Have you seen companies that struggle where the CEO still gets a huge bonus? What does that do to employee morale? Is it fair for the leader to get a bonus when the company is struggling? Think about what you do as the leader and how that effects employee morale.
Do you take all the credit for the work of your employees? Do you give yourself the pay increase when your employees do all the work? When you determine how you compensate your employees and yourself, pay close attention to how your employees and outsiders will perceive your actions.
CEO’s During the Recession
There were a number of companies during the first few years of the recession where the CEO’s and other top management received huge bonuses while their employees suffered, and at times were even laid off. This treatment had a major negative impact on the employee morale at those companies. Employees felt their leaders didn’t care about them. They also felt the leader was in it to get as much money as possible without concern for their employees or the company.
Compensation Change
The trend of executives receiving huge compensation and bonuses regardless of the company performance is beginning to change. Today, the Wall Street Journal reported the results of the Journal/Hay Group survey regarding CEO compensation. The article was titled CEO Pay Lags Behind 2011 Results by Scott Thurm.
The survey polled 65 CEOs that had been at their company two years or more. The results showed that in 2011 the compensation on average had only increased by 1.4% whereas in 2010 it increased by 11% on average. The trend has changed for many companies so that CEOs are paid based on their performance.
This means that when the company does well, they may still get a big bonus. When, however, the company does not perform well, they get either a small bonus or no bonus at all. When the company really under-performs, some CEOs are even getting a pay deduction.
What This Means to Leaders
So how does this transfer to all leaders? As leaders, you should be fair to all your employees and yourself when determining compensation. Determine the type of bonus you will give the employees based on performance. Be consistent across the board, no matter what raise method you use. If you give percentage raises, you should be consistent based on performance.
Create an environment of consistency and fairness so everyone is driven to perform better. With a performance measurement system in place, employees will be able to see the fruits of their labors when the company performs well. If only the CEO benefits from great company performance, the employees will get discouraged and have less desire to work hard.
Reflect on Yourself
Examine your leadership practices and determine if you are being consistent with all your employees. If you find you are an inconsistent leaders, change yourself quickly.
How do you make sure you are consistent in your leadership? Please share your thoughts and feelings in the comments section below!
Great job. Keep it up.
Welcome Erlese! Thank you for your support! Glad you enjoyed the post!