Wednesday, October 13, 2010
I've begun to watch one new TV show.....a Reality show called "Undercover Boss" on CBS. It features a CEO of a big corporation who goes "undercover" for a week and works alongside his (or her) employees in the field. I watched the CEO of 7-Eleven working in a store, trucking in night deliveries to stores, and doing a stint in the 7-Eleven bakery. I also watched the CEO of Direct TV do a warehouse stint, train as a tech and an installer, and take a shift at a tech support call center. In every situation, the CEO can barely keep up, let alone accomplish the tasks at hand. The employee-trainers are incredibly patient and very skilled at what they do. Usually, at some point they share some facts about their lives in a matter-of-fact, good-natured way. You find out that one goes to dialysis after her incredibly productive shifts as a 7-Eleven store manager. A Direct TV warehouseman has half his vertebrae fused together. Another is a youth pastor. Another is an artist. Two go to school after their full time hours. At the end of the week, the CEO goes back to his boardroom and speaks briefly with the other suits about his time in the field. Then he summons the employees that he worked with and heaps on praise and some meaningful gifts.
It's a feel-good show, and so far, even the CEO's have been more than decent folks. However, the message that comes through loud and clear to me is that there is no way in the world to justify a CEO salary that is more than ten times above his/her people in the field. There's just no way you can rationalize that the CEO's hours in meetings, studying spreadsheets, and making macro decisions are ten or twenty times more grueling or exacting or conscientious than the hours spent by those who do the daily work of the company.
When Ben and Jerry's was owned by Ben and Jerry, they had a rule that nobody in the company would be paid more than seven times what anyone else in the company made. In 2004, more than half of the CEO's of the top 50 U.S. corporations earned at least 104 times what their average employee earned (not their lowest paid employee), and the top 10% "earned" over 350 times what their average employee earned. The research was done by Carola Frydman of Harvard and Raven E. Saks of the Federal Reserve.