Dive Brief:
- It may not be much of a surprise to most observers in the HR industry, but a recent survey from Glassdoor found that highly paid CEOs at large, publicly traded companies in the U.S. have a much lower approval rating from employees than CEOs who are not as highly paid.
- The Glassdoor statistical analysis, What Makes a Great CEO?, also uncovered that founder chief executives, when compared to outsider and internally promoted CEOs, enjoy higher approval ratings. And in an odd twist, low employee ratings around an employer's work-life balance scenario tend to correlate to higher CEO approval ratings.
- Finally, the survey found that factors such as employee feelings around culture, senior leadership, career advancement, compensation and benefits do have a bit of statistical significance around higher CEO approval, but factors such as gender, age, education and job tenure make little difference to employees.
Dive Insight:
“Employee opinion of the CEO can be very telling about a company, and Glassdoor data confirms there is a direct link between how employees view their CEO and how they feel about their company culture," said Dr. Andrew Chamberlain, chief economist of Glassdoor, Inc. He added that a strong company culture combined with career advancement opportunities for employees will typically give CEOs higher approval scores.
Past Glassdoor research on CEO-to-worker pay ratios has shown, on average, that CEOs earn 204 times the median pay of their workers. Of course, new SEC rules taking effect in 2017 could do more than boost transparency. This new study found that all else being equal, high CEO total compensation statistically predicts lower CEO approval ratings. However, the study found that having better company culture partly counters that effect, perhaps meaning a strong company culture can offset the negative effect of high CEO pay on approval data.
On the other hand, the entires issue of whether or not CEO pay has an actual impact on employee feelings is open to debate, as an earlier piece of research from Mercer found that by and large, employees are not all that concerned about CEO pay ratios.
