The Babe and other sages talk about excessive pay

By Dr. Henry Wong Meng Yeong | Thursday, December 6, 2012 at 2:52AM

Babe Ruth’s defense of his $80,000 salary exceeding the president’s $75,000 was that he had a better year than Herbert Hoover, who presided over the U.S. during the great depression of 1930.

Therefore, had President Hoover, or any politician or CEO had a bumper year, excessive pay would have been his entitlement, was the implication thereof.

In the implementation of tone at the top, policies, processes and procedures have to reflect the values of the organization, not replace them. We begin by examining policies on remuneration, and how paying excessively or under paying can impact the eradication of fraud and corruption.

Confucius (551-479 BC) cautioned that excess is equivalent to parsimony, meaning that overpaying is as wrong as underpaying. He supported pay in measured moderation.

Coincidentally, he was not alone in raising the alarm about excesses as other sages of his time also sent similar warnings:

“Excess generally causes reaction, and produces a change in the opposite direction, whether it be the seasons, or in individuals, or in governments”. Plato (427-347 BC).

“Everything in excess is opposed to nature”. Hippocrates (460-377BC)

Last month, the new General Secretary of the Communist Party of China, Xi Jin Ping, warned that if corruption is not eradicated it will cause the demise of the party and country.

“If you pay peanuts, you get monkeys” has often been used as justification for excessive pay of leaders and CEOs. But Confucius forewarned that “extravagance leads to insubordination and parsimony to meanness and it is better to be mean than insubordinate.”

Another often used proposal for excessive pay of leaders and CEOs is that it prevents corruption, implying that they are not likely to take bribes if they are well paid. This argument according to Confucius is also flawed because “if one is not greedy, even if one is paid to steal, one will not steal” attesting that honesty, by definition cannot be bought.

As for dictators of impoverished countries with billions stashed in Swiss accounts or CEOs like Ken Lay who enriched himself while bringing down his organization (Enron), Confucius had this to say: “When a country is ill governed, leader(s) gaining riches and honor are things to be ashamed of."

The discussion continues…………