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To Determine:
What might be the organization’s ideal pay ratio and why does it vary from country to country.
Case Summary: The case is about the pay gap between the CEO and the typical workers. Most of the people from almost countries think that higher employees like CEO, cabinet ministers etc should be paid less according to a research. In United States the average CEO is paid 354 times what the lowest-ranking employees get, for a ratio of 354:1.
30:1 is the estimation stated by the people of United States whereas it is around 18:1 by the people of Germany. However in reality it is 354:1 for the country United States and 151:1 for the country Germany. The difference in the pay between the CEO and the workers has made the people unhappy and de-motivated. According to them, they believe that the skilled workers should earn more than the unskilled workers.
Interpretation: It appears that less a person earns, the less satisfied the person is with the pay gap. Everyone wants a greater equality thus the pay gap should be smaller. Also, ideal ratio is different in different countries.
Adequate Information: For all countries worldwide in the study, participants universally believe that CEO’s are overpaid as the estimated ratios were above the ideal ratios.
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Organizational Behavior, Student Value Edition Plus MyLab Management with Pearson eText -- Access Card Package (17th Edition)
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