Please read each passage below and respond to each part. I DO NOT need a reference or title page, however please provide the reference(s) underneath the passage. Please label as I have done below, example Part 1 and place your response along with the reference. Please keep each one on the same document! Please cite properly and use correct grammar. DUE Tomorrow by 6PM CST 6/6/22
Part 1
Executive compensation has both core and employee benefits elements, which include a compensation package that emphasizes long-term or deferred rewards over short-term rewards (Martocchio, 2017). These packages consist of their annual base pay and bonuses. Executive compensation differs from other compensation because it is not necessarily tied to any preexisting pay grade or salary band, compensation and benefits may be subject to board approval, they are subject to more scrutiny by both a legal team or publicly, different tax considerations, executives have a high level of at-risk pay meaning they receive high bonuses for goals met but base salary much lower than usual, and executive compensation packages may come with a more detailed employment contract which is less common for other employees (Miller, 2016). When it comes to non-executive pay, there is typically a range of starting salaries that a company has orchestrated to start an individual off with due to budgets or factors. Many times, at a non-executive pay level, compensation is non-negotiable. Unlike a rare finding executive, employers are willing to continue to look for candidates that fit what they are willing to pay, at an executive level it is harder to find a qualified representative, so they are more willing to pay that price. Non-executive pay typically follows a pay-for-performance that triggers merit and incentive awards, and the degree of success determines the amount of the award (Martocchio, 2017). While non-executive pay employees are working hard to earn their pay and rewards, executives are still being rewarded whether the organization made their goals or not. Pay gaps will never improve unless organizations take a stand to make wages fairer, meaning if the company does not do well for the year, no one should get a bonus that far exceeds what can be afforded (Huhman, 2015). This is one of the biggest controversies, where if the company does bad, a non-executive employee does not get a bonus or get a merit increase, however the executives still do. They can perform poorly and still be rewarded but non-executives do not get the same luxury.
References
Huhman, Heather R. (2015, October 12). 3 ways to address the salary chasm between CEOs and employees. Entrepreneur.
Martocchio, J.J. (2017). Strategic compensation: A human resource management approach (9th ed.). Pearson.
Miller, Bridget. (2016, November 27). How executive compensation is different from other compensation. HR Daily Advisor.
Part 2
Principle differences between executive and non-executive pay are derived entirely in areas of pay and compensation packages that are provided. Martocchio (2017) refers to the potential hire of a compensation professional made in part by the CEO that targets such packages that may benefit one party over the other in a conflict-of-interest scenario (sec. 11.1). This misrepresentation can blur the lines of the best interest of the organization to where true motives in the profitability of the company although prominent or not would still provide that those executive employees still reap the benefits. Long-term or deferred rewards over a short time (Sec. 11.3) are the main difference between executive to non-executive compensation packages that stable predetermined allocations regardless of the execution and performance of the executive when it comes to the company meeting strategic objectives. Thus, non-executive milestones that are met may get compensated and recognized, the executive receives similar accolades for more modest short-term goals.
Controversies with the growing disparities amongst both compensation packages can further allude to other metrics based within the company that many executives fail to argue against along the gleaming avenues of an organization that practices sound business operations and looks out for all instead of those relative to the top. Findings in 2012 alone found a gap of 273 to 1 from the Economy Policy institute that too failed to account for the various stock option incentives as a driving factor when posed to executive and non-executive packages (International Herald Tribune, 2013). Legislation on divulging such specifics regarding benefits packages and pay thus has been diluted and without proper representation and forceful legislation will continue to be hidden through company loopholes. Concerns here are then not solely with the individuals that are hired to monitor such efforts but encompass the approach of the whole organization in proper representation and equality for all their workers. In a recent article published by Chowdhury & Shams (2021), they recognize that due to organizational structure differences and the life cycle changes therein, many organizations are offering increased incentives to those non-executive members to attain the managerial skills necessary to compete for CEO positions. This adoption of an altered view of organizational competition could provide a bridge between the gap between executive and non-executive status.
References
Chowdhury, H., & Shams, S. (2021). Does firm life cycle have impacts on managerial promotion tournament incentives? Australian Journal of Management (Sage Publications Ltd.), 46(4), 593–628. https://doi.org/10.1177/0312896220974417
Corporate executives and the pay gap. (2013, July 15). International Herald Tribune.
Martocchio, J.J. (2017). Strategic compensation: A human resource management approach (9th ed.). Pearson.
