Case: Its NOT Fair

SUMMARY:

The given case is about compensations of a top level management are very high
that leads to demotivation of others when compare. Critics expressed their sorrow about
high annual bonuses offered in financial services industry are not fair.The compensation ha
to be decide on from the principles of equity theory equate the compensation of same
sector and same level of employees.

FACTS:

The average compensation for a top level management (CEO, COO) is 263
times higher than the employee who is working in low level of management. This is eight
times more than the ratio from the 1950s

According to the equity theory, The pay has to equitable when compared with
a pay of an employee of same sector and the same level then it is considered as a fair
compensation, it gives no dis-satisfaction when the compensation of two employees of same
sector and same level are equal.

In the given case there is gender bias while paying compensation as given in
the examples Nooyi is the CEO of pepsi co. Though she is the CEO as like others she is
getting very less compensation when compared with other two CEOs.

PROBLEMS:

In this case the main problem is about annual bonuses of top level management from the
given examples that are Microsoft is paying compensation of $84 million that is 520 crores
compensation, google pays $50 million to Sundar Pichai and CEO of pepsi Nooyi is getting
$17 million these are the inequalities in payments of all multinational Companys. While
considering the principles of equity theory by comparing two multinational it sector
companys this may leads to dissatisfaction of their their job because one is getting half of
the compensation of the other.

1. Equity theory says the individuals compare their job inputs and outputs with
those of others and respond to inequalities. It mainly says that a person compa-
res himself with their friends, neighbours, co-workers, or Collegues and pre-
sent job with the past job. The main variables in comparison are gender, length
of tenure, level in the organisation and amount of education. For Instance, if a
person is compares with his friend who had two years less experience than him
and getting more salary than him. This leads to demotivation of an employee
and direct towards finding a new job. According to me one has to take the
person who is working in the same organisation as a Referent where the work,
 strategies and productivity are same this give motion to work in an efficient
manner and when a person compares with outside organisation as referent may
their strategies are somewhat different and the productivity is also different
and we have to think in a way of contribution to the productivity of an
organisation. There is no gender bias while paying the compensation because
the contribution is same whether the employee is male or female.

2. Yes, when a firm performance is linked to the compensation of employees this

indirectly effects the performance to the compensation that means when
employees work in efficient manner this gives high pay for the employees this
gives motivation to work efficiently and make profits for the organisation. For
Example, In Infosys, employees get company shares as their compensation for
their work that is when all the employees work in efficient manner this leads to
increase in productivity this leads to increase inn share value which is linked
with the compensation of employees ,This motivates the employees positively
to work by considering as their responsible for their compensation.