A Modest Proposal on Compensation

by Matthew Stollak on Tuesday, April 23, 2013

Three charts have kept my interest for the past few months.

1.  Corporate profits are at an all-time high


2.  Wages as a percent of the economy are at a low

3.  CEO pay continues to grow

 4.  Workers are more productive, yet wages haven't matched that productivity


Given the combination of the above, I make the following modest proposal to address the above issues:

1.  Overall compensation increases for Key Employees and Highly Compensated Employees, as defined by the IRS, will be capped...UNTIL
2.  Compensation increases for the rest of the employees averages 5%.
3.  Thereafter, the cap is removed.

A simple enough example:
a) It would take $500,000 to raise the compensation of the bottom 92% of employees by 5%
b) The top 8% could not see their overall compensation raised by more than a total of $500,000 until part a is reached.

RATIONALE
1.  If you want to pay exorbitant amounts of money to your top level people, go wild....as long as most employees see some gain from the success of the organization
2.  By averaging compensation at 5% for lower-level employees, it provides flexibility to recognize high performing employees.

One comment

(ft.com) Nairobi’s first governor Evans Kidero is a man with a purpose to fight corruption in the city and increase prosperity He has suspended 16 of his staff on suspicion of corruption.

He wants to ensure that more resources are available for providing services and has an ambitious plan to redress inequality and boost services in east Africa’s biggest economy.

Nairobi is in a bad state. Today 70 per cent of its 4m people live in slums, 60 per cent have no jobs in Kenya and no utilities and infrastructure.

Nairobi is the back bone of the country. Nairobi changing means things will change in the whole country. Every Kenyan goes to Nairobi for jobs in Kenya. Kidero promises to improve traffic, rubbish collection, security and fight of protection rackets in the transport sector. He grew up in the slums of Nairobi among the poor and the jobless and knows it is imperative to increase the number of jobs in Kenya.
more on http://datum-recruitment.com/blog/

by Unknown on April 24, 2013 at 4:34 AM. #

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