For CEOs, the more they make, the meaner they become

(Originally published July 16, 2010)

Tales of mean rich people have sold well over the centuries. Even today, it’s not unusual to see yet another telling of A Christmas Carol and its sour, stingy main character, Ebenezer Scrooge. Despite his change of heart in the Dickens’ story, his name is still associated with miserliness and meanness.

Now there’s a new study suggesting that the higher paid a CEO is, the more likely he and his organization are to treat rank-and-file employees meanly. The study, conducted by Sreedhari Desai at Harvard, Jennifer George of Rice University and Arthur Brief of the University of Utah, concludes that “increasing executive compensation results in executives behaving meanly toward those lower down the hierarchy.”

To conduct the study and make the claim, the authors had to define meanness. To do so, they assigned  “strength points” and “weakness points” to companies. Companies that offered employee profit sharing received strength points. Companies that have been penalized for employee mistreatment got dinged with weakness points. The authors then looked at each company’s executive compensation for correlations between executive income and meanness. They found a positive correlation; as executive income rose, meanness rose.

In the study, the researchers cited everyone’s favorite whipping boy, Walmart, which has a large gap between executive pay and worker pay. “Walmart continues to make headlines year after year for violating wage laws, failing to provide adequate health care to employees, exploiting workers, taking an anti-union stance, and violating human rights in foreign countries. Some of the gory details involving its overseas operations include denying workers minimum wage, compulsory overtime, failing to provide adequate safety equipment to workers, and hiring child labor. Back in the U.S., Walmart’s executives’ behavior toward their employees has been just as mean.”

Read the study and draw your own conclusions. I’ve worked with highly paid CEOs and other senior executives. My experience has been that each is an individual case. I’ve run across my share of Scrooges, but I’ve also worked with a number who are decent, motivating team builders.

I’ve observed over the years that those who come up through operations, such as plant managers, seem to be more concerned about the concerns, needs and well-being of workers than those who spend their career in the ivory towers of law, accounting and finance. It seems to be easier to think of workers as pieces in a game if you haven’t spent much time with them.

What do you think? Does money breed meanness in corporate life?

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