Almost half of U.S. workers -- and two-thirds of those at publicly traded
companies -- say the gap between executives' pay and average workers' pay is
too wide, according to a report released Wednesday by Hudson, the staffing and
outsourcing firm.
Meanwhile, 39% of workers overall -- and 56% of those at publicly traded
companies -- say top executives get paid too much, according to the third
annual compensation and benefits survey of about 10,000 U.S. workers,
conducted by Rasmussen Research for Hudson.
Sixty-four percent of survey respondents said companies should directly link
senior executives' pay to the firm's performance, but just 38% said that is
how executive pay is determined at their organization.
Workers say "executives should be paid based on performance, and many people
think that's not happening in their organization," said Robert Morgan,
president of Hudson Talent Solutions, a unit of Hudson Highland Group Inc., in New York. Morgan is in
Chicago.
Still, 36% of survey respondents say executives are paid just the right
amount, and 13% say executives earn less than they should.
Those figures shift when you separate managers from nonmanagers: 41% of
managers say senior executives earn the right amount, while just 33% of
nonmanagers say that, according to the survey. "There's a disconnect," Morgan
said. "Executives say they're being paid fairly but workers say that's not the
case."
Rewarding pay
Maybe U.S. workers just want executives to be happier: Workers who say their
pay is based on their own performance report being happier with their
compensation packages: 79% of the workers who are paid based on performance
are happy with their pay compared with 60% of those whose pay is not based on
performance.
More companies now pay workers based on their performance: 41% of workers in
this survey said their pay is based on performance, up from 35% in the same
survey a year ago.
Still, some employees may not understand they're paid based on performance:
While 56% of managers said workers who do a better job are rewarded with
better pay and benefits, just 32% of nonmanagers agreed. And half of workers
said their raises are not based on performance but are cost-of-living
increases.
That lack of understanding is likely due to employers not communicating well
about how performance is tied to pay, Morgan said.
If you work at a company that communicates well, "you know how you can make
more money, how your money is tied to the overall performance of the
organization," Morgan said. "There's a direct line of sight between your pay
and the overall performance of the organization."
Equal opportunity
Companies should devise ways to reward high-performing workers with bonuses
and salary increases, Morgan said.
"People want to be rewarded for what they put into a job ... they want to have
a positive return on their investment of their time and effort," Morgan said.
"No one gets up and goes to work every day thinking, 'I really don't care what
I do today.' People really want to do a good job. If you provide them an
opportunity to do that and reward them for that, you have a much more
motivated work force," he said. "If I have employees going above and beyond to
satisfy customers...I'm going to beat my competition."
More money = happiness
When asked to point to one change that would make them happier about their
compensation, more workers pointed to money than any other benefit: 41% said
more money, 21% said better health-care benefits, 12% said better retirement
benefits, 11% said better work-life balance, 7% said more paid time off and 7%
said they weren't sure.
Still, Morgan said, "more money" is almost a default answer. "None of us makes
enough," he said.
And getting more money doesn't necessarily keep us at any particular job, he
said. "Pay and benefits doesn't have as much to do with your staying with the
organization," he said.
Instead, workers usually point to career development and how well they get
along with their manager, among other reasons for why they stay with their
job, according to separate Hudson surveys, Morgan said.
"Even though no one thinks they're paid enough, money is not a real driver of
retention."
