Explore BrainMass
Share

# Spread of Pay difference between CEO and lowest ranking employee

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

What do you think should be a reasonable spread (either a dollar amount, XX times more than or percentage number) between the earnings of a firm's CEO and its lowest paid hourly workers and why? Provide your detailed explanation on this volatile issue.

(NOTE: Be careful when using percentages. For example, if the lowest paid employee makes \$20,000 and you recommend a 100% higher for the CEO, you are only offering the CEO \$40,000, and that really isn't reasonable.) I expect for you to suggest a reasonable spread, using either a dollar amount, XX times more, or percentage amount, and to not simply tell me that it isn't possible to do so!

NOTE: DO NOT suggest an hourly pay for the CEO, as he/she is a salaried person, as are all management personnel of a firm.

#### Solution Preview

There are a few views on this:

If a CEO wants to be "responsible" then the rule of thumb should be that the CEO earns 50 times more then the lowest paid employee.

So if the lowest employee makes \$20,000, the CEO would make 1,000,000.

http://www.cypress.com/?rID=34986

Other views say that the spread should be 25 times. According to this website, if that worker received the minimum ...

#### Solution Summary

The spread of pay difference between a CEO and the lowest ranking employee is determined. The expert determines the reasonable spread is between these two.

\$2.19

## Pay for Performance and Employment

Please review the below three job scenarios. What Pay-for-Performance Program would you recommend?

Forklift Driver

Person drives a forklift for a small metals manufacturer. Worker picks up parts that have been boxed and loaded onto pallets and delivers them to warehouse for shipping. Worker then returns and waits for the next load to be readied.

Custodian

Person is a custodian for a large, nationwide hotel chain. The custodian's duties are to vacuum the hallways, clean the rest rooms, and carry refuse to the Dumpsters in the rear of the hotel.

Chief Executive Officer

Person is a CEO for a small, independent furniture manufacturer. The CEO is responsible for the firm's performance in the areas of sales, new accounts, new products, profits, and return on assets.

View Full Posting Details