Sir David Walker never actually suggested publishing details on each individual bankers’ pay, fearing that this would jeopardise their privacy (ah, poor dears!). And he’s since pulled back from his milder suggestion that banks publish ‘bands’ showing the pay and bonuses of all employees earning over £1m while hiding individual employees’ names. It seems this can’t be done unless all countries do the same thing (which was never going to happen anyway).
But the topic of pay transparency has not gone away.
Hutton Review (and the CIPD)
Today’s interim report from the Hutton Fair Pay Review (which I’m still reading) suggests that no civil servant should get paid more than twenty times the lowest paid worker in that organisation.
As the name of the review suggests, this focuses on fairness. But most of the reporting of the review, if not so much the review itself, seems to interpret fairness as showing tax payers that their investments are being protected, and that the 20,000 public servants who earn more than £117k per year (including heads of Universities on £200k and CEOs of NHS trusts on £150k) deserve their salaries. This is about managing perception – about ensuring everyone seems to be sharing the effects of austerity. And it’s why Hutton recommends setting principles and greater transparency in what people get paid.
I’m more interested in the effect of internal pay differentials. I think John Humphrys got it right on the Today programme this morning (as he usually does), quoting Peter Drucker’s concerns that differentials over 20 x can lead to resentment, falling morale and could become socially corrosive.
I think socially corrosive organisations is exactly what we’ve got – in the private as well as the public sector, and steep pay differentials have had their role to play in this.
But the issue is particularly significant in the public sector – particularly because, as I was discussing with Bruce Warman at the Personnel Today Awards last night, the ‘profit motive’ doesn’t really exist there. These organisations aren’t going to go to the wall, so the role of the strategist (part of the role of a business leader) is a less fundamental one. This means that there’s less of a need for high differentials than there is in the private sector.
And the issue is even more significant in the voluntary sector. Here, it’s about sense of mission, rather than high pay, being even more of a focus (or should be being more of a focus) than high pay. That’s why Jackie Orme is getting some rightly deserved stick (eg from Donald Clark: 1 and 2) for her £400k salary at the CIPD.
But for me, the whole debate has echoes of Denise Kingsmill’s Accounting for People review. Kingsmill was focused on providing information on human capital for investors, whereas in truth, the people who really need better information on HCM are business leaders.
Same again here. I personally believe Hutton’s suggestions are entirely reasonable. But they also miss the point. The real need is to educate remuneration committee members and other business leaders, as well as compensation consultants and their like about the impact of such a big divide.
It’s why my bigger worry about Orme’s salary is how are the CIPD going to support Hutton’s proposals when they must have a pay differential of around 20x themselves.
Anyway, if you’re interested in pay transparency we’ll be talking about this during #cHRchat on Twitter tonight (7.00pm GMT). I’m not going to pretend that we’ve deliberately set out to be responsive to current topics – it’s just that, by accident, the subject came up in a tweet of mine during last week’s chat:
Big opportunities throughout HR for more social (thinking) approaches eg pay transparency in Reward #chrchat
Would love someone to do a #chrchat on pay transparency sometime....
Join us if you can.
- Consulting - Research - Speaking - Training - Writing
- Strategy - Talent - Engagement - Change and OD
- Contact me to create more value for your business
- jon [dot] ingham [at] strategic [dash] hcm [dot] com