By Monde Nkosi
Winston Churchill once claimed that all men make mistakes, but only wise men learn from their mistakes. It would appear that we, as a country, are not wise.
As far back as 2005 during a strike by the SA Commercial, Catering and Allied Workers Union, a placard read: “Sean Summers you earn R12 million but you don’t want to give us R400. It’s a shame.” And we now find ourselves back in the same situation with Vytjie Mentor, chairperson of the Portfolio Committee on Public Enterprise, finding that workers have cited high increases for management as one of the reasons for their current strike.
The facts prove that these workers are not incorrect in their belief that executive remuneration is disproportionately high, relative to the average South African worker. A study by forensic accountant Dr Phillip Theunissen revealed that it takes the average South African CEO two and a half months to earn R1 million; it takes the average paid South African worker more than eight years to do the same.
The study also finds that the situation has actually worsened since the famous 2005 placard; the average basic CEO remuneration has increased by an annual average of 19.9% since 2006, while that of the average worker increased by 15.4%.
The logic is thus quite simple; history shows us that disproportionately high executive remuneration leads to worker discontent and contributes to the reasons for strike action. This strike action cripples our basic services such as schools and hospitals, and the resultant above-inflation wage increases exacerbate the issue of unemployment in a country with (according to the Economist magazine) the highest unemployment rate in the world. This can’t be in the national interest. Yet we continue to grant executives high pay increases.
I dug deeper, however, because I reasoned that we are not inherently stupid as a country therefore there must be a reason why shareholders continue to grant executives these pay hikes. I could think of only one solid argument that explained what is happening. It is, in fact, quite a simple argument. Better paid managers are less likely to be inefficient and the costs of inefficiency far exceed the extra cost of hiring a competent executive.
This is illustrated vividly by the SAA saga. The new SAA board paid R15 million for a forensic report which found that former CEO Khaya Ngqula had allegedly misspent R141 million in sponsorship funds and another R30.8 million that the company is now suing Ngqula for. In addition to this, SAA will now incur considerable legal costs in an effort to recover the money. It is inconceivable that a competent CEO would have cost SAA this much in terms of remuneration. It is thus evident that the argument holds, provided that the better pay leads to more competent leadership.
Recent South African history, however, indicates that too often better pay does not lead to more competent leadership. Ngqula himself received a very competitive market-related salary. Other popular examples that spring to mind include Jacob Maroga (former Eskom CEO) and Sipho Shabalala (Ithala CEO), to mention but a few. This makes the argument defending high executive remuneration, quite simply, not hold in the South African context.
This brings us back to the conclusion that executive remuneration in South Africa has reached unacceptable levels and cannot be justified or shown to work in the national interest. I can only imagine the difficulty new Eskom CEO Brian Dames would have explaining to workers how his reported 91% pay rise is in the national interest when his employees had to threaten strike action to receive a 9% increase.
Highlighting problems is, however, far easier than solving those self-same problems. Now that we have identified this problem, how do we solve it?
There has been talk, globally, of capping executive pay. This is not feasible because of the obvious disincentive effect. Why strive to be a better and more efficient executive if you will be paid the same amount as a less diligent and less hard-working executive?
The answer, in my opinion, lies in accountability and transparency. In particular, involving unions (and therefore workers) in determining the performance measures upon which managers will be judged and remunerated.
This will have several lasting impacts. Firstly it will help us, as the people, judge the performance of these highly-paid executives. Secondly, having the performance measures in the public eye will give the executives extra incentive to perform. Thirdly, it may finally create the much-needed link between CEO pay and performance in South Africa which, as aforementioned, is the only basis upon which high executive pay can be justified and be in the public interest.
I call on every person who calls themselves a South African to heed my call and learn from past mistakes. Our mistakes are costly, not only to contemporary South Africa but also to the country this land will become in the future. Just ask the children sitting at home because they have no teachers at school.
Monde Nkosi is studying finance at the University of Cape Town.
“Are CEOs overpaid?”
Is a gross understatement!!
Rampant corporate corruption results in fatcat executives rewarding each other with OBSCENE salaries and bonuses that are not linked to any realistic performance metrics except possibly their length of service! LOL
“There has been talk, globally, of capping executive pay. This is not feasible because of the obvious disincentive effect.”
NOT TRUE! Wall Street executives made the same argument but were proven wrong since the majority of these fatcats remained in their position even though they salaries and bonuses were DRASTICALLY cut after receiving government bailouts.
You somehow dribble around the issue. No CEO can -single-handedly- drive an organisation to higher performance. But, yes, he can screw it up.
Success has many fathers, failure is always an orphan!
I have said it many times, and will repeat it many more times. One of the answers lies in connecting the highest pay with the lowest pay in any organisation.
Apart from a number of other things, such a measure could create a bond of interdependency between the two extremes as well as a more transparent measure to compare individual contributions to the organisation.
The idea that one has to pay top money to get top people is created by a bunch of top people. I am sure that there is a selection of equally bright people running around on the globe who will do the same sterling job for half the price.
The answer to your question: “Are CEOs overpaid?” is a sure “YES”.
One needs to distinguish between the CEOs of private companies and public companies. Private companies can pretty much do what they want, and rightly so.
Your examples are mostly from parastatals, though. In that regard, it would be interesting to compare the salaries of the CEOs of these companies from before and after 1994, for instance.
Such a comparison would also be insightful with regard to the rectors of universities, superintendents of public hospitals, army generals and a whole host of other semipublic positions I can think of.
While I totally agree with you, I note that you avoided mentioning the public service.
I do think problems occur because people in responsible positions find it impossible to judge competence, in either the private or public sector.
Ask why we are paid at the end of the week/month. Because the employer has the right to judge our work before paying.
Salaries, bonuses and golden handshakes should have little to do with whether you pitched most days, and more to do with what you didn’t accomplish, rather than what you did.
Too much management is collecting on what the workers achieve without credible management input.
No wonder they’re feveish.
If I had my way, I’d pay the public servants what they want but fire outright any who have hindered the good health, education and would-be prosperity of others.
Even government could afford to pay that pretty easily and those that remain might just pick up their work ethic.
Dear Monde
Your ineptitude at problem-solving is surpassed only by your disingenuity at proposing intelligent solutions.
Such simplicity is at best naive.
Perhaps 3 evergreen reality checks may assist you?
1. Life is unequal and unfair. Get used to it.
2. It’s not the hand we are dealt but what we do with it that matters.
3. Two wrongs don’t make a right.
Furthermore,in response to your 3 proposals;
1, A brief read of Orwell’s 1984 would enlighten you as to the flaws in your proposals re unions.(Of course there are more authoritative works… KISS)
2. A superficial understanding of the behavioural sciences would have enabled you make an intelligent/informed proposal re determinants of behaviour.
3. A basic understanding of the laws of supply and demand and/or cause/effect would have assisted you to avoid your final blunder.
Comparing apples with apples would also assist.
The principles of basic economics as applied to determining relative value is obviously foreign to you.
So with respect, while there is need for equitable distribution of wealth and while your intentions may be noble, your lack of homework and basic lack of understanding of the problem has led you to write an embarrassingly flawed post.
Stick to what you know best. You could perhaps have a bash at writing about “The integrity of trade unionism and other fairy tales” or a treatise/biography on Marx, Lenin and Vavi, titled
“On being accountable to the working class”
Can we honestly believe a person can do a honest
days work when they are paid so much.?
Can we honestly believe someone’s skill is so much better ?
Performance is relative ?
Hype and prejudice is characteristic?
There are a few flaws in this argument. Firstly, SAA and ESKOM are parastatals and the remuneration of its CEOs cannot be used as reflective of the situation of CEOs in general. Secondly, a CEO’s salary should be disproportionately higher than anyone else’s salary in the given company because those with CEO skills are more scarce than ordinary workers. It is precisely because of this scarcity that CEO salaries are so disproportionately high. It is easy to replace someone fitting nuts and bolts, but it’s not so easy to replace – or keep – someone with an MBA who heads the strategic direction of the company. A CEO worth its salt is priceless because without the CEO doing a proper job, there will be no nuts to fit and no bolts to tighten and hence no job opportunities for workers. The reality is a CEO can do without any given individual worker, but no worker an do without a CEO. Thirdly, to give each worker a R400 increase in a large company may very well amount to more than R20 million for a CEO in absolute terms. It thus works out cheaper to pay one CEO a higher salary than raising the wages of workers by a paltry sum.
There is perhaps a simpler explanation, supply and demand, in south africa there is an abundance of un-skilled and semi-skilled labour while good quality CEO’s are scarce. the reason for under-performing CEO’s is the governments drive for “representation” if you have to have a non-white CEO you may have to settle for not the best. to clarify i am not saying that black CEO’s are incompetent just that they are in short supply leading to some being promoted when the shouldn’t. Perhaps the transformation Charter is doing more damage then we think
Its a Myth that higher pay attracts better skills and encourages better performance.
There are may examples of highly skilled and dedicated people who do not succumb to paycheck greed, and do not link their performance to better pay. Dedication to service rather than to a paycheck can be found in many professions. And in the NGO sector, driven by service-oriented volunteers. Problem is, these philanthropic characters cannot be ‘bought’ by politicians.
Furthermore, excessive remuneration dulls the senses, and sensiblitiy. Overpaid employees, swamped in their monthly income, lose all sense of value for the money they earn. And the money they manage within an enterprise. Witness the facile justifications that ministers have proffered for their profligate spending on arbitrary luxuries. A few million lost here, or wasted there, is meaningless petty cash to them.
continued …
SANTA is one good example … once a highly successful TB program which, for decades, became the gold-standard of the world, emulated in many other countries. Today SANTA is a dysfunctional enterprise, and TB is once again out of control.
Another example is the education trust fund I used to support. It was founded in 1970 by a woman who ran it for 40 years without drawing a cent for herself. Three years ago she handed over to a new director, who demanded substantial remuneration. The fund’s administrative costs rose from 9% to 55% of income donated by private sponsors, resulting in massive withdrawal of sponsorships.
Further proof can be found in the response to pathetic calls for help from municipalities, the Education Dept, Health Dept, water management operations. Skilled teachers, accountants, engineers, who were ‘affirmatively’ removed from their posts years ago, are responding by offering their skills pro bono to assist these dysfunctional, enterprises and their overpaid, underperforming ministers, directors and managers.
The position of CEO is not democratic. If the company shows bad results, the CEO takes the blame and (often) gets fired. Higher risk investments are usually those with a higher return (if they do not fail…). A similar law holds for the CEO. He/she gets a higher return (renumeration, share options, etc.) as long as things go well, but only for so long…. The average worker has much greater job security and because of the financial impact of numbers, cannot compare themselves to a CEO. But exorbitant CEO pay is not good for staff morale. That is true.
You cannot equate government, or parastatals, with private companies. In private companies, an incompetent CEO can be removed by the shareholders. While Pick ‘n Pay continues to make profits for it’s shareholders, Sean Summers can command his large salary, as voted by the shareholders.
Parastatals are other beasts altogether. Despite gross incompetence, the government interferes to keep them in their positions. It appears that they are beyond the reach of the shareholders. These parastatals are also funded by the country’s taxpayers in the form of massive bail-outs. One example is the huge rise in the price of electricity which we were told was to fund capital projects, among other things. Due to the increase, Eskom appears to make a profit. The fat-cat board awards themselves a “performance bonus” and of course the workers go on strike for their share.
Don’t blame private companies. Blame the ANC, as the current administration.
SETAs are the worst example I’ve personally witnessed: working on their computer systems and listening to the financial director and the CEO banter over who earns the most.
That was almost 5 years ago, and the memory sickens me still. But to learn now that public sector DGs and parastatal CEOs earn upwards of R140,000 per month really makes me want to puke.
I earn half of that in a year, and live a fairly comfortable life.
The people I interact with, project staff, servants (yes, intentional phraseology, but not derogatory by any means. God knows that my maid, U Mama kaAmber, is the best, and strongest person I’ve ever known; and I am driven and humbled by her) earn less than 20% of that! Granted for only 3 half-days a week, but still…
A 1:100+ ratio is iniquitous, and a revolution is brewing.
Seems like it’s coming soon. (Pardon, did I hear you say NDR?)
Our expectations have been consistently lowered since before Polokwane.
JZ is SACP through and through.
@ Basil
Although I don’t consider your response particularly well thought out, I appreciate the criticism. Some points though:
Firstly, I mentioned one solution of my own, what are the three you talk of?
Secondly, you speak of behavioural sciences. In coming to my current viewpoints I read several academic studies on the causal link between executive remuneration and performance, including several by Prof. Martin Conyon of the IE Business School. Expoloring these in depth would be more appropriate for a thesis, not a Thought Leader article.
Secondly, you say I lack an understanding of basic supply and demand. Well it is those very laws that motivated my conclusion that capping executive pay would not be feasible.
Lastly, I wrote this article because it is quite clear that the current state of affairs is not feasible. Unemployment is too high and the above-inflation wage increases we are seeing will only worsen that situation. I found that, in the opinion of the workers, one of the causes of this state of affairs is high executive pay. Given that fact, I presented the article to spark intelligent debate that will help us get to a workable solution.
If we were to all follow your lead and merely accept that, as you put it, life is unfair and unequal get used to it; well then where would we go as a society?
@Lynne,
I hope that PnP shareholders aren’t still paying Sean Summers – he resigned in August 2006.
@ Dave Harris
Wall street remuneration is reportedly back to pre-crash levels.
To the author. Please review the fundamental economic laws of supply and demand, then factor in BEE which, rightly or wrongly, distorts the natural process of supply and demand; making that which is globally in short supply even more difficult to procure: i.e: a competent CEO.
Briefly all economic activity is determined by scarcity. Top talent is by definition harder to find than bottom feeders who generally abound and frequently have to unionise to force their price up.
Consider that we have masses of cleaners, [for instance' not to mention classroom child minders], striking for higher wages when 30% [officially] of the potential workforce [competition] are unemployed.
What is surprising is that the wage gap is only a wide as you report. Get used to the fact that an unintended consequence of BEE is a stagnating economy in which opportunities for the lower end of the workforce decline
while limited appointment opportunities at the top [i.e. appoint only pigmentally unchallenged cronies to the top end] restricts opportunities at that end too.
The result of such scarcity as Hayek and Von Mises pointed out more than half a century ago will be misery, and wage distortion. There is no solution to market distortion on this scale.
So since you are studying a most useful and undersupplied segment of the market requirement [finance] go forth, qualify and claim your own personal disproportionate share of a declining heap of loot.
Most have already touched on the many flaws in your argument.
Firstly, yes CEO get ridiculous pay increases – but hopefully most of them are sanctioned by the board and they are accountable to board/shareholders.
Now how accountable are your parastatal CEO’s? A lot of them survive through their political connections (which landed them the job in the first place).
Secondly, you are not forced to work for company X. If you don’t like their wages – leave and go and work for company Z. If company X values your skills, productivity and knowledge they will remunerate you appropriately to avoid losing you to the competition.
This is what a flexible labour market should look like. Instead we have an inflexible labour market (because of wishy washy PC sentiments like yours) in which trade unions effectively manage to secure more perks and benefits for their members without increasing productivity or skills.
This causes companies to employ less people (labour expensive), spend less on training (expensive labour/setas), raises the barriers of entry/opportunities for low-skilled workers (now cheap low skilled jobs) and leads to higher unemployment.
Instead of blaming private company CEO’s maybe you should start asking questions about the SA Inc’s CEO and his board – and how their policies is eating away at your salary/economic prospects…
I work for a multinational FMCG and remuneration is a scinece based on numerous factors 1)An external agency conducts a survey of what all FMCG’s pay their executives 2)Our company uses the industry average as a base for remuneration.
The GM’s are then calibrated across the region (Central, Eastern Europe, Middle East & Africa) each year based on business results achieved (for the same measures e.g. Market % growth. shipments etc).The GM’s are then ranked 1-50 and remuneration based on performance.
This is an approach that should be considered by CEO’s of parastatals;a list of objectives for each financial year should be agreed to BEFORE they commence work.Thus if they grow profitability or market share by 50%,the public is aware of their performance and their pay is more transparent instead of remaining a “black box”.
All in all,CEO’s that have a big business impact on the business will be remunerated accordingly while under-performing CEO’s will receive relative pay.
Monde
I totally agree with the examples you listed, but to extend that argument from the public sector to the private sector is disingenuous. Yes there are several CEOs in the private sector that earn high salaries, but these tend to be intricately linked to performance (not always though).
In a country such as ours, where a crises of leadership is in full swing, as is evident by the continual complaints about the current crop (Zuma, Malema etc), paying those competent leaders what the market dictates seems justifiable.
The harsh reality in SA is that the factory workers are a dime a dozen and their job security and pay levels are due to legalities providing a floor, rather than skills. People don’t like to think of themselves as replaceable, but most are.
The irony is that the institutionalised high cost, low flexibility of our labour market is doing more to increase unemployment – and each time people embark on strikes it is often a net loss for the economy, labour in general and themselves. The Labour Unions are actually hurting those most desperate, those they have pledged to help.
Pay people what the market decides they are worth.
Why does everyone carefully forget to mention such excellent examples of the above as Prasa/Metro?
Are CEOs paid too much? Hell yes!
Does this lead to worker discontent and strikes? Obviously! If the company has the money to reward the boss disgustingly, obviously they can afford to let some rain down.
@Basil – South Africa does NOT have a free market, which means free market economic principles do not apply here as it should. Supply and demand? Come on, who are you kidding? I suppose one could translate that into supply of overpaid positions by uncle
s to underskilled, incompetent nephews/brothers/sons, keeping the profits in the family.
I wonder if the last thought to go through Marie-Antoinette’s head, just before she lost it was: “life is not fair”. There is very little economic difference for the masses between “croneyism”, nepotism and an aristocracy.
@basil
What a pompous up-your-own-bum reply to the article.
I agree with many of the other respondents (the fault is mainly in the parastatals) but the SA economy is also characterised by many sectoral oligopolies whose management are not much better, and are often worse, than the worst governmental departments.
The findings of the CompCon with respect to Tiger Brands, Pioneer et al, were not met with punitive action against companies that basically stole the bread out of the mouths of the poor. I would like to have seen people jailed for a long time for this.
Lastly, when you add ‘with respect’ after being disrespectful, it is often decoded as ‘pompous AND a knobend’.
Paul (got his economics degree, with 2+ years of maths, stats and finance. Have also read 1984 and a whole bunch of other books without pictures.)
@blogroids
“Wall street remunerations is reportedly back to pre-crash levels”
A complete LIE.
Salaries and bonuses across the board have been DRASTICALLY cut and many jobs have disappeared overnight.
Monde, in general, lovely article. Sparked good debate.
But I don’t think you can compare private sector issues with public sector issues.
I say this because in all honesty private sector executives generally undergo vigorous (and expensive) training. Most of them tend to be CAs, MBAs etc. While the normal worker at Pick ‘n Pay generally doesn’t have anything beyond a matric. So naturally there will be enormous gaps in their pay as the amount and difficulty of the work done differs as well.
Whereas in the public sector I can understand the lower level worker’s dismay at disproportional pay increases for senior workers. The reason I say it is different in the public sector is that one tends to find that most of these higher level government employees are political appointments anyways… not necessarily the most qualified person.
Therefore in this case I can sympathize with the lower level worker as chances are the minister in charge of his /her department probably isn’t much more qualified than the high school principal or the doctor at the state hospital…
Since there is no such thing as “objective value” but it is possible to argue for “market value”.
Let us try to compare say Khaya Ngqula [former head of SAA] with Christiano Ronaldo [ former Man U player who now plays for Real Madrid]
As we know that Christiano Ronaldo was sold by Man U to real Madrid for about R1 billion and currently R9 million a month (1 million euros) What can Ronaldo do that other people cannot do to warrant such an obscene salary and transfer fee? Well , He can play soccer well, very well in fact. He contributes to Real Madrid being one of the top two teams in Spain and one of the top soccer teams in the world.He is certainly one of the top 5 players in the world. He can keep his obscene salary as long as he entertains the fans and delivers the goods.Whatever you may think of Ronaldo’s obscene salary , THE MARKETS DETERMINE HIS VALUE PERIOD!
Let us now turn our attention to Khaya and ignore the fact that Ngqula while at SAA would have had to work for more than a year to earn what Ronaldo earns in a month, and ask the same questions.What can Khaya do that a hundred other SAA employees as well as several thousand other people in SA (who did not have his political AA EE and BEE connections ) cannot do. Not very much I would guess! His market value? Are you kidding?
@Dave Harris. Quote from “Careers in Finance” a New York based placement agency that recruits, among others, Wall street workers:
“Salaries are Bounding Back. As we write this in June 2010, banking salaries and bonuses are under attack due to the perception that high banker salaries may have worsened the financial crisis of 2008/9. Regardless, many investment banks will continue to pay good bonus compensation.
All-in compensation took a substantial hit in 2008 with many firms paying low to zero bonuses (the dreaded “goose egg”). Starting offers in 2010 and many year end bonus numbers for 2009 were up substantially, although typically down from their peak in 2007 .”
They quote a typical 2010 price for a 1st year analyst with a bachelor’s degree at ZAR 905,000, while a Departmental head can expect to be making ZAR25 million… While that is probably ‘down’ from the 2007 highs understand that overall business globally is down much more than the 10-30 % reduction in remuneration referred to in their quote… indicating that remuneration is back on a roll as reported some weeks ago by Max Keiser on RT’s’ Keiser Report’.
A weekend report also on RT, and carried on Bloomberg, pointed out that real estate sales in the US were at their lowest level since 1963… EXCEPT for Manhattan [home of Wall street types] where prices continue to rise and demand has not even paused.
Thus i hardly think my observation to be a “LIE”. I don’t lie.
@ Palaboran
Point taken
, I’m not a follower of the particulars of big business, but you can insert any CEO of any private company in that space.
Dave Harris is absolutely right, once again he hits the nail on the head. Ninety percent or more of South Africa’s CEO’s are white males. Relics of the apartheid regime. The myth of black incompetence persists in corporate life as it does in the judiciary. The myth of black corruption in corporate life is as strong as the myth of black corruption in politics. Our legal system is dominated by Roman Dutch law, unfair and un-African from its inception.
@blogroids, basil, feanor, HD and other ‘good leaders require high pay to motivate them’ advocates. People who are struggling to survive are motivated by money, money very quickly becomes a non-issue after this. People are far more complex, and that is a good thing. We should recognise this and not encourage the ‘money=value’ idea which is unsustainable, flawed and not very nice. http://www.lifehack.org/articles/productivity/the-science-of-motivation.html
R140 000 per MONTH is just plain INSANE, most people in non-government type jobs are grateful to get that per ANNUM and are delighted with a 5% raise.
Do these strikers actually know what life in the real world is like? It doesn’t seem so!!
Thandinkosi raises a very valid point. Too much or too little remuneration are very much subjective. However, I do agree with Mondi that the CEOs of the parastatals are getting paid far too much, if one judges their performance and hence their market value in terms of what they contribute to their ‘teams’. No Ronaldos at Eskom!
@ Andrew: I don’t recollect suggesting that CEO’s need high pay to motivate them… It is well known that pay and other benefits fall into the category of what Professor Frederick Herzberg famously called “dissatisfiers’. People are motivated by relatively abstract things like security, recognition, peer praise et al.
These are things that are enjoyed at work. Pay, benefits, perks, medicals pensions et al are things one enjoys when one is not at work… after hours.
Now without detracting from the notorious failures of a series of cronyist parastatal ceo’s who’s shortcomings have been well exposed both by the bloggist and many commentators, consider Mr Nkosi’s reference to Sean Summers, lately head of Pick n Pay before his embarrassing faux pas with his Ferrari.
Consider that his replacement, Nick Badminton earned possibly roughly the same or a bit more last year: say ZAR12-15 million.
According to Pick n Pay’s annual report : as at February this year they had a turnover of just short of ZAR 55,000,000,000 [55 billion] , with after tax profit of ZAR1,200,000,000… [1,2 billion] And the leader person who engineered that and made it possible, and without whom it may never have happened ONLY EARNED A LOUSY ONE PERCENT, as compensation for his unusual expertise.
Now i would say that that would be a very real basis for dissatisfaction… There is sure to be someone in his social circle who got 3% !!… such humiliation.
Thank goodness Ronaldo isn’t the CEO of Eskom, he probably wouldn’t know a circuit breaker from a capacitor. Perhaps that is why the world is going to hell in a hand basket, the best paid individuals are those who know how to play with a ball, whilst those who have trained long and hard to understand the why’s and wherefores are lucky to get volunteer work to make our planet a better on to live on. And yes, of course, the financial sector that rides piggyback on top of all, earning the cream the masses produced. How long before the masses figure they actually are not actually contributing much at all?
@blogroids
That is tantamount to a BIG LIE.
Its INSANE to quote from an article in “Careers in Finance” a New York based PLACEMENT AGENCY?
Any imbecile will tell you that a placement agency will alway paint a rosy picture of the industry because their placement fee depends on successfully hiring someone!
Anyway, it seems like all the major financial newspapers are wrong and we should believe the words of a PLACEMENT AGENCY…LOL
@ blogroid
I agree. People underestimate the effect a good CEO can have in a business. They are paid that much more because the good ones are worth that much.
Comparing a factory worker to a CEO is like comparing me to Tiger Woods. The skill levels are quite a bit different. I shoot 85 per round and have to pay for the pleasure, he shoots 20% less and is a billionaire. Unfortunately in the big pressure world of business, marginal differences in skill levels are worth a lot.
@Dave Harris… You live in a strange world of paranoia and conspiracy. Placement agencies ARE the most likely people to know what different industries pay and what the best prospects are likely to earn… That is there business, as i’m sure any thoughtleader reader associated with that industry could tell you.
Do you think the world is loaded with people competent enough to handle the levels of pressure expected of a worker in the finance market… They are in short supply that is why they earn so much. Accept that tthis particular source is in the business of placing people and if they are lying the word will get around and they will do less business….
Maybe you should start paying attention to the business press… instead of the socialist press. If half a dozen financial commentators are telling us that prices of workers in the financial services market are again on the rise then there must be truth in the statement.
This is the global village we are living in and this class of worker is seriously wired.
@Blogroid – Do you perhaps know what percentage a teller’s or cleaner’s salary is of that profit? You will surely agree that the finest engineering will never see the light of day without the valuable input of the person on the treadmill?
Thank you to everybody for the comments and interest shown in debating the topic.
An interesting development linked to the issue is the provision in the Dodd-Frank Act that companies must publically disclose the ratio of the median annual pay of all their employees to that of the CEO.
To this end I’d suggest reading an interesting Financial Times article on the issue: http://www.ft.com/cms/s/0/93ff41de-b457-11df-8208-00144feabdc0.html
@blogroid
“Dave Harris… You live in a strange world of paranoia and conspiracy”
With your reasoning, I suspect your world is far stranger than mine!