersonal and industrial relations in the workplace. Psychological studies show that human success is determined by the level of self-esteem (Bebchuk, 2009). However, exercising authority over an individual lowers self-esteem and consequently the chances of success. Hence, there are minimal chances of success in the workplace where executives exert excess pressure on employees.

In the contemporary world, business success is highly dependent on the effectiveness of industrial relations. Industrial relations refer to the rights of employees to communicate with their seniors within established channels and suitability of working environment according to labor regulations and policies. In working environments where there are huge disparities between executive and worker compensation levels, there are higher chances of having ineffective industrial relations. Employees feel threatened by their executives due to their high social status, and thus they cannot communicate freely to express their ideas or opinions. Besides, executives can exercise their authority over workers without considering any violation of the employees’ rights.

In the recent past, there have been increased cases of employees going on strikes due to salary increment protests. Interestingly, studies have not found executives going on strikes for the same reason. This aspect explains the adverse effects of compensation disparities between executives and workers in the workplace. The global economy has rapidly changed with increased inflation levels that led to increased prices of commodities. Employees are severely hit by changes in the economic levels, as they do not have enough income to invest to cushion them against such adverse effects. In contrast, executives have adequate income that enables them to withstand worst economic changes. Hence, they do not feel the sense of workers demanding a pay rise. On the contrary, the agitation for pay increment in the workplace is seen as jealousy-motivated claims.

Societal Issues and the most affected individuals

Compensation disparities play a major role in creating economic dualism in a country. As mentioned earlier, the executives’ income sustains their needs coupled with enabling them to withstand the consequences of worst economic changes. They are well positioned for investing their money to generate more income (Carola & Saks, 2010). On the contrary, workers are lowly paid. Therefore, their income is not enough to cater for their necessities as well as education for their children. Hence, they have little to invest for the sake of acquiring an additional income. In the worst-case economic scenarios, workers are hardly hit and rendered poor. Hence, the disparity contributes to the creation of economic dualism in a society and the country as well.

The most affected persons by the compensation disparity issues in the workplace include immigrants and women. In the United States and other developed countries, there are high populations of immigrants from underdeveloped nations. Immigrants suffer income disparity due to two main reasons. First, they are assumed to have low-level education as opposed to the locals. This assumption may be true for the job descriptions that demand specialized knowledge and skills that could not easily be acquired in the third world economies.

Hence, immigrant workers are given jobs that do not require highly specialized, which consequently leads to poor remuneration. On the other hand, this assumption could be wrong because in the contemporary world, the underdeveloped nations have the latest technologies for training albeit they do not have practical use of such skills. Hence, the immigrants could be as suitable as locals in those job descriptions.

Besides, there is a natural misconception that locals should have the bigger piece of the pie in the work environment. Hence, locals are the most suitable for the high-ranking jobs that have the best compensation plans. The immigrants get the low-ranking jobs regardless of the level of knowledge, skills, and expertise. Consequently, the disparity in compensation levels between the locals and immigrants bring forth negative social disparities. Immigrants feel oppressed by their counterparts, and thus they opt to avoid their social contacts. Therefore, they limit their social contact with locals only to the workplace environments.

On the other hand, locals view immigrants as people of low social status. Therefore, avoiding their social contacts as well as inhibiting them from indulging in their social affairs. Additionally, immigrants are sometimes denied the opportunity to participate in the important activities and contributing to the decision-making processes in the workplace.

Secondly, women are denied high-ranking positions in a workplace in most cases. Some job descriptions are physically demanding, and thus women are segregated on such grounds. Instead, women are allocated job positions that are lesser demanding, but with low compensations. Consequently, they feel neglected, as they cannot relate well to their counterparts who assume higher social status. Historically, women were not viewed as equals with their male counterparts in the society. They were denied the opportunity to attend tertiary institutions because they could not be employed even after acquiring the necessary knowledge and skills. However, the situation changed after the success of feminist movements demanding equal treatment.

In the contemporary world, women are yet to enjoy equal rights as men in the workplace. The majority of men are of the idea that giving women high-ranking positions would have adverse societal consequences. They claim that women will fail to handle their family duties with the required responsibility. Apparently, the society holds that the family values will disintegrate for children will not enjoy the parental care when both parents are busy working.

Hence, women are given minimal high-ranking positions in a workplace with the majority getting the low-ranking positions, which attract low pay. Consequently, there is a huge disparity in social status between men and women in the workplace, which is brought about by differences in the compensation levels. Therefore, women are viewed as subordinates to their male counterparts in the society based on their social status.

In the United States and other developed nations, employers adhere strictly to the labor laws unlike in the developing countries. In the developed world, employers follow well-established regulations on the maximum number of working hours that should not be exceeded without any good reason recognized by law. Labor laws and regulations on the working hours were established to enhance gender equality in the workplace.

Employers would overwork their employees by demanding that they work for at least ten hours in a day. This aspect violated the employees’ human rights since they could not have enough time for their family and societal affairs. Hence, women found working unsuitable for their physical strength as well as family matters. Consequently, they opted to find low-ranking jobs that could be done within a short period albeit lowly compensated. In the contemporary world, labor laws have helped women to have time for their family and societal affairs and equal rights as men in the workplace.

In the majority of developing nations, employers are expected to follow the set labor laws and regulation policies to the maximum number of working hours in a day. However, most nations do not impose any legal punishment to those who violate those laws (Rycroft, 2013). Therefore, women are denied the right to work since they lack time to attend to their family and societal duties. Some developing countries are in an economic rush to becoming middle economic nations, and thus they use a twenty-four-hour working plans as the economic drive. This aspect implies that the majority of employees are overworked to help achieve the established economic goal. Consequently, women are segregated, as they are found unsuitable to work for long hours and men given priority.

Positive Aspects of the Compensation Disparity in a Workplace

Although disparity is not good for human experiences, it has positive aspects in the workplace. In the modern world, economic crises in different countries have caused high unemployment levels. Therefore, there is a surplus of labor supply and deficiency in job opportunities. Employers are well aware of the social situation and thus they take advantage where they incur low labor cost at the expense of maximizing profit for their businesses. Albeit a social and economic crime, the problems that the majority people are going through force them to take lowly paid job offers.

Compensation disparity enables executives to exert pressure on workers with an objective of achieving the desired high-performance levels. Consequently, organizations are in a position to achieve their economic objectives quickly due to the conformity of workers to the demands of the executives. Additionally, in most cases, workers are not involved in the decision-making processes, and in such scenarios, executives have the benefit of making their suitable decisions easily without opposition from workers.

Negative aspects of the Disparity in a Workplace

Compensation disparity is negative in nature, and it creates tension in human relations. The existence of tension between executive and worker relations creates an unsuitable working environment for the both culprits. Hence, the level of productivity declines, which poses the risk of the organization making losses. As mentioned earlier, human beings perform poorly when under pressure. Therefore, in reality, workers perform poorly only that they give desired results due to pressure from the executives. Based on this understanding, it suffices to conclude that when left under little or no supervision, they cannot deliver the desired results (Wojciech, Saez, & Song, 2010).

Compensation disparity between the executive and workers is a global issue that needs to be addressed in the international trade forums. Industrial relations are governed by universal labor regulations and policies in the Commonwealth nations, which were under the British rule. Such policies have been effective due to trade relations that exist among those nations. The same case should be done to control compensation disparity menace around the world.

The world is economically developing at a fast rate and issues that would bring about economic dualism ought to be dealt with amicably. Economic dualism has adverse effects on the large economies like the case of India. Studies show that the Indian problems arose from social disintegration where some social groups established themselves as of higher social status than others (Mishel, Bivens, Gould, & Shierholz, 2012). Consequently, the country is at the risk of not bridging the economic gap without undergoing a major overhaul in different sectors. Hence, nations should welcome the idea of universal policies that govern compensation disparity. The policies should establish the maximum ratio of the disparity between different levels of positions in the workplace.

Globalization is a vital economic driver in the contemporary world. As it stands, the developed nations are extending growth into their underdeveloped counterparts. Therefore, there is a high chance of extending universal policies that would address societal issues that arise from the effects of compensation disparities. Globalized organizations should ensure a reasonable compensation disparity and the observance of women and the immigrants’ rights. This move will help reduce the issue of the workers’ rights violation by acting as the pacesetter in the foreign economies.

Conclusion

Compensation disparities between the executive and workers have adverse effects in both workplace and societal parameters. Workers feel oppressed by their executives; hence, low self-esteem in the workplace. Consequently, the low esteem causes tension in the relationship with executives and employees. On the other hand, the executives exert excess pressure to achieve the desired results. Without pressure from the executives, workers cannot deliver the desired results.

However, the disparity issue is higher in the underdeveloped nations than in the United States and other developed countries. The most common issue in the developed nations is immigrants and other vulnerable social groups considered as low class by the locals. Therefore, such groups are denied equal rights, and this aspect creates disparity in social classes.

References

Balsam, S. (2013). Equity compensation: motivations and implications. Washington, D.C: WorldatWork Press. Web.

Bebchuk, L. (2009). Pay without performance: the unfulfilled promise of executive compensation. Cambridge, MA: Harvard University Press. Web.

Carola, F., & Saks, R. (2010). Executive compensation: a new view from a long-term perspective, 1936—2005. Review of Financial Studies, Society for Financial Studies, 23(5), 2099-2138. Web.

Mishel, L., Bivens, J., Gould, E., & Shierholz, H. (2012). The state of working America: An economic policy institute book. Ithaca, NY: Cornell University Press. Web.

Rycroft, R. (2013). The economics of inequality, poverty, and discrimination in the 21st Century. Santa Barbara, CA: ABC-CLIO. Web.

Wojciech, K., Saez, M., & Song, J. (2010). Earnings inequality and mobility in the United States: evidence from social security data since 1937. The Quarterly Journal of Economics, 125(1), 91–128. Web.

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IvyPanda. "Executive versus Worker Compensation Disparity." June 30, 2020. https://ivypanda.com/essays/executive-versus-worker-compensation-disparity/.

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IvyPanda. 2020. "Executive versus Worker Compensation Disparity." June 30, 2020. https://ivypanda.com/essays/executive-versus-worker-compensation-disparity/.

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IvyPanda. (2020) 'Executive versus Worker Compensation Disparity'. 30 June.

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