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SarahBell

Boss Wages 7X Minimum Paid To Staff

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Tom calls his social enterprise a meeting of communism and capitalism. As chief executive, he can only earn seven times the lowest paid employee. ("Seven X" as he refers to it.)

http://www.bbc.co.uk/news/business-31036601

Nice article and a nice concept of CE only getting 7x the lowest earner.

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How would that work across the UK? Would councils be better for something like that?

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Yes, we used to have a similar policy at our workplace. Much lower multiple though - and I think the CEO might be excepted. But even the most senior managers cannot earn more than around 2X the lowest earner. Not sure if we still do, but probably.

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Sounds like a good idea. If your company is doing well, the lowest paid will earn more and so will you.

Unfortunately most CEOs have no loyalty to their company and contempt for their employees. For them, each new role is just a stepping-stone to another higher-paid job next year that has no relation to their past performance.

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Ben & Jerry's used to have a policy that no employee's rate of pay shall exceed 5 X that of entry-level employees, but they quietly scrapped it in 1995

It always seems to fail at the point when senior managers get big offers to work elsewhere, but really if they believe in the policy they should let those people go and just train up some some replacements.

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Umm, did you read the whole article?

"People are also motivated by personal return. If I sell this company I'll make millions, and that's a human motivator.

"I really fundamentally want to live my life in this way, but the fact that I can walk away with tens of millions - that's a positive, I'm not going to say I feel bad about it. "

Not to be overly cynical, but taking the profit in the form of salary or capital gain is just an accounting trick -- the CEO is still making vastly more money than the average worker (and pays a fraction of the tax rate if he takes his compensation in equity). Really, this guy plans on making millions off the firm and will pay a tax rate lower than the average worker drone. He's not doing anyone any favours here.

From the sound of the article the guy runs a waste disposal company no different to the hundreds of other ones out there, except that he's targeted his marketing spend towards eco-guff and the BBC has sent some free PR his way.

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Ben & Jerry's used to have a policy that no employee's rate of pay shall exceed 5 X that of entry-level employees, but they quietly scrapped it in 1995

It always seems to fail at the point when senior managers get big offers to work elsewhere, but really if they believe in the policy they should let those people go and just train up some some replacements.

Heretic!!!

You can't train anyone to manage, only the top talent can manage and for the top talent you have to pay!

Did Ben & Jerry's drop this noble idea once they found out the company could make "serious" money? At which point all idealism went out of the window?

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Heretic!!!

You can't train anyone to manage, only the top talent can manage and for the top talent you have to pay!

Did Ben & Jerry's drop this noble idea once they found out the company could make "serious" money? At which point all idealism went out of the window?

Either that or ben and jerry retired or sold the business moving it from a family run enterprise with friendly employee pay policy, to a soulless corporate entity run by a relentless churn of professional execs and directors only interested in their own pay cheque.

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Either that or ben and jerry retired or sold the business moving it from a family run enterprise with friendly employee pay policy, to a soulless corporate entity run by a relentless churn of professional execs and directors only interested in their own pay cheque.

It's owned by Unilever. I hope you're not casting aspersions at the highly talented/paid execs of that fine organisation?

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Trouble with these rules is that many companies will only employ the skilled staff themselves and outsource the low skilled work to contractors or temps. This means they then don't count the "non-employees"

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Trouble with these rules is that many companies will only employ the skilled staff themselves and outsource the low skilled work to contractors or temps. This means they then don't count the "non-employees"

An easy why round this would be to apply 'IR35' style tests to the contract 'employees' and apply the rule anyway.

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I am not sure that this idealism can be applied in the UK or anywhere else for that matter.

If one looks to parts of the world hailed as the future (BRICS, et al), the disparity is more extreme, rather than less.

Here in Cambodia I have some CEO friends that are on a multiple of 400x their lowest paid employees. As for the Chairmen, well, most be several 1000x...

My own multiple is 100x - which is a figure I do think about, but the reality is what it is - a low wage economy with relatively limited skillsets and high pay for literally anyone who has competence in any appropriate field.

And this is where you buy all your "stuff" from!

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An easy why round this would be to apply 'IR35' style tests to the contract 'employees' and apply the rule anyway.

It would be easy to make the rule, much more difficult to actually implement and police. Just as IR35 itself has been. The policing of it has cost more that has raised from what I read.

Also, how do you account for work outsourced to countries where the cost of living is much lower? For example manufacturing in Thailand or China?

Edited by BalancedBear

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