We can create a crisis!!!

When we give a key employee a 2% raise and the CEO a 25% raise, aren’t we building in employee dissatisfaction and maybe even a culture of unfairness and haven’t we just CREATED a risk to the organization?  While we’re all focused on Executive Pay in the Comp Committee, shouldn’t we also be focused on how the employees are being compensated and if it’s fair, especially in relation to Executive compensation?  The distance between a 2% increase and a 25% increase is material and not unnoticed by the employees.  I have heard from two key employees this past week that they have no incentive to work harder, or even as hard as they’ve been working.  They now know they won’t be compensated for their efforts or results so they’re figuring out to work less and therefore improve their quality of life by having more time.  When these decisions are being made about employee compensation in the organization, are we, as directors, aware of the unintended consequences of our decisions throughout the organization?  We’ve just been through a very difficult time when employees were asked to work harder/longer for no additional pay, or in some cases for less pay.  Now we generously reward the CEO and not recognize the employees?  What is the message we just sent to every employee in the organization?  And doesn’t that create an extraordinary level of risk?