CEO compensation

Chapter 20 focuses on Deetz's critical approach to organizational communication. Deetz suggests that corporate colonization, the "encroachment of modern corporations into every area of life outside the workplace" (p. 262) negatively impacts our quality of life, enriching the few to the detriment of the many. Griffin offers this fact: "compensation for . . . CEOs has risen from 24 times to over 175 times that of the average worker" (p. 263). Unfortunately, the situation is even worse than that. According to a New York Times article on the bailout of financial institutions, "In 2007, the total compensation of chief executives in large American corporations was 275 times that of the salary of the average worker. . . . In the late 1970s, chief executive pay was 35 times that of the average American worker." And that pay isn't linked with performance. A 2006 Mercury News article about Bay Area CEO pay provided several examples of struggling companies that paid its top executives huge salaries. For example, "While Sun Microsystems has struggled since the dot-com bust, Chief Executive Scott McNealy received a $1.1 million bonus in 2005 and had been awarded 3.7 million options over the past three years."

Deetz argues that top management is most concerned with control and it "often takes precedence over representation of conflicting interests and long-term company and community health" (p. 264). The results of this emphasis on managerial control are evident in the current financial crisis, which some economists had predicted more than two years ago. But the push to deregulate the banking industry, giving top executives free reign to institute their own corporate controls, led to risky investment practices and poor decisions.

Would Deetz's approach to organization, with its emphasis on stakeholder democracy, have prevented the current financial crisis? The issues are complex, so it's difficult to know. Still, involving more people in the decision-making process might have put the brakes on the high-risk investment strategies that got our economy in this mess.

~ Professor Cyborg