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Bob Schoultz
Naval/Academic leader

Bob Schoultz

Captain Bob Schoultz (U.S. Navy, Ret.) directs the Master of Science in Global Leadership at the University of San Diego's School of Business Administration.

Great Pay, Great Responsibility

It depends on a number of factors. If leaders are asking employees to take cuts in pay or perks, work more for less, or make other sacrifices, then their credibility as leaders will depend on demonstrating their willingness to share the pain.

The degree of sacrifice will also depend on a number of factors. Some leaders are receiving compensation many, many times what their subordinates are receiving, complete with perks and the long-term financial security associated with such compensation packages. Leaders in that category have the most flexibility to take significant cuts and to make clear statements that their loyalty is to the long-term health of the whole enterprise, not merely their own affluence.

With great power (and pay) comes great responsibility. Many of us have been impressed by how some organizations have decided as a group to take pay cuts across the board to avoid having to lay people off, and executives have chosen to be part of that. Other organizations are using these difficult times to cut dead-wood and make efficiency decisions that would be harder in more prosperous times. Both approaches have merit, again depending on the circumstances and HOW these steps are taken.

When an organization is under economic stress, sharing sacrifices can be very valuable in building an organization's ethos and sense of mission. But just as important is WHAT is done, HOW it is done, and how it is perceived. The credibility and sense of belonging that comes of shared sacrifice could help an organization come out of this crisis stronger than before. Executives have to lead, if that is to happen.

By Bob Schoultz

 |  March 17, 2009; 10:15 AM ET
Category:  Compensation Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Posted by: Lauren Keane | March 17, 2009 1:24 PM
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Why should an Alex Ferguson or Arsne Wanger have their salaries cut when they deliver plenty of value to Manchester United and Arsenal Football Clubs, in the most popular sport in the world? Besides, the English Premier League correctly classify them as managers, meaning that they manage the egos of all the players. Besides, Sir Alex Freguson makes only a portion of what Cristiano Ronaldo (the world's 2008 FIFA Football Player of the Year) makes!

Posted by: fgominho | March 17, 2009 12:44 PM
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