In a class of 44 management students, the average ratio of CEO pay to worker pay was 73, and the median ratio was 20. A typical student expects to make $1 million for being the CEO, but is perfectly happy to accept a salary of $55,000. When Drucker raised his concerns about pay disparities 20 years ago, the ratio was 40. Just prior to the meltdown of 2008, the ratio was 400, which also happens to be the maximum ratio reported by any student in our class. Do novice management students lack a sense of the magnitude of CEO salaries today, or are their estimates a more accurate reflection of what CEO salaries should be? The mode salary of $500,000 suggests the former is explanation.Post Script: See Flowingmotion's comments below. They offer some compelling questions about how HR recruiters fail to justify this gap. We need empirical tests.
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3 comments:
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Alisha
http://pay-dayadvance.net
Thanks, Alisha. This is kind of an experiment-in-progress. If it's new and interesting, I am ready to try.
This is not universal. In some countries, students are vocally disgusetd by the divide and will formally complain about a professor who appears to support such a divide.
What concerns me about HR practitioners who support the growing ratio is that they cannot explain why the divide should occur or lay out testable propositions to show the divide benefits a business. The lack of 'argument' is bothersome.
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