The increasing gap between chief executive pay and that of the average employee ‘risks undermining the morale and motivation of the workforce’, according to research presented at the annual conference of the British Psychological Society’s Division of Occupational Psychology. The paper concludes that organisations need to pay more attention to who is selected to top positions, suggesting that individuals with more narcissistic tendencies are most likely to emerge as leaders and are also more adept at negotiating themselves higher rewards.
It goes so far as to suggest that the most powerful are not averse to ‘rigging’ their company’s performance outcome measures to present themselves in the best possible light in order to demand even higher rewards. The research also recommends there should be less focus on disproportionately rewarding the performance of key individuals given that, where CEOs promote shared or distributed leadership there is likely to be better team performance.
Dr Almuth McDowall, lead researcher, said:
‘Fundamentally, significant changes need to be made to CEO rewards, which need to be smaller, have a more transparent structure and linked to transparent reporting of financial and non-financial metrics for success.’