Article: Ex-PepsiCo CEO Indra Nooyi thinks asking for a raise is 'cringeworthy'


Ex-PepsiCo CEO Indra Nooyi thinks asking for a raise is 'cringeworthy'

'I cannot imagine working for somebody and saying my pay is not enough,' the former CEO of PepsiCo said. The remark has been seen as largely detrimental to the fight for gender pay equity.
Ex-PepsiCo CEO Indra Nooyi thinks asking for a raise is 'cringeworthy'

Indra Nooyi, former CEO of PepsiCo – who has long been celebrated for breaking the glass ceiling for women of colour – this week revealed in an interview that she has never gone out of her way to ask for a raise. In fact, she even turned down an offer during her time at the global food and beverage company.

Speaking to the New York Times Magazine, Nooyi recounted: "I think it's me, just me. I've never, ever, ever asked for a raise." It's a practice she finds "cringeworthy," she said.

"I cannot imagine working for somebody and saying my pay is not enough ... I never asked my board to give me more money."

This influenced her decision to decline a pay increase during an economic downturn. 

"One year, the board gave me a raise and I said, 'I don't want it.' They said, 'Why not?' It was right after a financial crisis, and I said, 'I don't want the raise.'"

The remarks, however, raised concerns among business and talent leaders who saw Nooyi's views as detrimental to the fight for equal pay, especially for women. But her comments also play out in the context of CEO pay in a time of crisis.

Income inequality remains stark

Across industries and regions, discourse on executive compensation has been fraught with tension, particularly over hefty payouts.

Early 2020, however, appeared to have changed that, when senior executives took voluntary pay cuts just as the COVID-19 pandemic forced businesses to close down or cut back on costs.

Executive pay cuts ranged from five to 20% of their annual base pay. Other leaders, meanwhile, decided to forgo their executive salary altogether during quarters when their businesses were worst hit.

This action – similar in many respects to Nooyi's decision in the wake of a financial crisis – is seen as a way for executives to "share the pain" that most workers feel, a recent study published in the Journal of Accounting and Public Policy pointed out.

Despite all good intentions – amid headlines of CEOs taking salary cuts or refusing 100% of their pay last year – there remains a sizable gap between executive salaries and the salaries of entry-level and mid-level employees. 

This is what, for many, makes Nooyi's views difficult to accept at a time when income inequality has grown more stark and when women, in particular, face a greater disadvantage. 

For example, CEOs last year still earned 351 times the salary of the average worker – even as much of the world was reeling from the impact of the pandemic, data from the Economic Policy Institute, a US-based think-tank, revealed.

Women fighting for pay equity

But Nooyi's refusal to ask for higher compensation also touches on the more specific issue of pay equity among women. When Nooyi stepped down as CEO in 2018, her own compensation package was purportedly nowhere near the pay grade for CEOs of most of the top US public companies. The highest-paid woman CEO at the time, Safra Catz of Oracle, was only number 33 on the list, Bloomberg reported.

Whether viewed from the top or bottom of the corporate ladder, income inequality brings with it a gender dimension, advocates of pay equity point out. 

It's a notion that industry observers expect Nooyi herself would have been acquainted with – in her ascent as one of only a handful of women leading a Fortune 500 company.

As a figure respected by many for representing women and women of colour in the upper echelons of the corporate world, Nooyi's hesitation to speak up and advocate for fair pay potentially silences others who are hoping for greater equality – and equity – in the workplace.

In her time at PepsiCo, Nooyi was aware that her decision to avoid conversations on executive pay also affected the remuneration of those who worked for her. "Some of my reports would say to me, 'Your problem is you're not asking for more money, because our compensation is pegged to yours, and you're not asking for more,'" she said in the interview.

Across the online sphere, business and talent leaders are speaking out.

Sujata Mukherjee, a leader in India's education technology space, maintains great respect for Nooyi "for breaking the shackles" of women and leading their rise to the top.

However, Mukherjee believes some companies "constantly underpay" employees. "The insinuation that employees should not ask for a raise because they are paid enough is a slap in the face of the working class," she said.

Suzanne Lucas, an influential voice in the HR community, warned against Nooyi's approach. "I'm glad this worked for her [but] don't listen to her. You can ask for a raise. You may not get it, but you can ask."

Career coach Dorothy Dalton agreed. "[Nooyi's] comment comes from a place of extreme privilege," she said. "You can believe you are adequately compensated, but still encourage others to negotiate."

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Topics: Diversity, Compensation & Benefits, Leadership, Culture

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