“Ratios of CEO pay to UK employees’ pay
Average estimated FTSE 100 CEO total remuneration was £4.7 million (412 times National Minimum Wage and 221 times 2010 UK median earnings).”
source: One Society
“UK income inequality is among the highest in the developed world and evidence shows that this is bad for almost everyone”.
Source: The Equality Trust
As I was stuck in traffic on the M23 for two hours today, I spent best part of an hour listening to Margaret Hodge unpicking the payments made to senior executives at the BBC.
It was a revealing insight into the mind of the senior executive – when an individual’s base salary is approx £800,000 along with all the associated benefits then I guess giving an additional £500k as a sop to keep another executive sweet during the final days of their tenure, probably doesn’t seem that much. (If someone is already paid £500k isn’t that enough to motivate them to do a brilliant job for their organisation and with pride?) It’s a distortion of reality and represents the disconnect between business leaders from the day to day realities of the people that work in the organisation they are leading.
I believed today that Mark Thompson believed what he was saying, that to get “talent” you have to pay market prices although I believe both are constructs. I could hear too that when he was being asked to justify decisions that he had clearly felt were valid when he made them, that his own rationale started to sound weak. The reasons began to sag and sound self serving under scrutiny.
People in senior jobs of course do need to be remunerated in accordance with risks they have to take, experience they bring in and the responsibilities they bear. But – when the distance between the lowest and highest widens to the extent that we are now seeing, the decision making lens becomes clouded by self interest, there is so much more to lose and therefore so much more energy put into holding on.
The financial gap can also I guess, be seen as a metaphor for other gaps – discounting what staff say is one; for every organisation that has been swallowed up there will have been staff knowing, and very often saying, that something is very wrong. But, the distance stops the executives from hearing. Or asking. This article in the Telegraph gives a flavour from 2010 of attitudes from staff at the BBC. There was a story within the hearing today of a receptionist who had been at the BBC for 23 years, and she got their basic redundancy package, yet the senior Executive under review, who was already banking £500k annually, got an extra payoff to keep him sweet.
Governors have a responsibility for appropriate financial leadership of both public and private bodies, and somehow, over time, there has been a universal buy in to justifying inflated salaries and packages. It’s created a elitism and a world in which executives do not live and work in the same reality of the vast amount of people that they employ and who they serve. What role does HR have in relation to advise, educate, challenge Boards?
“a greater creeping inequality continues to spread more widely in the corporate sector, bringing with it a range of economic and social costs, and dysfunction.”
“HR as champions for better work and working lives”.…….. Every executive should understand how damaging excessive pay gaps are and how it influences what decisions get made and how they get made. HR as educator, advocate, challenge and champion for equality.
I like that.