High pay isn’t greed: HR experts

Even as Narayana Murthy expressed his discontent on the manner in which CEOCOO salaries were rising beyond the average median at Infosys, HR industry experts dismiss the existence of such a metric that dictates what’s greed and what’s not.While Murthy talked about compassionate capitalism and how CEO salaries should be reined in, industry experts say it is the competitive nature of an industry , the scale of an organisation and the competencies required in a CEO that should be the deciding factors.

Santrupt Misra, HR director, Aditya Birla Group, said a comparison cannot be drawn between a CEO’s salary and the average manager’s salary in an organisation.

“If you look at the remuneration of a CEO and the size of the business, the first question to ask is, given the size of the business and complexity and the responsibility the CEO has, is the remuneration fair in the market context?
You cannot take a philosophical position on a CEO’s compensation in reference to what other managers get paid. A comparison cannot be drawn between the two.“

Experts believe the pay gap between the CEO and the average median will only widen going forward. Sonal Agrawal, managing partner, Accord Group India, said, “A CEO’s compensation is linked to the scale and complexity in the context of a particular industry or market. The multi ple between a CEO’s salary and theaverage median will vary tremendously across markets, industries and companies. There is unlikely to be a single number as a benchmark to decide a CEO’s compensation based on what the median average in an organisation is, and it’s subjective to construe that anything above that number can be described as greed.“

Agrawal said organisations can set up a construct for performance metrics that drive CEOsalaries based on the shareholder’s short-term and long-term objectives.“Broadly speaking, CEOs will be paid basis the value they create and what the market for their skills are. A well constructed performance metric should drive behaviour that makes a good company great. By the same yardstick, if one says a CEO earning a certain compensation beyond a certain level is greed, do we also similarly categorise the value and returns created by the CEO for the company and shareholders?“ asked Agrawal. He added, “Individuals and shareholders can always drive socialistic goals through appropriate use of dividends.“

K Sudarshan, managing partner India, and regional VP Asia, EMA Partners, said, “Given the kind of skill sets, capabilities and bandwidth required for a CEO, it would be unfair to compare hisher salary to the entry-level candidate or an average median in an organisation.“

Experts questioned Murthy’s definition of compassionate compensation as well.

For full report, log on to http:www.timesofindia.com

 

Source-Times of India

Date-04-04-2017

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