Mark Bertolini, chairman and CEO of health care insurer Aetna Inc., confirmed in media interviews in Davos that his company had raised all employees’ wages to a base of $16. The pay and benefit hikes introduced by Aetna will help about 5,700 employees, most of whom were making $13 to $14 an hour.
Aetna found that most of its lowest-paid employees were single mothers, and that wage rates being paid were not enough for them to make ends meet.
Bertolini said he could no longer justify poverty inducing wages when his company was doing so well. “Here we are at a Fortune 50 company and we’re about to put these people into poverty and I just didn’t think it was fair,” Bertolini said during a Squawk Box interview in Davos.
Aetna’s decision to voluntarily reach above mandated minimum wages is part of a growing movement among the CEOs at successful companies to restore some dignity to hourly pay. Costco founder and former CEO Jim Sinegal has not only increased wages and benefits for his employees to sector-leading levels, he has lobbied government to increase minimum wages.
Unfortunately, there are still many more organizations dragging their heels on this issue. I believe those who refuse to look at a living wage for their employees will pay a price, both financially and in terms of damage to their organization’s brands.
Take McDonald’s for example. It’s CEO Don Thompson, stepped down recently after only three years at the helm. Sagging financial performance was certainly one of the main reasons he resigned. However, under Thompson’s stewardship, McDonald’s has become synonymous with extremely low wages, consistently refusing to increase hourly pay and benefits despite widespread demonstrations and public condemnations.
Just because a company can pay low wages, doesn’t make it right. #Courage #Aetna…
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This is just another example of how important it has become for business leaders to connect organizational success with employee rewards. Thanks in large part to the ability of the internet and social media to expose wage levels in major employers, those leaders who insist on paying the lowest-possible wages can look forward to being punished by consumers and sometimes by investors as well.
The principle found here is that just because a company can pay low wages, doesn’t make it right.
Truly great leaders are those who can do what’s right for their company, their employees and key stakeholders they serve. The truly great leaders go one step further and ensure their organizations do right by society.
Higher pay not only helps your organization attract and retain top talent, it drives employee engagement and productivity. As McDonald’s and other iconic brands are discovering now, paying absurdly lower wages is not much of a bargain when you look at the online backlash and its impact on long term performance.
This week’s Gut Check question: Do you have the courage to do what’s right?
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About the Author
Vince Molinaro is the Global Managing Director of Strategic Solutions at Lee Hecht Harrison. He is also the author of The Leadership Contract – a New York Times and USA Today bestseller. Vince has spent more than 20 years as an adviser to boards and senior executives looking to improve leadership in their organizations.Follow on Twitter More Content by Vince Molinaro