Big Business and Management: Too Many Bosses and Too Much Pay?
The mainstream or neoclassical economics view that labor is rewarded according to its productivity has been extended to managers and management teams as justification for the levels of compensation that they receive. Additionally, the management concept of “span of management” or “span of control” has been used to explain the total number of and per employee number of managers in any organization along with the assumption that the appropriate span of management is where the marginal productivity of the last manager employed should equal his/her marginal cost, or wage. On the other hand, Marxists and institutionalists hold different views of the roles and purposes of managers within organizations and attempt to explain these through either the view of managers exploiting workers on behalf of owners or the view of managers exploiting both workers and owners in order to advance their own agenda. This research note examines managerial compensation and intensity from both traditional/mainstream and alternative views by focusing on measures of managerial salaries, employee productivity, return on owners’ equity, return on assets, and rates of worker exploitation.