- It is not uncommon in today’s world to hear the news of termination of lower level or assembly workers in order to make leeway for large salaries of top executives to be paid. It is a matter of opinion whether such actions are justified or not. Many companies argue that it is the strategies adopted by the top management and executives that leads to the growth of the company, and hence they have first claim on the earnings of a company. However, people against such an action argue that this action is not justified because the assembly workers are not well off and living on day-to-day wages, whereas top executives are already well off. I think that the best approach for any company is to adopt a middle ground. It should not fire the workers for exorbitant benefits of the top management, and it should pay the top executives the amount that the company can afford.
- Equity theory states that the top executives only render as much effort in their work as much they consider it to be justifying their pay. Therefore, executives are paid large salaries are also more hardworking and do more for the company. When an employee sees that a large amount of bonus or salary is being paid to top executives, he perceives that he is not being treated as well. Therefore, he either gets dissatisfied from the work or tries to expend more effort to the work to reach the top position so that he can also earn large bonuses and salaries. It can be more beneficial for the organization, and at the same time it can be discouraging for assembly line workers.
References:
Patton, L. (2012, December 12). McDonald's $8.25 Man and $8.75 Million CEO Shows Pay
Gap. Retrieved October 18, 2014, from http://www.bloomberg.com/news/2012-12-
12/mcdonald-s-8-25-man-and-8-75-million-ceo-shows-pay-gap.html
Mathis, R., & Jackson, J. (2011). Human resource management (13th ed.). Mason, OH:
Thomson/South-western
