I watched a dispatches programme the other night investigating the morality, fairness and commercial impact of the ever-increasing c-suite salaries vs those on the ground floor of companies across the UK and abroad. At present chiefs of British business are taking home average pay of £4.8million, 180 times more than the average working wage.
I will start by saying that I believe that people should be rewarded for hard work and success, but within reason.
It got me thinking can someone really be worth that much money? Or is that the wrong way to look at it?
The argument from the c-suite was that they have to pay the going rate and what the market dictates. Just like the astronomic wages that footballers receive for kicking a ball around a piece of grass for 90 minutes, so do the large corporates in order to get their person. It amazes me that the stock market in general can have such a dramatic impact on share prices also. The announcement that Steve Jobs was to return to Apple after years out of the business generated massive share price increases while the firing of a CEO can also help stop the rot on a companies share value.
The argument from down stairs (aside from the obvious) is generally that if you could bring down the top earners pay, you could use this to support employees pensions, invest in those of the future, become morally more respected and help regenerate the entire UK economy. Recessions are, to a degree, psycological…if you could put £100 more in each employees pay packet they would feel better about their financial circumstances and start to ease those purse strings; net effect the wheels of Economy GB start to turn again.
The real kicker for me is that the remuneration packages agreed for new CEO’s and the like are agreed by fellow CEO’s, if you or I were to be held responsible for setting the reward package for our friends then we can see where that would end up can’t we!?
There is a small, but growing movement that remuneration for top execs should be spread over a longer period of time and related directly to the performance over that period. Just like the insane pay packages that a football manager gets after 3 weeks in the job before being sacked for poor results, the same generally applies in business. This would ensure that those people who are brought in, perhaps to save a company from bankruptcy, or to expand internationally and make a success of it are justly rewarded, but those who fail are not.
Dispatches also made the point that we can all have our say. There have been a few cases recently where groups of shareholders have voted against proposed pay increases for some of the UK’s blue-chips top execs and succeeded…perhaps this is something we will see more of as the general public wants to see not just a financial return on their investments, but a moral return also.
As a final point, Dan Pink makes the point that we should try to get to a position where pay is taken out of the equation when it comes to work. Pay people enough, that they are not simply motivated by money and you will find that people feel under less pressure, perform better and enjoy their work more.