Compensation and MBAs

The current employment picture represents a seller's market for college graduates, with employers going to unprecedented lengths to secure the cream of the crop. This year graduating MBAs will probably have an average starting salary of something above $70,000 a year. They also will receive a one-time "signing bonus" of something over $20,000. Such signing bonuses were unthinkable in the past. As an executive with a headhunting firm notes, "Signing bonuses, which a year ago were atypical, are now the norm" (Hirsch, 1997, p. 53). The fervor with which employers now court recent MBA graduates can be traced, in part, to the fallout of past decades of corporate greed.

America's economy underwent a fundamental change as a result of corporate excesses and increased global competition during the 1980s and 1990s. Corporations assumed massive amounts of debt to finance mergers, levera

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utive pay, particularly in light of corporate downsizing and stagnant or declining wage levels for workers at the bottom rung of the economic ladder. According to Gordon (1996) this wage squeeze is a feature that is unique to American industry: "Wage stagnation in the United States stands out like a sore thumb. It is the only country with wage change close to zero" (p. 25). The wage differential that exists in the United States is enormous compared to pay gaps in other countries. In America, the average CEO earns 212 times the pay of the average American employee. Only 30 years ago, the multiple was 44. In contrast, the estimated Japan multiple is 16 and the Germany multiple is 21 (Weicher, 1997, p. 33). Part of the outrage the public feels about the compensation of managers is based on the issue of fairness. Compensation packages that include signing bonuses appear greedy and exorbitant. The notion of equity is violated when compensation appears inappropriate. As one representative of a shareholder's association observes, "I'm often asked, 'How much is enough? What else could one buy? Isn't there an amount of pay that is just obscene?'" ("Fairness," 1992, p. 461). Therefore, society should show a degree of restr
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Approximate Word count = 2166
Approximate Pages = 9 (250 words per page)

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