Conscious Compensation 💰
Amidst ongoing labor challenges, conscious leadership is needed
President Joe Biden made an historic visit to the United Auto Workers picket line last week. The White House said he was the “first modern president to visit a picket line.” During remarks delivered via bullhorn, Biden encouraged the striking auto workers to “stick with it” and stated, “you deserve the significant raise you need.” The “significant” raise Biden alluded to is the 40% pay increase that is part of the striking workers’ demands.
Why are the workers demanding a 40% pay increase? Because it mirrors the pay increase CEOs have experienced in the last four years. In fact, during this year’s “Hot Labor Summer” executive compensation has been a major topic.
The Hollywood writers and actors strike also revealed shocking disparity in pay across the industry. CNN reported that most working actors don’t earn the minimum $26,470 necessary to qualify them for union health insurance. One actor disclosed the paltry amount she earns in residuals from her Disney show: "I pull in $.03 each quarter for UNLIMITED worldwide streams on fx/hulu/DISNEY. & [Bob] Iger is yachting."
These strikes point to a larger issue in the workforce: a growing divide amongst the working class and those who reap the most financial rewards from that work.
According to Reuters, “CEO pay and benefits have skyrocketed in recent decades, but worker pay has not kept pace. The ratio of CEO pay to the average, non-supervisory production worker at the biggest U.S. companies has jumped from less than 40 to 1 over the last four decades to nearly 400 to 1, the Economic Policy Institute calculated in 2022.”
Amidst all these depressing, frustrating stories about the growing disconnect between workers and company leaders, I came across this refreshing example of a CEO practicing conscious leadership. Satisha Malhotra, the CEO of the Container Store, will take a temporary 10% pay cut so that his employees can receive their merit pay raises. While Malhotra isn’t the first leader to do so, his example is another reminder that leadership is about serving all stakeholders, not maximizing profits at the expense of some.
Some argue that to address the inequalities of C-suite and worker pay the government should institute higher taxes or regulations. Those options would have an impact, but they wouldn’t address the underlying issue of a lack of conscious leadership in the workplace. It’s leaders who increase their conscious leadership that will be most effective at addressing inequality and creating a company where all stakeholders can thrive.
In his book Conscious Leadership, John Mackey describes how one company tackled this challenge and were guided by the conscious leadership principles of their CEO. Examining how his company operated, Ramón Mediola, CEO of Florida Ice & Farm Company (FIFCO), realized they weren’t giving back enough to their workers and community. “I realized that we needed to evolve in the way we were doing business. We needed to embrace a more conscious, inclusive, holistic view in which we were sharing the wealth that we create among all our stakeholders.”
Mediola also realized he “had to put his money where his conscious was.” So he revamped executive pay to incentivize not just financial gain, but social and environmental progress. “ In other words, if the company didn’t meet its new targets, the executives would be paid less.” As Mackey notes, it was a “fundamental restructuring of the incentives of the organization. Changing the compensation model led to behavioral change at the company.”
Another example of conscious leadership compensation is Dr. Bronner’s. The Oregon-based company famously instituted a pay cap for its CEO where the pay ratio with their average employee is 5-to-1.
As a B Corporation, Dr Bronner’s is committed to meeting “the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose,” which perfectly aligns with conscious leadership values.
“The salary cap is part of what anchors our mission,” says Ryan Fletcher, Director of Public Affairs & Media Relations. “We believe in social justice. We think of the company as a for-profit with the DNA of a nonprofit. In part, the money we save on executive salaries allows us to do right by our employees and suppliers, and also allows us to dedicate over one-third of profits annually — all profits not needed for business development — to social and environmental causes.”
The company also offers above-average benefits because of their conscious leadership-aligned philosophy: “treat employees as we would treat our sisters and brothers—create a healthy environment and programs that encourage personal wellbeing and growth—promote from within whenever possible—give employees every opportunity to thrive and take pride in their contributions to the broader world community through their work at Dr. Bronner’s.”
We have a long way to go in bringing more conscious leadership to the way we work. But we can no longer ignore the desperate need for increasing conscious leadership across industries and professions. It’s time for us to start looking at problems through a different lens that considers the needs of all stakeholders. From there, we can create businesses and organizations that consciously create a place for all of us to thrive.
Work happy. Live happy. BE happy.
Meredith
The way we work and build teams is rapidly changing. Leaders often feel unprepared to navigate the transition. As a conscious leadership coach, consultant, and communicator, Meredith helps leaders and their teams create new ways of working and relating so they can prepare for the future by consciously co-creating it.
Contact her to develop your conscious leadership and transform your organization into the workplace of the future.
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