8 Reasons Why Leaders Get Paid More Than Others

If you are like me, you probably have been frustrated more than a few times by why a low-performing leader gets paid more than a high-performing subordinate.

The reasons why leaders get paid more than others are; greater responsibility, more experience, higher education, strategic thinking skills, strong market demand, and being less agreeable.

Some of those you might find obvious, and some you might find interesting, most people I talk to don’t understand why less agreeable people make more money. If you want to understand that, you can skip directly to the bottom of this post!

Responsibility

The most obvious reason and the most common argument why leaders get higher salaries than their employees it’s because they assume a greater level of responsibility for the outcome; they are, therefore, also under scrutiny if something goes wrong.

Experience

Most organizations select leaders based on previous performance. This means that they have some experience that the upper management finds valuable. This experience should benefit the organization in making more money; hence, paying extra money for an effective leader is a good return on investment.

Education

Many times this experience is layered by different forms of education, often some MBA or leadership-specific certificate. People go to universities and high education to invest in themselves; they, therefore, leave university expecting to get paid more than people who do not.

Strategic Thinking

The ability to understand the big picture and where the organization is going in the future is a key quality of a good leader. This is something that needs to be practiced and takes a few years to develop.

Market Demand

Sometimes, it is as simple as a product of the market demand. Companies are willing to pay for unique skills because they know it will generate revenue to pay for itself. Often, whether we like it or not, the lowest in the hierarchy are the easiest people to exchange while maintaining productivity.

Therefore, someone with a more profound knowledge of a particular topic is harder to swap without losing momentum and may affect the bottom line.

Complex Tasks

In most jobs, the lower in the hierarchy you are, the more simple the tasks you should have; this does not mean that they are easy, but that the amount of uncertainty should be lower.

The Ability to Motivate and Inspire

Motivating and inspiring is the ability to create a higher output with the same resources. This is something that every organization strives for; it is easy to see why this is something that companies are willing to pay a premium for.

A good manager can also remove before they become a problem and so HR-related issues before they can impact productivity.

Many Leaders Are Disagreeable

If you have ever heard Dr. Jordan B Peterson talk, then you know that he is a big fan of the Big Five personality traits; he has his own test, which I have taken and recommend; you can find it on understandmyself.com.

One part of the Big Five personality test tests agreeableness, and it turns out that people getting paid more are often more disagreeable. These people also tend to think that they are correct and therefore want to change situations; these are people who apply for leadership positions.

All in all, this means that leaders are usually less willing to accept pay lower pay.

Should Subordinates Be Able to Earn More Than Their Superiors?

The main reason why leaders earn more than their subordinates is that their specific skillset has a higher value to the company. That means if the employees can an even greater value to the company by offering specific skills or tools, then they should earn more than the manager.