Ethically managing compensation definition. Bloom (2004) stresses “Compensation systems can be both powerful determinants and important reflections of organizational values and ethics” (p. 151). According to Bloom (2004), "Compensation systems are almost always set and administered by the most powerful members of an organization . . . and imposed upon the least powerful which . . . an organization relies on for its survival and success (p. 151). Judging the ethics of compensation practices should start with its efficiency and fairness (Milkovich et al., 2014). Milkovich et al., 2014 state “All three (efficiency, fairness and compliance) must be achieved (p. 20). Many ethical dilemmas of compensation originate within the pressures to achieve
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65). According to Evans and Hefner (2009) “Over the past two decades, public opinion that executive compensation is excessive and inequitable has been fueled by the phenomenal growth in CEO pay relative to the salaries of rank and file employees” (p. 65). Brown, (2006); De George, (1988); Hanly, (1992) emphasize “Golden parachutes are contentious contractual agreements because they provide senior management with substantial . . . payouts when they elect or are forced to leave . . . while other stakeholders are subjected to layoffs . . . And other negative externalities (as cited in Evans and Hefner, 2009, p. …show more content…
These jobs were not as valuable to the organization as the executive positions were. Additionally, they of course knew when they were hired they would be the first to leave in the event of downsizing. Many of them however had confided in me that they had hoped that they would be hired as full-time employees. It is unfortunate that the organization took a downturn and had to let them go however this was a chance they took knowing up front the conditions of their employment. The question remains what is the most ethical way to handle executive compensation. It appears though, that ethical corporate social responsibility can play a major role in the acceptance of executive compensation. Additionally the federal government has enacted the Sarbanes-Oxley Act in an attempt to regulate and prohibit certain types of executive compensation. However, an organization that is responsive to the needs and views of their stakeholders will have more acceptance of their executive compensation
65). According to Evans and Hefner (2009) “Over the past two decades, public opinion that executive compensation is excessive and inequitable has been fueled by the phenomenal growth in CEO pay relative to the salaries of rank and file employees” (p. 65). Brown, (2006); De George, (1988); Hanly, (1992) emphasize “Golden parachutes are contentious contractual agreements because they provide senior management with substantial . . . payouts when they elect or are forced to leave . . . while other stakeholders are subjected to layoffs . . . And other negative externalities (as cited in Evans and Hefner, 2009, p. …show more content…
These jobs were not as valuable to the organization as the executive positions were. Additionally, they of course knew when they were hired they would be the first to leave in the event of downsizing. Many of them however had confided in me that they had hoped that they would be hired as full-time employees. It is unfortunate that the organization took a downturn and had to let them go however this was a chance they took knowing up front the conditions of their employment. The question remains what is the most ethical way to handle executive compensation. It appears though, that ethical corporate social responsibility can play a major role in the acceptance of executive compensation. Additionally the federal government has enacted the Sarbanes-Oxley Act in an attempt to regulate and prohibit certain types of executive compensation. However, an organization that is responsive to the needs and views of their stakeholders will have more acceptance of their executive compensation