2023 DeepDyve, Inc. All rights reserved. Other companies then use the oversized pay of the leapfroggers in subsequent bench marks. Golden parachute changes in control-agreement payouts were curtailed and restricted stock prohibited from being sold so long as the institution received government assistance (Surez 2014, p. 87; Weisman and Lublin 2009). Perceptions of injustice regarding excessive compensation practices can have adverse effects on employee performance, commitment, morale and organizational citizenship behavior (Neeley and Boyd 2010, pp. This (faulty) connection is said to align the interests of principles and agents (Lin, Kuo and Wang 2013, p. 28). We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. 3. Employee perception of fairness in compensation methods and systems is important to achieve the purposes of compensation management, which is a basic function of human resource management. 12-17). Health care delivery systems, financial compensation, and ethical issues related to resource allocation are intertwined because resources are ultimately finite. A particular fiduciary duty of CEOs is to accept no more than the minimum compensation necessary to ensure productive and effective performance in the best interests of shareholders (Moriarty 2009, p. 235). Our academic experts are ready and waiting to assist with any writing project you may have. Check your inbox or spam folder now to confirm your subscription. compensation systems to promote OSH and the well-being of workers. These include whether such compensation is excessive compared against provision of service and whether the compensation process is compromised by inadequately transparent negotiation (Perel 2003, p. 381; Moriarty 2009, p. 235). As any amount above the minimum effective compensation detracts from the firms value, the duty of directors and executives precludes exorbitant compensation (Moriarty 2009, pp. Is it okay to request an exception to the policy that caps the amount of leave that can be sold back in order to boost retirement? A model capturing ethics and executive compensation. 235-250, Murphy, K J 2012, The politics of pay: a legislative history of executive compensation, in R S. Thomas, J G. Hill (ed. The all-encompassing view at the time was that the best possible . As managers implement strategies to reduce benefit costs, create incentives to attract and retain talent, and even negotiate their own compensation, they must do so in a way that is credible to the public. Staffing and selection: The easiest way to have an ethical work force is to hire only ethical people in an organization. Advances in organizational research, particularly those focused on issues of justice and fairness, suggest that the fully understanding the outcomes of compensation systems requires examining their psychological, social, and moral effects. For example, executive compensation at recipient institutions of the Troubled Assets Relief Program decreased during the Great Recession, demonstrating linkage between corporate performance and executive pay (Winkelvoss, Amoruso and Duchac 2013, pp. This leads to increases in compensation for individual executives and facilitates system-wide upswings in executive pay (DiPrete, Eirich, and Pittinsky 2010, pp. Employee perceptions of distributive, procedural, and interactional justice have been related to a, SUMMARY As Figure 1.3 illustrates, several important theories of orga-nizational justice can be arrayed in a 2 x 2 matrix. A firm does not afford to insure ethics by the use of law, because something which is legal may not be right, while something which is right may not be legal. This view suggested that only economic considerations matter for understanding how compensation systems effect organizations and their employees. Compensation systems are an integral part of the relationships organizations establish with their employees. If your specific country is not listed, please select the UK version of the site, as this is best suited to international visitors. Compensation systems are an integral part of the relationships organizations establish with their employees. O'Reilly, C. A., III and J. Pfeer 2000, Hidden value: How great Companies Achieve Extraordinary Results with Ordinary People (Harvard Business School Press, Boston). The Docket Search connects to an external database of case information . In the U.S., the average CEO-to-worker compensation ratio increased from 20 to 1 in 1965 to 295.9 to 1 in 2013 (Mishel and Davis 2014). Learn about:- ADVERTISEMENTS: 1. This section provides access to the Court's oral arguments library and other documents related to recent and upcoming cases argued before the Court. This study investigated discursive processes through which heavily contested executive pay schemes of the Finnish, Abstract The author argues that a virtue ethics perspective can inform the conversation about moral aspects of organizational justice. There are frequent surveys in the market which reflect the attitude of an employer regarding the pay plan. Brockner, J., P. A. Siegel, J. P. Daly, T. Tyler and C. Martin: 1997, 'When trust matters: The moderating effect of outcome favorability', Administrative Science Quarterly 12. They like to be motivated and keep balance between their efforts and their rewards. 101-113, McNaughton, D, Rawling, P 1998, 2011, Deontological Ethics, in E. Craig (ed. Mendoza College of Business, University of Notre Dame, Notre Dame, Indiana, 46556, USA, You can also search for this author in For many years, researchers viewed pay systems as an efficient way to bring market-like labour exchanges inside organizations. The Critique of Current Compensation Schemes. 2, pp. Turillo, C. J., R. Folger, J. J. Lavelle, E. E. Umphress and J. O. Gee: 2002, 'Is virtue its own reward? Systems of production, consumption, marketing, advertising, social and economic accounting, labour relations, public relations and organisational behaviour are analysed from a moral viewpoint. This research study looks at the impact of organization culture on compensation and . These executives add market value to the firm and increase returns to shareholders (Kay and Robinson 1994, p.26). Episode 1: Financial Ethics, the Performance Enhancer, Episode 3: Issue Spotting and Problem Solving, Early Roots of the Western Moral Tradition. But changes to benefits should be considered during agreement negotiations or renegotiations so that changes can be considered in the context of the cost of the entire package. 3-9, Srinivas, S 2014, CEO pay rises at double the rate of workers, The Guardian, published 6 December 2014, accessed 6 December 2014,
the ethics of compensation systems
