Module 3 – Case

PROBLEM SOLVING, EXCEL, AND PEST ANALYSIS

Assignment Overview

Michael Bruno is a senior level manager for Company XYZ. He has been with this organization for 25 years. Michael is in charge of recruiting a new CEO for Company XYZ because the previous CEO, who had a “golden parachute,” was terminated for tolerating low performers, mismanaging change, and ignoring customers. After posting the position on LinkedIn, he received a number of inquiries from potential candidates. After spending months interviewing both internal and external candidates, Michael has two potential candidates (i.e., Doug Wilson and John Smithson) for the CEO position. After having the final round of interviews and spending the day with each candidate, the hiring committee selects John Smithson for the CEO position.

Michael decides to have a meeting with his team to discuss the CEO’s salary before sending John’s employment contract. Michael believes that the CEO of a company should make at least 10 times more than the highest paid employee. Several of his colleagues reject his idea and argue that the CEO should make significantly less. One person yells out, “What about the employees—the employees of the organization should all receive a raise that is well overdue.” Michael is perplexed and decides to have a follow-up meeting with his group first thing in the morning.

Some specific articles on this topic to get you started:

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Taylor, M. (2009). Super CEO salaries on the rise. Super Review. Available in the Trident Online Library. 

Mongan, E. (2017). Multi-facility CEO salaries on the rise. McKnight’s Long – Term Care News, 38(4), 4. Available in the Trident Online Library. 

Peterson, A. (2015). If reddit wants to fight the gender pay gap, it should disclose everyone’s salaries. Washington: WP Company LLC d/b/a The Washington Post. Available in the Trident Online Library. 

David Wighton in, N. Y. (2007). Goldman sachs CEO nets $68.5m salary. FT.Com, 1. Available in the Trident Online Library. 

Case Assignment

Once you have finished reading about this topic and reviewing the background materials, please write a 2- to 3-page paper (either in essay format or Q & A format) addressing the following questions:

  1. Should a CEO of a large organization earn at least 10 times more than the highest paid employee? Justify your response.
  2. Should Michael Bruno try to low-ball John Smithson so he can also provide a small raise to all of the employees of Company XYZ? Justify your response.
  3. What resources can Michael Bruno use to learn more about CEO salaries?
  4. Should Company XYZ have a salary cap for CEOs? What are the pros and cons to having a salary cap?
  5. Should CEOs have a golden parachute?
  6. Based upon your research and beliefs, discuss a fair policy for a CEO’s salary so there is no confusion among the employees.

Be sure to support your arguments with references to the background readings and your research.

Upload your assignment to the Case 3 Dropbox. Be sure to review your TurnItIn Originality report. If the score is over 20%, you may be copying too much material from the internet or other sources and you will need to contact your professor and arrange to revise and resubmit the paper. https://courses.lumenlearning.com/informationliteracy/chapter/video-me-plagiarize/

Assignment Expectations

The Case papers in this course will be evaluated using the criteria as stated in the Case rubric. The following is a review of the rubric criteria:

  • Assignment-Driven: Does the paper fully address all aspects of the assignment? Is the assignment addressed accurately and precisely using sound logic? Does the paper meet minimum length requirements?
  • Critical Thinking: Does the paper demonstrate graduate-level analysis, in which information derived from multiple sources, expert opinions, and assumptions has been critically evaluated and synthesized in the formulation of a logical set of conclusions? Does the paper address the topic with sufficient depth of discussion and analysis?
  • Business Writing: Is the essay logical, well organized and well written? Are the grammar, spelling, and vocabulary appropriate for graduate-level work? Are section headings included? Are paraphrasing and synthesis of concepts the primary means of responding, or is justification/support instead conveyed through excessive use of direct quotations?
  • Effective Use of Information: Does the submission demonstrate that the student has read, understood, and can apply the background materials for the module? If required, has the student demonstrated effective research, as evidenced by student’s use of relevant and quality sources? Do additional sources used provide strong support for conclusions drawn, and do they help in shaping the overall paper?
  • Citing Sources: Does the student demonstrate understanding of APA Style of referencing, by inclusion of proper citations (for paraphrased text and direct quotations) as appropriate? Have all sources (e.g., references used from the Background page, the assignment readings, and outside research) been included, and are these properly cited? Have all sources cited in the paper been included on the References page?
  • Timeliness: Has the assignment been submitted to TLC (Trident’s learning management system) on or before the module’s due date?

Case reports are to be prepared in Microsoft Word and should be 2-3 pages in length, in addition to a cover page (course name and number, module number, session name, Attention is to be given to citing sources of information in-text (within the body of the paper) as well as in the end references section of your paper. In-text citation and end reference formatting instructions are available at https://owl.english.purdue.edu/owl/resource/560/10/. Submit your report in the Case Dropbox for this module on or before the date due, as indicated at the TLC Homepage.

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Module Case 3: CEO Recruitment

Module Case 3: CEO Recruitment

Recruiting a new CEO is a challenging task. It requires the deployment of specific resources backed-up by factual information to attract and engage the right candidate. In this case, after the CEO of the XYZ Company left, Michael, the senior-level manager, is tasked with the duty of hiring a new CEO. John Smithson qualifies as the best candidate and is about to receive the employment contract, but first, Michael and his team must discuss the new CEO’s salary. This paper outlines how Michael and his team can reach a mutual agreement for the benefit of all.

CEOs are considered the most valuable employees in an organization. For this reason, Chen & Chung (2016) argue that the CEO, as the most valuable employee, should be paid ten times or more than the highest-paid worker. The Chief Executive Officer (CEO) ‘s principal role is to ensure that the company performs exceptionally. Similarly, the skills and expertise needed by the CEO are intricate, and only a few people can manifest such roles. Resultantly, most CEOs of big companies are paid more than other workers.

Low-balling John Smithson should be considered if the outcome benefits the company’s productivity and performance. According to Asaari, Desa & Subramaniam (2019), the low balling offer should be keenly measured to avoid unbearable consequences. If John Smithson cannot go any lower with the offer, Michael could stand the risk of losing him to please his team. Conversely, if Michael decides to maintain the CEO salary offer, he could lose or affect his employees’ performance. Be that as it may, achieving a low ball offer agreement means that all parties stand to benefit.

There are many sources that Michael can use to gain more knowledge on CEO salaries. For instance, by watching the release of business newspapers and magazines, he could find relevant data to inform his choices. Additionally, as Faleye, Reis & Venkateswaran (2013) explain in their journal, CEO salary varies from one organization to another. Numerous determinants are shown to influence the salary ratios between top executives and other workers. Credible sites like Salary.com and Chiefexecutive.net can provide Michael with the knowledge he needs.

On average, salary caps are meant to limit the wages an individual should earn within an organization. Varying opinions have been given regarding whether wage caps are beneficial or disadvantageous to a business, according to Asaari, Desa & Subramaniam (2019). In my opinion, XYZ should not have a salary cap, as this could have different impacts on the workforce. Some may feel favored, other disfavored. The advantages of salary caps include enabling smaller businesses to remain competitive, harboring healthy competition among organizational teams, and motivating the personnel to climb up the ladder. Conversely, salary caps can lead to unfairness; unhealthy competition disqualifies salaries and conflicts between employers and employees.

A golden parachute is a motivator to CEOs and other executives. Boards of directors believe that a golden parachute is crucial for the hiring and retaining process. If the company’s management or ownership shifts from one part to another, the golden parachute guarantees the CEO a severance package in case of a dismissal. Noteworthy, this serves as a security guarantee to the CEO by encouraging them to explore deals that, in the long run, are beneficial to the company. Agreeably, CEOs are entitled to a golden parachute, not for their benefit only, but the organization.

Salary policies are challenging to formulate, given the interest of the parties involved. As previously indicated, CEOs are considered some of the most valuable employees, and therefore, a fair policy is essential when recruiting one. However, the CEO’s role without the collaboration of other employees is considered futile. I believe the best approach for a CEO’s salary with minor complications is rewards based on its performance. Whether a salary cap is deployed or not, the organization should formulate a policy that favors all stakeholders. Conclusively, the current average ratio stands at 70:1. In some cases, CEOs earn more than 300 times than the average employee. Meaning, a fair policy is one that considered all options available.

References

Asaari, M. H. A. H., Desa, N. M., & Subramaniam, L. (2019). Influence of salary, promotion, and recognition toward work motivation among government trade agency employees. International Journal of Business and Management14(4), 48-59.

Chen, H. M., & Chung, H. M. (2016). How to measure personal brand of a business CEO. Journal of Human Resource and Sustainability Studies4(04), 305.

Faleye, O., Reis, E., & Venkateswaran, A. (2013). The determinants and effects of CEO–employee pay ratios. Journal of Banking & Finance37(8), 3258-3272.