In todays competitive market it is prudent for an organization to spend out more finances in order to attract the best talent in the industry. With increasing competition in the market there is a dearth of talented people in the market. To stay ahead or at par with your peers in the market it is necessary to employ the best talented people in the market and good people do not come for cheap. Today there is a rush of employers at Business Schools with all organizations offering fat pay packages and if a company wants to employ people who are among the best brains in the industry, the company has to offer them competitive pay packages.
As Senior Management is involved in taking decisions and planning for the company, talented people at the Senior Management will help in overall growth of the company. Work done by an individual is always equivalent to the motivation levels at which that person is. In case the salaries of Senior Management are low, this will not act as a motivation factor and they may not give a 100 percent at work. This will affect the company's overall performance hitting company stock prices and affecting everyone linked to that company.
In case there are good and talented managers at the top, their decisions will take the company on a growth trajectory which will help lowest-paid employees in terms of getting salary hikes and bonuses at regular intervals. There are possibilities where lowest-paid employees may have company stocks and an overall growth of the company triggered by prudent decisions taken by managers at the top will help in rising stock prices are indirectly helping the lowest-paid.
Thus high salaries are necessary and are justified to attract the best managers, the individuals whose decisions have a great impact on the overall well being of the company which affects the lowest-paid employees as well.
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