Publishing pay ratios is undoubtedly linked to pay equality, there is no getting away from it. Where corporate governance requires it of course you are going to publish your CEO pay ratio, but there are better reasons than that for getting your numbers out there:
Promotes Transparency - If you expressly aim for an open and honest culture then this is an additional way to promote transparency. Be clear about your ratio, what it means and how it has changed over time. It should align with your values.
Enhances Accountability - Remind people of the decisions that were made that led to your ratio, and explain the rationale for those decisions if necessary. This will help build trust and credibility.
Improves Morale - It shows that you value fairness and are committed to addressing income inequality - monitoring and comparing pay in this way shows that there is an awareness that these issues need to be transparent to be addressed. This in turn can improve morale.
Reflects Social Responsibility - It shows the the company is mindful of the broader societal issues and this can enhance your reputation.
Informs Stakeholder Decisions - It will help them understand how the company values its leadership relative to its workforce. They can make informed decision about their involvement with your company.
So, in a nutshell, publishing CEO pay ratios is a step towards greater transparency, fairness, and accountability in executive compensation. It can help build trust, improve morale, and ensure that pay practices align with your values and goals.
Reward Risk Management Ltd.