Let’s take a simplified scenario of the mechanics underlying the remuneration relationship between a corporation and an employee in the knowledge economy.
The corporation pays a white collar employee a certain salary and benefits. The corporation in turn charges its clients for the work performed by said employee a much higher rate, double or more (!) what the equivalent cost of the employee’s salary and benefits. This difference pools into a so-called “overhead” budget. The overhead budget covers things such as facilities’ rent, but by far, the largest chunk goes to indirect labor, i.e. executives. They in turn are supposed to make life better for everyone: customers – innovative products and services -, employees – job security -, shareholders – profit.
The art and science of the possible 