Thursday, June 01, 2006

Distribution of wealth in an organization

I recently watched the WalMart documentary 'The High Cost of Low Price' that deals with Walmart's exploitation of its workers and the environment (http://www.walmartmovie.com). I am never shopping there again!

It got me thinking that one of the biggest challenges of modern economics is how to have a fair distribution of wealth in an organization.

An idea that makes sense to me is expressing all salaries and bonuses as a multiple of the lowest salary in the organization. For example, a CEO or upper management person's salary is 1000 times more than the lowest paid worker (of course there has to be a limit to this multiple as well). So, financial benefits would reflect throughout the organization in a consistent manner. The upper management now has direct interest in the financial well-being of employees throughout the organization. This also ensures that there is enough incentive for personal growth.

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