Hi Bark,
First of all, congratulations! I believe yours is the right perspective for what you are trying to accomplish, which is to grow a small business (less than 100 Million in Revenues). Second, it is also a smart strategy.
What I suggest is that instead of focusing on the gap between the lowest and the highest earner, you implement a well designed compensation system that is aware of the market values of the different "roles" in your organization, and that has a multiple of components that keep alive the drive for performance and also pulls those no so self-motivated to achieve more.
I have implemented several performance based systems and my recommendation is always that, all, including the CEO, are subject to performance when it comes to compensation. If you have a board, I will also include the board.
If you would like some assistance in setting-up a performance based compensation system in your organization contact me directly at diegoleon@americasbdc.net.
Best regards,
Diego
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Wage Gap Question
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Bark,
You obviously have never owned or have run a company. I have since 1993. I have moved our company from nothing to over $5 million in sales in one year. Being an experienced employer with a monthly expense that would frighten most people, I know from years of putting up with the complaints, the lying, the steeling, the cheating, and eveything else that you could think of, it is not easy. A CEO/founder deserves to make 150-500 times more then the lowest paid employee. A typical employee has no equity in the business, they don`t have their house on the line to get things going, they don`t have to skip a paycheck because a client didn`t pay you this month, they don`t have to negotiate new rentals/purchases, they don`t have to do close to anything a CEO/founder has to do. They just have to show up for work and do a reasonable enough job to get by. I joke around with people that ask me what the hardest part of being the CEO of my company is, I respond "babysitting". Employees need to be babysit, they wine when things aren`t going well, they make faces if their bonus is not greater then the year before, they complain when you have to take their gas card away, they bitch about having to stay late and finish something.
Having said all of that, I have to end with a couple of thoughts. Employees are the best and worse thing a CEO/founder has to deal with. Most companies could not make it without employees. You just have to realize that at the end of the day, everything that happens good or bad is reflection of the CEO/founder. Hire and fire to make as many things as you can turn out good.
Every American should own a company once in there life time and then they would know that money doesn`t grow on trees and that it is earned everyday, rain or shine. So many employees think that money grows on trees or they deserve more then they are being paid. I recently spoke to a Police officer on an airliner and he said something very interesting. He said that all the cops in his department are not writing tickets any more to speeding drivers, I asked why? He said because his department has not given anyone in over 2 years a raise. I asked, how does that make it better. He said that they see all the summons with just a warning and they will eventually get the idea on how much money they are missing out of. I found that incredible, that he and his fellow officers were punishing the township with not writing tickets because they haven`t had a raise in a while. That is why every person needs to won and run a business. If he did he would have understood that the more money that comes in, the more can go out in bonuses and wage increases.
Most employees think they punish the business owner by not performing, they punish everyone within that company. A dead weight drags everyone down.
A CEO/founder should be able to make 100s of time more then lowest paid employee because they have to put up with everyones situation and everyones job. Not just a single job responsibility.
-------------------------
Swany
dswan@customprograms.com
If you don`t try, you`ll never know!
bark,
I myself don`t have a corporation of my own, still working for the man. your intentions are well founded. personally I believe those 400% wage gaps are the difference between the scrooges in life and the other guys (Fezziwig). I myself call those 400% wage gap kind of companies sweat shops. Keep in mind there is no data cause as one can read above many people seem to think that just because they own the business they can be a scrooges when, where, and how they want. Why we have laws that govern so many areas of business. It`s a real shame that many businesses only care about their workers safety for example because they have to. There are no laws that mandate wage gaps, but I do remember a documentary on walmart their highest ceo pays himself 12% above the highest paid hourly wage earner. Or so he claims. I do know many executives in walmart complain about as much as the hourly workers about their low pay. but no one is forcing them to stay either.
Their are those who want to sell 10 items for 100 dollars each, and there are those who want to sell 100 items for 10 dollars each. There are people who refuse to pay 100 dollars for something they can get for 10 dollars but beware there are those who will not pay 10 dollars for fear of their egos being bruised if they find out they could buy it for 100 dollars thinking they are better then the jones.
I myself don`t have a corporation of my own, still working for the man. your intentions are well founded. personally I believe those 400% wage gaps are the difference between the scrooges in life and the other guys (Fezziwig). I myself call those 400% wage gap kind of companies sweat shops. Keep in mind there is no data cause as one can read above many people seem to think that just because they own the business they can be a scrooges when, where, and how they want. Why we have laws that govern so many areas of business. It`s a real shame that many businesses only care about their workers safety for example because they have to. There are no laws that mandate wage gaps, but I do remember a documentary on walmart their highest ceo pays himself 12% above the highest paid hourly wage earner. Or so he claims. I do know many executives in walmart complain about as much as the hourly workers about their low pay. but no one is forcing them to stay either.
Their are those who want to sell 10 items for 100 dollars each, and there are those who want to sell 100 items for 10 dollars each. There are people who refuse to pay 100 dollars for something they can get for 10 dollars but beware there are those who will not pay 10 dollars for fear of their egos being bruised if they find out they could buy it for 100 dollars thinking they are better then the jones.
I believe the Owner of the Company can pay whatever he/she wants to pay the CEO. It`s the people that accepted the job at the wage they came in. No different than people stating athletes get paid too much money. Do they? What`s too much money? What`s not enough money? It`s up to the people at the bottom of the company to educated themselves financially. In a small business it`s easy to share the wealth among 5 - 10 employees. Take a GM or Ford, you can`t do that. The question shouldn`t be, why do CEO`s get all the money? It should be, how can employees earn more profit?
Bark,
I think the concept you are looking for exists at Ben & Jerry`s. You might want to research in that direction.
Good luck and Happy Holidays-
Wendy Steele
Tape Wrangler
A 400% wage gap is a "sweat shop"?
Hmm, let`s see:
If your lowest worker is paid $8.00/hr (in China a huge sum), that puts the top banana at $32.00/hr.
If you`re an engineer and the janitor is getting $8.00/hr, you`d be willing to work at no more than $32/hr? As a well trained, certified engineer?
You want to run a company for that kind of money? Try it and let us all know.
For those amongst us who have expressed communistic tendencies take a hint. It failed, miserably. Read Animal Farm.
However, try it your way, you are free to do so.
Risk gets rewarded, in any system.
Hmm, let`s see:
If your lowest worker is paid $8.00/hr (in China a huge sum), that puts the top banana at $32.00/hr.
If you`re an engineer and the janitor is getting $8.00/hr, you`d be willing to work at no more than $32/hr? As a well trained, certified engineer?
You want to run a company for that kind of money? Try it and let us all know.
For those amongst us who have expressed communistic tendencies take a hint. It failed, miserably. Read Animal Farm.
However, try it your way, you are free to do so.
Risk gets rewarded, in any system.
Way to go BurninGreen! I`m glad someone brought up the "c" word before I did. The communist system failed because why would anyone want to go to the effort of getting a college degree, going to medical school, and training for several more years to become a doctor, only to be paid the same as the high school dropout janitor?
Why should your minimum wage deserving employees aspire to anything better if you pay them $100,000 per year for minimum wage work? The disparity in earnings for more education, training, risk taking, etc. is there for a reason.
Don`t get me wrong, money isn`t everything. There are certainly other satisfying rewards for running a successful company, such as being your own boss, the pride of producing a high quality product that people really want to buy, and so on. But limiting your income to 4 times the janitor`s so that your employees like you more just seems bizarre to me.
Gary
Why should your minimum wage deserving employees aspire to anything better if you pay them $100,000 per year for minimum wage work? The disparity in earnings for more education, training, risk taking, etc. is there for a reason.
Don`t get me wrong, money isn`t everything. There are certainly other satisfying rewards for running a successful company, such as being your own boss, the pride of producing a high quality product that people really want to buy, and so on. But limiting your income to 4 times the janitor`s so that your employees like you more just seems bizarre to me.
Gary
Just got wind of this CEO discussion. Barkwheats, I believe you are focused on CEO`s from very large companies. did you ever consider that an entrepreneur or small business person who runs their own business fits the definition of a CEO?
I know that yo9u have said that you are not demonizing CEOs, but to those reading your bent, you are.
I am the regional director of an organization that re-branded it`s name to CEO Space in 2006. Many of our members were very upset that we changed the name. Why? They had a similar mindset as you. Whenever you mention a CEO you think of the greedy SOBs that run the large corporations, the ones that have been ruining the economics of this country.
Our orgainzation works with the CEOs of small to mid size businesses to help them accelerate business growth. They work from a cooperative model not the greed infested competative model. Often, as start-ups they are the only "employee". At that level, if you didn`t dig enough to see what you are truly dealing with, that greedy little bastard gets 100% of the earnings. Can you imagine that? That CEO gets 100% of the earnings of thir own company. Of course that may only be $30 to $40 thousand/year. Not to mention that there is a very high % of small businesses that don`t ever make it. They fold before they ever get a chance to be greedy.
It would assist those reading your posts if you began to qualify what CEOs you are actually focusing on. Are these the CEOs of the large corporations? If you were able to develop a full spectrum of CEOs from Start-ups to large coorporations, I beleive you would see a great deal of difference.
I know that yo9u have said that you are not demonizing CEOs, but to those reading your bent, you are.
I am the regional director of an organization that re-branded it`s name to CEO Space in 2006. Many of our members were very upset that we changed the name. Why? They had a similar mindset as you. Whenever you mention a CEO you think of the greedy SOBs that run the large corporations, the ones that have been ruining the economics of this country.
Our orgainzation works with the CEOs of small to mid size businesses to help them accelerate business growth. They work from a cooperative model not the greed infested competative model. Often, as start-ups they are the only "employee". At that level, if you didn`t dig enough to see what you are truly dealing with, that greedy little bastard gets 100% of the earnings. Can you imagine that? That CEO gets 100% of the earnings of thir own company. Of course that may only be $30 to $40 thousand/year. Not to mention that there is a very high % of small businesses that don`t ever make it. They fold before they ever get a chance to be greedy.
It would assist those reading your posts if you began to qualify what CEOs you are actually focusing on. Are these the CEOs of the large corporations? If you were able to develop a full spectrum of CEOs from Start-ups to large coorporations, I beleive you would see a great deal of difference.
Thanks for the reply. I`m in no way trying to "demonize" anyone. I`m simply asking for others` input on the subject, as it`s something I hadn`t ever thought of before I started my business.
As for who I`m focusing on... I would say I`m focusing on the mid to large size companies, as that`s where I want to grow into and make sure my policies are in place.
Thanks again!
-------------------------
Barkwheats Dog Biscuits
-all natural, maine-made buckwheat dog biscuits
Dear Barkwheats,
Thank you for thinking this way about your business. Thanks for posting about it and for standing up for your position in the face of what, to me, was surprising criticism. I was interested and glad to read some thoughtful reflections as well, especially the part about unintended consequences.
Good luck with your business. Hopefully the biscuits will come to a retailer near me (or online) in Ohio. I`m sure that my little dog will love them too.
Thanks Jemba!
I`m glad to hear others` responses as well. It does me no good to hear from all the people who agree with me, and does me all the world of good to hear from people who think differently from me.
And... you can certainly buy my biscuits online :) And if you have a store that you purchase from, let me know their name and I can see about getting our biscuits over there!
Thanks :)
-------------------------
Barkwheats Dog Biscuits
-all natural, maine-made buckwheat dog biscuits
BurninGreen... nice, I like your ideas. And thanks Diego. Swany, thanks for your input. And yes, this is my first company, but my family has grown many multi-million dollar businesses in the past. To each their own.
Thanks Spiderman. That last question is the most important one, that`s true. :)
Also, BurninGreen... your last post was wrong on the math. If someone is making 8 dollars an hour, 400 times that is $3,200an hour, or about 6 million dollars a year. Just wanted to clarify that for folks.
-------------------------
Barkwheats Dog Biscuits
-all natural, maine-made buckwheat dog biscuits
Thanks Spiderman. That last question is the most important one, that`s true. :)
Also, BurninGreen... your last post was wrong on the math. If someone is making 8 dollars an hour, 400 times that is $3,200an hour, or about 6 million dollars a year. Just wanted to clarify that for folks.
-------------------------
Barkwheats Dog Biscuits
-all natural, maine-made buckwheat dog biscuits
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