Integrity Matters
November 8, 2006

Pay gap continues to widen

Question: (E-265)

Dear Jim:

CEO pay and benefits now run as much as 1,000 times that of front-line employees. Will such inequities destroy whatever is left of the trust that needs to exist between labor and management?


Yes, because short-sighted members of corporate boards' compensation committees repeatedly send demoralizing signals to the rank-and-file. Frontline employees feel relegated to second- or even third-class slot-fillers, asked to accept minimum cost-of-living raises and nod acceptingly while those in corner offices reap giant stock options and bonuses.

Simply blaming an executive for taking the fat pay package is to miss those who are truly to blame. After all, who approves these packages? The members of the board of directors! The same workers who resent pay disparities are forced to pay ever-higher prices for products and services that have been intentionally inflated by irresponsible corporate boards that overpay "rock star" executives.

What's fascinating about these outrageous but culturally acceptable pay practices is that they don't reflect what the best of the best do. Case in point is research presented in Jason Jennings' 2005 book, "Thing Big - Act Small, How America's Best Performing Companies Keep the Start-Up Spirit Alive." The Jennings research team screened more than 100,000 U.S. companies to find nine that rarely end up on magazine covers but have grown by 10 percent or more for 10 straight years. Then they interviewed the leaders, workers and customers of these quiet superstars to identify the secret to their astonishing results.

America's Nine Best Performing Companies, according to Jennings are: Cabela's of Sidney, Neb.; Dot Foods of Mount Sterling, Ill.; Koch Industries of Wichita, Kan.; Medline Industries of Mundelein, Ill.; O'Reilly Automotive of Springfield, Mo.; PETCO Animal Supplies of San Diego; SAS Institute of Cary, N.C.; Sonic Drive-In, Oklahoma City; and Strayer Education of Arlington, Va.

Of the 10 building blocks he considers essential to their success, humility comes first. Here are the other nine: Keep your hands dirty; make short-term goals and long-term horizons; let go; have everyone think and act like an owner; invent new businesses; create win-win solutions; choose your competitors; build communities; and grow future leaders from within.

To contrast these world-class companies with flashy pretenders, consider these operating aspects of the first building block, called "down to Earth and humble":

  • Stewardship - respect and protect resources
  • Transparency - information availability
  • Accessibility - visible, attentive, respective
  • Work ethic - lead by example, offering praise
  • Stand for something - mission beyond self-interest
  • Erase superficial distinctions - everyone is important
  • No big offices - stay humble
Trust is built with integrity in small and large enterprises!

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