It is widely acknowledged that C.E.O.’s are paid handsomely. However the reasons for the high pay may not be what one thinks. A recent article outlines interesting views.

Chief executives’ have important roles in their company, as the success or failure lies in their hands. However, the reasoning behind C.E.O.’s high wages do not seem to be related to job requirements. Rather, companies are using higher pay to try and keep their C.E.O.’s from leaving. Furthermore, companies try to prevent their chief executives from ‘jumping ship’ by offering similar wages as their competition. This peer-group benchmark pushes wages higher and higher.

However, studies have shown “chief executives can’t readily transfer their skills from one company to another”  resulting in “relatively few chief executives land[ing] new top jobs elsewhere”. This is not commonly known and the typical notion is that C.E.O.’s will leave a company if the pay does not keep rising.

In order to deal with this situation, the common notion of keeping C.E.O.’s by raising their pay needs to be corrected. As well, companies should implement benchmarks. The directors in the company will need to set up a standard of pay, which will be extra work but worth it in the long run.

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Foxconn is one of Apple’s biggest manufacturers. Over the years, Foxconn has received continuous criticism for their labor practices.

Foxconn’s tarnished reputation is mainly due to working conditions. Scrutiny revealed Foxconn had illegal amounts of overtime and industrial accidents that have killed four people and injured several hundred employees. Furthermore, rumours suggested that Foxconn has a military-like atmosphere, explaining the occurrence of suicides. Further details on Foxconn can be found here.

From the gathered evidence, it is concluded Foxconn employees are not being treated in an ethical manner. Workers are not  in a safe environment, which is a fundamental requirement in any company. An employee’s safety must be secure before a company issues them to begin working. On top of the unsafe surroundings, the factory’s atmosphere is so horrible that workers have committed suicide. Furthermore, employees are forced to work several hours of overtime, which sometimes goes unpaid. Under-age workers are also an occurrence, opening another can of worms regarding child labour. Vocational students are also told they “cannot graduate unless they continue working for the company.”

These are just some of the unethical behaviour occurring at Foxconn. Hopefully working conditions will improve and employees will be treated better.

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