Integrity Matters
July 7, 2004

Top managers must earn high salaries

Question: (E-102)

Dear Jim:

How can top management earn 70 to 80 percent of a company's total salaried pay while other employees and managers who are working harder earn less? When a company is doing poorly, it always seems to make layoffs lower on the corporate ladder, while top management still earns the same amount without any pay cut. Do these companies need to focus more on top managers' performance rather than on employees whom managers hired in the first place?


One of my mentors told me that bosses get paid for doing nothing. However, they are often well compensated for being responsible for everything. Allow me to explain. The person in charge is responsible for making sure that organizational objectives are achieved by overseeing and sustaining excellent customer service, superior product quality, career growth opportunities for employees and maintaining a constructive and healthy work environment. In almost every case, the employee is more capable of getting the job done than the leader. So, the boss is not doing the job, and in many cases probably cannot do the job. Bosses who enable those about them to complete their jobs effectively and efficiently would be classified as successful, but only if they can show positive results -- often in terms of profits. Still, effective leaders also will have addressed other responsibilities as well. As a consequence, the more respected leaders do earn their incomes -- unless the financial rewards are simply outlandish.

Successful leaders also are accountable for these nine functions:

  1. Attract capital
  2. Foster competence
  3. Insist on character
  4. Clarify organizational purpose
  5. Refine communication
  6. Promote consistency
  7. Develop chemistry
  8. Leverage confidence
  9. Utilize compensation

When bosses provide the foundation for success -- with and through others -- then they have earned the right and privilege to lead and be appropriately compensated as determined by their boards of directors.

Conversely, when employees conclude that their employer is opting to capriciously hire, fire and lay off underlings rather than making needed strategic moves or personal sacrifices, then trust will erode and productivity will suffer.

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