Discussion #4 Ethics Example

Discussion #4 Ethics Example Discussion #4 Ethics – Essay Example American Capitalism: Wage Discrepancy between CEOs and Other Workers Compensation of CEOs and other workers should be based on the contribution of the employee to the organization. It follows that pay differences should reflect each person’s effort towards the success of the firm. Executive members are responsible for major decisions and thus have more liability in case of business failure. As a result, their package should reflect the risk they take and obligations towards the continuity of the organization. However, this does not imply that the CEOs increase their salaries indiscriminately without consideration of the widening wage gaps as it poses a social-economic risk to the country. Firms downsize the workforce due to reasons such as financial stress or restructuring. In financial distress, it is unfair to increase a CEO’s salary while firing workers. It is ethical for CEOs to also accept a pay cut to save the jobs of fellow workers. However, if the downsizing is a result of restructuring, then the pay increase of CEOs cannot be morally unjust. The revisions on compensation of CEOs should follow well-structured system that involves a non-partisan board. The board should consider all relevant issues affecting compensation like growth in the revenues of the firm as a result of CEO’s actions, risk adjustments, economic considerations and also wage gap issues. Compensation for the CEOs and other workers can be adjusted without subjecting workers to pay cuts and layoffs as a result of pay increase of the executive. The government can regulate the ratio of the CEO salary to that of the average workers. By doing this, the workers can also benefit from an increase in the salary of the CEOs.