Analysis Of Compensation Between Workers And Executives

4032 words - 17 pages

1. Executive Summary

The positive economic growth recorded since 1994 by the new democratic South Africa is tainted by the widening wage gap between executives and average workers. This has made South Africa one of the most unequal countries in the world.
Average Chief Executive Officer (CEO) remuneration increased by 11.5% a year from 2006 to 2009. An average worker would take 8 years to earn what a CEO earns in a 3 month period (Theuissen, 2010).
Globalisation, company acquisitions and mergers make businesses more complex and challenging to manage. Companies seek to recruit the best managers who demand higher pay (Templetion, 2007).
The involvement of the compensation committee in the ...view middle of the document...

The trend in South Africa show disproportional increase in the executive compensation compared to wage earners and continue to create greater inequality than ever (Craven, 2009).
This assignment report, analyse the executive compensation in comparison to the wage earners in South Africa, identifying the underlying reasons for wage disparity, consequences of widening wage gap and the strategies to close the wage gap.
Government intervention may go a long way in addressing the imbalance in the executive compensation and the wage earners in order to reduce the inequality.
3. Analysis of Compensation between Workers and Executives
A forensic report conducted by the accounting firm, Computus covered 326 listed South African companies and parastatal corporations. The report showed that the average CEO remuneration had increased by 11.5% a year from 2006 to 2009. In 2009 a CEO would earn R1 million rand within 3month compared with an average worker who would take 8 years to earn the same amount of money. The study showed that there was no conclusive factor determining the compensation of executives as some executives still earned substantial amounts irrespective of company performance (Theuissen, 2010).
Globally pay gaps between executives and entry-level employees has grown. The hardest hit countries are emerging countries like the BRIC nations. The reasons cited for the large pay gap is the globalisation of the market for management talent, companies must pay a premium to retain top management talent (templeton, 2007).
4. Underlying Reasons for Wage Disparities
Between 1973 and 2011, the average worker’s hourly wage increased by only 10.7 per cent (Mishel, 2012). The reason for this could be the difference between skilled and unskilled labour. Managers, among other professionals, demand and receive higher wages due to the demand for their skills and experience (Hlekiso and Mahlo, 2006). Over the past 30 years, the wages paid to skilled workers (those with higher levels of education, ability or job training) has increased dramatically relative to the wages of unskilled workers (Sill, 2002). Employees who also have a postgraduate degree have a higher wage premium than those who do not (Hlekiso and Mahlo, 2006). Skill-biased technical change, globalisation and unionisation are factors contributing to an increase in skill premium (the difference in wages between skilled and unskilled workers).
In less developed countries, low-skilled workers are more abundant than high-skilled workers. When there is an increase in the trade of goods and services with less developed countries, the low-skilled workers in poorer countries put downward pressure on the wages of low-skilled workers in the more developed country. In this way, globalisation and an increased trade with less developed countries can account for an increase in skill premium (Sill, 2002).
Unionisation is another factor considered to play a role in the increase in skill premium. The...

Other Papers Like Analysis of Compensation Between Workers and Executives

An Analysis of the Relationship Between Corporate Social Performance and Corporate Reputation

1140 words - 5 pages 8 7.0 Data Analysis and Presentation 8 8.0 Chapter Headings 9 9.0 Time Schedules 10 INTERIM REPORT: 1. Working Title An analysis of the relationship between corporate social performance and corporate reputation. The case of Tesco and its child education policies. 2. Background information: I chose to research in this area as I am interested in the PR area of business and the importance of

A Comparative Study of Protections for Workers in America, Europe and Japan

2382 words - 10 pages A Comparative Study of Protections for Workers in America, Europe, and Japan ------------------------------------------------- By: Freda Manning January 31, 2016 MBA 605 Business, Government, and Society Mercy College January 31, 2016 MBA 605 Business, Government, and Society Mercy College Abstract In this paper, I will examine and compare the impact of American, Japanese and European Labor laws and how it's managed throughout the

Distinguish Between Parametric And Nonparametric Statistics And Discuss When To Use Each Method In Analysis Of Data

763 words - 4 pages DISTINGUISH BETWEEN PARAMETRIC AND NONPARAMETRIC STATISTICS AND DISCUSS WHEN TO USE EACH METHOD IN ANALYSIS OF DATA The word parametric comes from “metric” meaning to measure, and “para” meaning beside or closely related. The combined term refers to the assumptions about the population from which the measurements were obtained. The two classes of statistical tests are:  Parametric Statistics  Nonparametric Statistics i. Parametric

Students Are to Write a Literature Review on Two Specific Types of Career Development Programmes (Baruch, 2003, P. 251): (a) for Ethnic Minority Workers, and (B) for Workers in Gender-Untypical...

1048 words - 5 pages showing the same tendency. Pakistani and Bangladeshi are mainly doing unstable and low paid jobs.Black Carribean, Black Affrican and other Black groups are standing somewhere in between. The question here is what is missing for those people to be in equal position with their conterparts? The aim of this review is to outline specific career development programmes for both ethnic minority workers and for workers in gender untypical occupations. The

Describe How Monitoring of the Environment, the Public, Workers and the Workplace Can Be Used to Control the Pollution Cause by Ionising Radiation (20)

680 words - 3 pages sight of Chernobyl. Radiation is also monitored at workplaces that use radioactive materials, these materials are often closed off from workers and workers often wear badges which can sense radiation to alert the worker, if this happens they know the radiation is leaking from somewhere. Workplaces aren't the only buildings however that may have dangerous levels of radiation , radioactive materials have to be tested for underground, this is done

12 Angry Men Critical Analysis - Differences And Similarities Between The Book And The Movie

1116 words - 5 pages In Twelve Angry Men, a boy is convicted of the murder of his father and 12 jurors are chosen to decide his fate. In the beginning, all of the evidence points to him being guilty. However, after a little bit of analysis of the evidence, there is some reasonable doubt. Slowly all of the Jurors accept the boy as innocent except for one very stubborn juror: Juror 3. The differences and similarities between the stage directions and the director’

Comparison Between Places of Worship of Islam and Hinduism

1146 words - 5 pages Comparison between Places of Worship of Islam and Hinduism People do their worships according to the place requirement of their relevant religion. The same case is for the peoples belong to the religion of Islam and Hinduism. The people belongs to Islam are called as Muslims whereas people belongs to Hinduism are called as Hindu. Muslims do their worships in a building called as Mosque and another name of Mosque is Masjid came from original

Link Between Organisational Theory and Practice of Management

901 words - 4 pages application of scientific knowledge in the practical activities of scientific * There should be a physical division of work between workers on the one hand and management on the other. All actions of the employee are combined with appropriate management actions. * Scientific selection and training of each worker; * In depth study of each element of the employee’s work; * Specialisation of labour; * Proper selection, distribution

The Myth of the Relationship Between Scent and Attractiveness

1315 words - 6 pages The Myth of the Relationship between Scent and Attractiveness Researches have shown physical attractiveness is not solely dependent upon the visual aspects of appearance but is often modulated by other sensory cues as well. While the importance of the sense of smell in social interactions and behavior of animals is well known, olfaction has often been thought to be of minor relevance to primates in general and humans in particular. However

The Relationship Between Gasoline Sales And Vehicles Miles Of Travel

1581 words - 7 pages The Relationship Between Gasoline Sales and Vehicles Miles of Travel Rufat Rahmanov Quantitative Research Methods (EC 315) Professor Kathleen Vinlove October 7, 2008 Park University Purpose Statement and Model I have chosen this particular model for research paper because I am a business major. At the present time world economy faces the situation of the high petroleum prices. Thus, the understanding of what factors and how they

Of Mice and Men Analysis

839 words - 4 pages Anon 6.3.15 Per. 2 Literary Analysis: Of Mice And Men In the book Of Mice And Men here are many there are many ropy that take place in this novel, for example the mental health of Lennie. The character Lennie helps the author John Steinbeck, show how people with mental health issue would've been treated in those days by Lennie's childish behavior and the affect it has in his actions , how he's dependent on George and the way he's

Related Essays

Should U.S. Government Regulate The Compensation Of Senior Bank Executives?

1663 words - 7 pages example, may find another ways to avoid the law in order to attract valuable employees. Furthermore, regulation can at some point exacerbate agency problems and other issues in banks. The present essay is mainly focused on the structure of compensation of bank executives in the U.S. banks, but the amount of compensation (especially bonuses) is also mentioned. Generally, bank executive’s compensation consists of fixed salary, bonuses, equity

Employment Status Of Casual And Agency Workers

4174 words - 17 pages assigned to work at a hostel for the long term care of people with mental health problems. The Court of Appeal considered that there could be an implied contract between the end- user and the agency worker. It was unhappy with the ease with which the agency industry had been able to structure itself so as to process a large number of workers who were not ‘employees’: What is relied on is the fact that the two critical elements - the

Japanese And American Workers: Two Casts Of Mind

2136 words - 9 pages Japanese and American Workers: Two Casts of Mind by William Ouchi P erhaps the most difficult aspect of the Japanese for Westerners to comprehend is the strong orientation to collective values, particularly a collective sense of responsibility. Let me illustrate with an anecdote about a visit to a new factory in Japan owned and operated by an American electronics company. The American company, a particularly creative firm, frequently

Skills And Characteristics Of Mental Health Service Workers

920 words - 4 pages Skills and Characteristics of Mental Health Human Services Workers Michelle Humble BSHS 471 December 11, 2011 Deborah Machold Skills and Characteristics of Mental Health Human Services Workers Working in the human service field can be a very trying job for many people. I believe that there are those that were born to be that way and those that have been taught to be caring and compassionate. While not every person is cut out to be