In a comment on another diary last week, I found this gem:
The basic premise of worth is reflected by the value an individual has with regards to his/her contribution to the economic model of the company. This value is demonstrated by the wages or salary that person makes. A CEO makes millions because that is his/her worth. It isn't about who works hardest or who has been there the longest.
I can't really get my head around the cynicism of this statement but I'll try because it seems to be at the core of what some consider "Economics 101" and what others, like me, consider... well... offensive.
The apparent lack of understanding of the predicament of the "worker" versus the "CEO" is tragic. Perhaps the author's never been in the workplace? Who knows?
If we accept this, the value of an employee, then, is directly related to their contribution to the ecomony of the company. If simplified, this could be reasonably assumed to mean that their "productivity" should be a function of their revenue generated minus their costs.
From my reading, some CEO's today make as much as 400 to 700 times more than the average salary of their subordinates. Roughly, this means that the productivity of the single person should be the same or better than 400 to 700 people! Wow! Tough assignment! Placed into the "formula" suggested above, this single person should generate the same revenue as 400 to 700 other employees of that company in order to justify their existence. I'm not economist so I won't try to analyze this any further. But, I wouldn't hesitate to say there is no single CEO at the head of any company who can generate as much product as 400 to 700 people! At least not here on Earth.
In another diary today, it is reported that the National Chamber of Commerce feels they must come to the aid of the poor, oppressed MegaCorp to defend them from the candidates who might take up the cause of workers' rights. At least the Chamber knows on which side its bread is buttered! In the case of the workers, they'll have to hope the candidates follow through on their pledges to protect us from the MegaCorps! Once elected, they seem to forget the butter and go for the bread!
Anyway, back to the point; the "worth" of an employee versus that of the CEO. The referenced author feels that the worth of a CEO is much more than that of the employees under him/her but fails to qualify or quantify that "value". It's simply expected that this "top of the pyramid" person is "worth" more and their value is measured by the fact that they make more money. So, someone who makes more money is "worth" more to the company. Well, how about if all those 400 to 700 employees take a couple months off? What about the "value" of a CEO in that predicament? Looks like a long work week for him/her!
Unfortunately, in today's business world, there are too many CEO's who operate in the same frame as the statement's cynical author. Often they are paid huge salaries and bonuses although their contribution to the company's revenue and profits is very little. So, their "worth" and "value" can't be related to their salary and the statement falls flat on it's face.
When CEO's start believing they are more valuable than the people in the company, then they have outlived their usefulness and become worthless. That's my thought for the day.
(revised to change "percent" to "times")