Let's dive into the larger conversation of what does the founder/CEO of a company owe to his/her employees?

Employees are not empathetic toward their cash-rich bosses

Let's dive into the larger conversation of what does the founder/CEO of a company owe to his/her employees?

A spotlight has recently been cast on many executives who have displayed a particular lack of self-awareness: flaunting their success in front of their employees. Income inequality—and the ways the working class is subjected to salaries several hundreds of times lower than their counterparts—is among the most talked-about aspects of economic ethics.

Even during the 20th century, fair pay organizers were pushing back against what they called “executive excess,” referring to studies that showed exponential growth in the gap between the salaries of executives and workers. The trends have only increased since then.

The problem of inequality has become so strong that entire think tanks and news organizations are devoted to tackling the issue as the gap widens. The pandemic famously led 114 million people to lose their jobs in the first year alone, while creating 5 million new millionaires at the top end of the wealth gap. Credit Suisse, which tracked the increasing wealth gap, called it “completely detached” from the devastation caused by Covid, according to BBC.

As ethics around management practices evolve, CEOs have continued to upset their workers and the public in recent years. One April poll by JUST Capital, a financial policy organization, showed that 87 percent of US citizens feel the widening pay gap is a problem. That study, carried out for the organization by a marketing company, found the average CEO pay to median worker salary ratio was 235:1, with the gap widening during the pandemic.

No CEO or executive is exempt from public opinion on the issue. Even as billionaire philanthropist and former Microsoft CEO Bill Gates has built a reputation as an expert on global poverty and health interventions, he made headlines during his divorce for the vastness of his wealth. On top of that, the divorce proceedings in 2021 highlighted that Gates had a habit of driving to work in expensive cars and asking women who worked for him on dates. At the same time, Gates was excoriated by news outlets for not knowing the price of basic groceries.

The ways CEOs can get themselves into this kind of trouble vary. From showing off expensive toys like fancy cars or homes to implementing policies that cut benefits, management choices often pit management against their employees and reveal a stark contrast. Vishal Garg, the founder of mortgage lender, nearly lost his job earlier this year after he decided to lay off 900 workers en masse by video conference. The company’s board announced an interim CEO to fill daily duties and tried to distance Garg from the scandal. The fallout was partly due to the scale of the layoff, with 9 percent of the company’s workforce losing their job in the course of one video call.

Social media users have been quick to point out the hypocrisy of performative awareness by CEOs on social media in recent years. In a high-profile 2022 case, CEO Braden Wallake of Ohio-based HyperSocial labeled himself the “crying CEO” after he had to lay off employees. Even expressing sadness landed Wallake under fire because many took it as a stunt designed to earn his company goodwill while in the midst of cutting jobs. Wallake’s post on LinkedIn garnered tens of thousands of likes, complete with a photo of a tear running down his face.

“If you are truly that upset, you would have helped them and even posted about how amazing they are on LinkedIn to find them new work,” one commenter responded on Wallake’s original post.

"The bigger issue is that we’re dealing with a protracted labor shortage. It’s kind of amazing how quickly the narrative changed; labor shortage is the bigger issue now. "

Similarly, in October, Peloton CEO Barry McCarthy announced plans to cut almost 500 employees—more than 10 percent of the company’s workforce—and was later surprised that media reports weren’t sympathetic to the company. “We were expecting a story about redemption and the successful turnaround of Peloton, which is why we invested time on background briefing them on the state of our turnaround,” McCarthy wrote in an internal memo obtained by The Verge.

McCarthy doubled down on this idea through his memo, arguing that it should have been seen as a positive by the public because the decision helped the company perform better financially. He even suggested that it was the framing by news reporters that would further harm the employees that lost their jobs, rather than the loss of a salary.

This case highlights how, even when operating internally and not arguing their case to the public broadly, CEOs need to better consider how their actions and words will come across to people working long hours and getting paid considerably less than them.

Meanwhile, as the threat of a recession looms across global markets, a disparity in the vulnerability of workers versus top-tier management comes clearly into focus. The situation can be dire for workers across the country as they face the threat of layoffs, and the problem of CEOs putting their foot in their mouths may continue to grow.

The pandemic may have been a strong boon for tech companies, but it hasn’t made them immune to layoffs and a potential recession. In 2022, massive corporations like Netflix and Spotify also cut their labor pools. The dynamic results from poorly performing public markets have also begun to hit private companies.

Even as GDP has decreased in the past two quarters, companies are cash-rich. A potential upcoming recession will largely focus on the wealth gap between companies and workers. This problem, according to economists, could lead to companies cutting more jobs even as they maintain high-profit margins. 

With the tech sector beginning to feel the pressure, the Silicon Slopes community in Utah has some hard decisions ahead. And the pandemic was a moment of reflection, according to state insiders like venture capitalist Gavin Christensen of Kickstart Fund.

Building on that, he says, the complexity of this moment is a slowing down market combined with potential labor issues as companies struggle to find qualified people to hire. As the situation develops, the ethics of CEOs and management taking accountability for their choices become front-and-center.

“We had several companies not make it,” Christensen says of the pandemic. “But some did incredibly well, so it was kind of a tale of two cities … A while ago, the tech industry was worried about universal income because of all the jobs being eaten up by automation, and I think that still could happen, but the bigger issue is that we’re dealing with a protracted labor shortage. It’s kind of amazing how quickly the narrative changed; labor shortage is the bigger issue now.”

Jack Dodson is a reporter and documentary filmmaker most recently based in Palestine-Israel from 2018-2022. He has reported for Vice, BBC, The Intercept, Middle East Eye, among many others. He has a master’s in investigative journalism and documentary from Columbia Journalism School and a bachelor’s degree from Elon University in rhetoric.