What Are the Advantages and Disadvantages of High Levels...

Tommy Le N8486666 Kasha – Class 07 Executives are often seen as the most crucial person in the companies. Their daily tasks involve both multifarious management and challenging projects in order to promote companies growth and achieve business goals in the competitive business environment. Therefore, most corporations tend to provide decent wages and welfare to executives for their great contribution and irreplaceable value. Although the right executives deserve high compensation, some people suspect that it might bring the heavy burden and potential risks to the companies. This essay will discuss both benefits and drawbacks of high levels of executive compensation. It will firstly consider the merits including affirmation and†¦show more content†¦First of all, the qualified executives from outside fields might be attracted because of the high remuneration above the average, and the companies also increase the competition as a result of absorbing talents. In addition, the relationship between shareholders and executives can be improved as well. Schubert and Barenbaum (2008, p.28) argue that maximizing shareholder value is usually seen as a second goal of 7/1/2013 Tommy Le N8486666 Kasha – Class 07 executives because they are willing to maximize their own profits. To some extent, the executives will take shareholders’ profits into consideration if they satisfy with the compensation. Top executives tend to persist in excellent management both in themselves and things around them, and they â€Å"wish to win in the shareholder performance game† (Schubert Barenbaum, 2008, p.28). Finally, high compensation is a mean to mitigate agency conflicts between shareholders and managers. As Feng, Ghosh, He, Sirmans (2010, pp.446–479) mentioned, high remuneration associated with the performance is effective in aligning executives’ interests with shareholders’, and they would like to join hand to pursue the same goal. However, high levels of executive compensation are not always beneficial to the staff. In spite of incentives, the issue of distributive justice may exist in most of companies. According to Harris (2009, p.150), the public view that executive pay packages seem grosslyShow MoreRelatedEssay on Internal and External Equity Compensation866 Words   |  4 PagesInternal and External Equity Comparison HRM/324 02/11/2013 Internal and External Equity Comparison Compensation packages are one of the most valuable pieces of the puzzle when an organization creates a program designed to attract and retain suitable employees. A well designed compensation package can ensure that employees are not only attracted to beginning work at an organization, but are also willing to stay within a corporation over time. 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