The initial part to be discussed with is economical aspect. This area is very significant because of its most direct and immense relationship with the term of financial crisis. Of course, other factors of the global crisis have affected however the amount of capital available to nations and companies certainly had the greatest impact (Weiss 2003, 155). Large amount of compensation to CEO or other higher position is very critical to reduce the limited sums of money of the firms.
In cases of CEOs or senior staffs are willing to invest their bonuses toward the company according to the weak condition of it, the problem will not be severe; however in Western cultures where operational management is dominating rather than strategic one, it is very hard to expect them to sacrifice their additional wealth for the company. This phenomenon is also unique in Eastern cultures as well. Drejer (2000, 3-4) states that the strategic management requires lots of sacrifices, proportionally comes from high positioned employees, for long term purposes of being beneficial and competitive. Drejer continues that the term, operational management, is opposite to the strategic management, and the blames about the outcomes of firm’s performance to CEOs are relatively lower than the former concept. Thus less sacrifice CEO will take due to this reason. Therefore, it is insisting that the compensation will be only loss for the companies in consideration of economic factors.
The bonuses to CEOs are relatively greater than other employees because it is counts of what is based on proportion of their wages. The following influences are also enormous. The huge loss of money may affect status of safety of the firm. Therefore, to maintain the safer cash flow it is important to reduce the amount of extra cashes to them. Their motivation from compensation may continue by giving shares, authorisation to use company’s assets such as resort or car, or forms of gifts to them. This non-cash compensation...