EXECUTIVES who take million-dollar salaries and bonuses are setting themselves up for many kinds of "dangerous and negative behavior" from employees, according to industrial psychologist Elaine Sloan of Personnel Decisions Inc., a Minneapolis consulting firm that assesses and develops mid- and top-level managers.

Sloan cites a Carnegie-Mellon University study that found that fully 55 percent of all workers don't trust top management. "We're seeing the same general alienation in our programs working with managers," she says. "More so than in the past {because of pay gaps, downsizing and mergers} managers are talking about early retirement, burnout and entrepreneurial ventures -- and these are often considered high-potential folks, people who have alternatives."

Employees have different reactions to big pay gaps, Sloan notes. "Some feel very personally devalued and depressed. They see a superman getting so much more and begin to feel they've failed." A second type lashes out. ("We expect more potential for unionization," Sloan says. "At the very least, middle managers won't be as likely to stand in the way.") And a third type becomes cynical: "They'll stick around, but they'll be a drain on the motivation of others."

Employees would not react negatively if they saw a relationship between pay and company performance, Sloan says. "But all the studies show there isn't that direct correlation." And if you violate employees' sense of equity, many play politics, concluding that "it's who you know that counts." Others become more likely to steal from the company or lie on expense accounts.