In an age of corporate transparency be careful with pay differentials.

A recent study in the American baseball leagues suggests that the greater the difference between the pay of the stars and that of the rest of the team, the less impressive is the performance of the stars and the team as a whole.

Allowing the gap between executive and average worker compensation to grow provides fertile ground for what Professor Robert Simons calls rationalization. He suggests that this is an essential ingredient for turning the pressure of alienation into the opportunity of unethical behaviour.

In other words, if individuals can convince themselves that their contemplated behaviour is not wrong – using excuses such as “Everybody does it,” “The effect is immaterial,” “No one is hurt” or “I’m doing it for the good of the company” – then there is little to prevent the type of behaviour that puts both the individual and the organization at risk.

Trevor B. Lee, EP International

With acknowledgement to my friends at: