While it is an accepted fact that high salaries are a pre-requisite to attract the best managers, it is equally well-accomplished that wage-disparity between Management and Labor leads to the maximum disputes between the two groups and leads to conflicts. It is therefore important to find the golden mean between the two as both the groups are important for the growth and well-being of the entire organisation. I, however, find linking executive and worker salary a more compelling alternative.
When the workers, who toil hard, find out that what they are being paid is just a fraction of what their counterparts in the management draw from the Company coffers, they are bound to get de-motivated. At the same time, this also leads them to think that management is enjoying the fruits of their(worker's) hardwork. This is one of the major causes of frequent strikes in an industrial set-up.
Another fact that draws our attention is that higher cost of acquisition of Managers, leads to an increase in the total cost of the organisation.
This may lead to fall in the profitability if the high cost of acquisition cannot be recovered. This again would increase worker unrest as their efforts go in vain, just because the Profits were all 'sucked' into the Managements' high compensation.
As stated earlier, it is also important to hire the best managers in order to give the organisation a stable and efficient leadership. However, linking managers salaries with those of the workers, does not necessarily mean that they have to be paid less. It only means that the disparity should not grow.
The organisation could form a policy wherein the salary of corporate executives should not be more than a certain percentage of the lowest-paid workers. This would help achieve two corporate objectives: First, the...