Main topic

Employees want an environment that offers rewarding work. When workers feel that their efforts and human resources are being appreciated they would perform better. This is because an improved performance would see them get a promotion. When an employee invests in advancing her level of education but the rewards at work are not forthcoming, it causes conflict between an employee and the company. Expecting a promotion after studying would be a reward the employee was hoping. Also, they would be expecting an increase in their compensation to reflect their improved capabilities and knowledge.

Job security ensures employees perform better and give better performance. This is because they are guaranteed that their future at the company is firm and stable. When they put so much of their life at work, and then there is uncertainty, then their performance will reduce, and this will cause a conflict between them and the company. Their compensation will be uncertain.

Moving ranks or one managerial post to another. An executive will expect that when they move upwards in their career. This advancement in a job should be as a result of increased performance and productivity of an employee.

Challenges

Executives would resist an increment in compensation when workers exceed a given target. They can say that although performance was beyond expectations, it was not reflected in profit margins or income of the company.

Performance-based compensation can result in unhealthy competition among employees. This is left unchecked can result in rivalry and sabotage among employees. This can also lead to some workers quitting while others may feel demoralized and intimidated.

It may lead to employees feeling stuck in one post far too long. A worker may outperform others, but a promotion to reflect on it may be unavailable. This will pose a problem to the management and the employee. This can be a cause of conflict and executives will be unwilling to involve themselves in.

During periods of poor performance and layoffs across an organization, this high compensation for executives is a source of conflict. Workers who are laid off and others who are affected view top executive compensations as evil, offensive and outrageously ridiculous. Those affected blame their unemployment to executives who earn a lot and are just a single individual.

Supporting evidence

Google uses a strategy where employees feel happy, and this boosts their performance. This employee support has seen a 12% increase in productivity. Forbes magazine

Apple and Netflix have 40% productivity of employees {business essential}.

Executive compensation is becoming increasingly expensive. Many companies consider performance while designing their compensation. These compensations seek to attract qualified and efficient executives. As companies strive to get the right executives for their companies, they offer compensation rewards that relate to specific measured performance (Karabell). Despite the high compensation companies should seek ways to diminish the salary gap between top executives and other employees. Also, companies should ensure high performance to ensure shareholders even don’t complain about the massive compensation in terms of bonuses by executives.

References

1. John. The issues and debates surrounding CEO compensation, retrieved .https://www.thebalancecareers.com/ceos-are-overpaid-2275136

Accessed on 17 March 2019

The Editorial board. How excessive executive pay hurts shareholders, July 14 2016

Retrieved from https://www.nytimes.com/2016/07/14/opinion/how-excessive-executive-pay-hurts-shareholders.html

Bass brian advantages of managerial compensation of a fixed salary. Retrieved fromhttps://smallbusiness.chron.com/advantages-managerial-compensation-fixed-salary-22503.html

Karabell S.executive compensation is out of control. What now? Retrieved from https://www.forbes.com