Equality

High CEO Pay Reduces Customer Satisfaction

- Adam Clare

The more a CEO is paid the worst customers are treated. Everyone knows inequality is bad for our society, but now shareholders might start caring because inequality within companies produces negative results. Customers are less satisfied with companies with high CEO compensations, and internally the companies suffer from inefficiency and lower morale.

This article adopts a marketing perspective to examine how wage inequality between top managers and their employees may have customer-related consequences (i.e., customer-directed effort, customer-directed opportunism, and customer-oriented culture) that affect customer satisfaction and firm performance. Surprisingly, marketing scholars and practitioners have largely neglected this pressing societal issue. The authors collect a cross-industry, multisource data set, including responses by top-level managers and objective data on wage inequality and firm performance from 106 business-to-business-focused firms (Study 1). In addition, they analyze multisource longitudinal panel data covering 521 firm-year observations for business-to-consumer-focused firms (Study 2). The results consistently reveal that wage inequality harms customer satisfaction. This relationship is mediated by customer-directed opportunism and customer-oriented culture but not customer-directed effort. Moreover, while wage inequality has a positive direct effect on short-term firm profitability, this effect is dampened by the negative indirect effect through customer-related consequences and customer satisfaction. Importantly, the positive direct effect of wage inequality on short-term profitability vanishes in the long run, whereas the adverse effect through customer satisfaction persists, leading to a nonsignificant total effect on long-term profitability. These findings may guide researchers, managers, shareholders, and policy makers in addressing the challenge of rising wage inequality.

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Pandora Papers Resonate in Canada

- Adam Clare

The Pandora Papers were released just last week and they are already having in impact in Canada. The non-profit Canadians for Tax Fairness is pushing the recently elected politicians to get on closing loopholes and exploits that only the rich get to use. All parties support tax reform to address the growing wealth divide in the country, and with the Pandora leak the need for tax reform is clear. Two Canadian celebrity athletes were exposed in the financial papers leak, which has hurt their reputations.

Support for tax fairness in Canada appears overwhelming. Eighty-nine per cent of Canadians want to see a wealth tax of one per cent paid by the richest Canadians as part of the country’s pandemic recovery, according to a recent Abacus Data pollbased on the NDP’s 2021 platform, and 92 per cent support closing tax loopholes and making it harder for corporations to strategically book profits in tax havens.

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“There seems to be universal acknowledgment across the parties that economic inequality is a problem, and it’s a problem that requires government action,” said Cochrane.

In a blog post for C4TF, Cochrane outlined policies the major parties could work together on, based on similarities between party platforms, and identified an excess profits tax as one possibility.

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Opening A Pandora’s Box of Elite Financial Trickery

- Adam Clare
money

Yesterday the Pandora Papers were released to the public by a team of investigative journalists. It exposed how 35 world leaders and 300 other public officials used complex financial arrangements to not pay taxes and avoid potential corruption charges. While the rest of us get in trouble for not paying taxes, the elite continue to eschew taxes by using offshore accounts and a constant movement of money only the wealthy can afford.

It’s important to expose this behaviour of the rich to show they aren’t above the law nor can the mooch off the rest of us by using services our taxes provide while not paying their share. What’s more, it’s the elite who contribute the most to climate change yet they hog all the money to solve the issue.

Let’s keep looking into their financial management.

Much like the Panama Papers leak in 2016 or the Paradise Papers the following year, the secret files provide a behind-the-scenes glimpse at how certain global elites — or in other cases, high-profile criminals — take advantage of financial wizardry or opaque corporate structures to either shield assets, wriggle out of their tax obligations, or hide wealth entirely.  

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“When we published the Panama Papers a few years ago, there was a lot of outcry around the world saying that this was a system that needed to end,” said Gerard Ryle, the ICIJ’s director. “But we’re now seeing the very people who could end the system … themselves benefiting from it.” 

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Master Resilience Improves Gender Equality in Mexico City

- Adam Clare

Water scarcity is a real problem in Mexico City, and due to existing gender inequality women bare the brunt of the costs of a lack of water. This manifests itself in everything from laundry to buying potable water, both are time consuming endeavours in places with water scarcity. Mexico City launched a program a few years ago to naturalize rain water collection while also enhancing their rain barrel water collection for homes. These changes combined have had a very positive impact on water usage and gender equality in the city.

The program helps install rainwater harvesting systems, which capture the rain that falls on roofs of houses. Water is stored in a cistern, which can then be used for domestic purposes. It can also be used as drinking water if given additional treatment. These systems can provide a family with water for between five to eight months of the year.

By prioritizing households headed by women, single mothers, indigenous people, older adults and people with disabilities, the program aims to improve equity across the board. To date, more than 13,000 female heads of household have benefited — comprising around 65% of installed rainwater harvesting systems.

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Converting to Co-Ops will Save Small Businesses

- Adam Clare
happy workers in a factory

The pandemic clearly caused chaos in the business world from lockdowns to supply chain issues, and this has caused many small businesses to face closure. Small businesses closing isn’t good for local economies and there are solutions to support these small operations. The best option is to convert to a cooperative.

That’s right, in order to save capitalism we need less idolization of individuals and more focus on shared growth. Business can survive through distributed risk and recovery by converting to cooperatives.

Co-operatives offer stable business models that provide good jobs. They are often better than conventional businesses in terms of responding to and surviving crisesbecause they source capital locally rather than with distant shareholders, meet local community needs, and foster trust and mutual aid.

During economic downturns, for instance, co-op members will often amend wages and revenue distribution rather than lay off employees.

The overall lack of knowledge of the co-op model is not surprising. There is systemic bias against solidarity-based economic activity by mainstream economists and business pundits, and a related lack of co-op content in post-secondary business and economics courses.

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