Can Chief Executive Officers (CEOs) Save Jobs?
By Cara Whedbee, Ph.D.| Business Writer, HRTools.com
A report recently published on Gallup.com shows that nearly one-in-four Americans (24 percent) are worried about having their wages reduced in the near future and about having their hours cut back. These worries are most likely due to the number of layoffs these Americans have seen or heard about in the past several months.
According to the U.S. Department of Labor Bureau of Labor Statistics “Employment Situation: January 2009” report (published Feb. 6), “Nonfarm payroll employment fell sharply in January (-598,000) and the unemployment rate rose from 7.2 to 7.6 percent… Payroll employment has declined by 3.6 million since the start of the recession in December 2007; about one-half of this decline occurred in the past 3 months. In January, job losses were large and widespread across nearly all major industry sectors.”
The Disconnect Between CEO Pay and Economic Reality
On Feb. 18, the KnowledgeatWharton.com site posted an article titled, “Outrage over Outsized Executive Compensation: Who Should Fix It and How?” In the article, Wharton management professor, Peter Cappelli, gave some explanations for the apparent disconnect between what executives seem to feel they deserve in pay versus how the public perceives their compensation:
“During the past decade, for example, CEO compensation has been going up at twice the rate of overall pay. As a result, CEOs and other top executives see these historically high rates as the new normal. When the economic environment is good, it is easy to pass along pay increases. When the tide reverses, however, it is painful to go back, and executives resist any push to return to prior levels.
Another reason executives are perceived by the public as out of step with reality is that they base their own expectations about compensation selectively…Executives look at what other senior managers are making and choose to see only those who are paid higher. As each package is negotiated, pay across the corporate landscape inflates even more. ‘It's easy to choose self-serving comparisons, and then it is off to the races with what is essentially bad governance.’”
So now you know why this disconnect between CEO pay and economic reality may be occurring, what can be done to close the gap and turn CEOs into job savers rather than job cutters?
CEOs Can Save Jobs with the “CEO Patriot Pledge”
According to a recent blog post (Feb. 11) on CNBC.com by Bob Rosner called, “The CEO Patriot Pledge: Just Say ‘No’ to More Layoffs,” the average CEO makes 262 times the salary of their lowest paid worker.
Rosner reports, “The Corporate Library examined the paychecks of just the CEOs of the Russell 3000 (the 3,000 largest U.S. companies based on market capitalization) and calculated these executives were overpaid by $14.7 billion annually.” This number does not include the paychecks of other employees in the C-level suites of these companies.
What could CEOs do with that extra dough? According to Rosner’s calculations, “For every ‘average’ salaried CEO who cuts back his or her base salary to a ratio of even 40 times the salary of the lowest paid worker, almost 200 workers would keep their jobs.”
Thus, based on what Rosner has to say, there is a way for CEOs to become job savers rather than job cutters. The “CEO Patriot Pledge,” as outlined in his post, reads as follows:
“As an executive my primary motivation is to act for the good of my company, not just my own financial gain. No one at our company will earn a guaranteed base salary more than 40 times of our lowest paid worker and we will offer the same health care and 401(K) matches to employees as we do for executives. We support pay for performance, so when our company’s performance serves investors and employees, we’ll share in the gains. When our company’s performance does not adequately serve our investors and employees, we’ll share in the sacrifice.”
Become a CEO Job Saver
If you are a CEO who would like to become a job saver rather than a job cutter, you can go to Workplace911.com and sign the pledge. Don’t just sign it, though; commit to follow it for the sake of your company and your employees.
This pledge is just one way you can be aggressive in a down economy in order to be in the best position to grow out of this slump first. Employees who are happy with their employer tend to work harder for that employer. Hard work naturally leads to higher productivity, which directly and positively affects the bottom line.
For more information on the “CEO Patriot Pledge,” including a link to a YouTube video by Rosner on the subject, check out this HRTools.com Insight.
<p> Can Chief Executive Officers (CEOs) Save Jobs?
 
By Cara Whedbee, Ph.D.| Business Writer, HRTools.com 
A report recently published on Gallup.com shows that nearly one-in-four Americans (24 percent) are worried about having their wages reduced in the near future and about having their hours cut back. The</p>