Wednesday, 20 October 2010

A fair day's wages for a fair day's work?

The issue of the excesses of executive pay has featured many times in the pages of this humble little blog. But an article in today’s Guardian once again turns the spotlight on this crazy situation.

I defy you to read some of these facts and not feel some sense of injustice!
  • The average income of a FTSE 100 chief executive is over £3m per year, including bonuses and pension contributions. This is more than 100 times median household income.
  • It is not uncommon for CEOs to earn 200 or 300 times as much as the average pay of their employees.
  • In Terry Leahy's final years CEO at Tesco, he was paid 500 times the average take-home pay of his colleagues.
  • In the year to September 2009, the FTSE LOST a third of its value. During the same period of time, executive pay ROSE 10%  
  • In 1980, the average pay of a UK CEO was ten times that of average UK earnings. By 2006, the average pay of a UK CEO was 75 (say it out loud and think about it ... seventy-five!) times that of average UK earnings

So what can be done about such evident and surely unsupportable imbalances between those at the top of UK organisations, and those who work within them? Today's Guardian article offers at least one good suggestion:
One thing that government could do to shake things up would be to change the composition of remuneration committees, adding some broader and more critical voices to the mix and disrupting the complacent back-slapping. Ed Miliband's proposal for worker representation on remuneration committees would be a promising way forward. It would inject a dose of realism into the determination of corporate pay, as the presence of even a single dissenting voice could puncture group-think, and lead to pay policies that were broadly justifiable to all sections of an organisation, rather than only serving the interests of a self-perpetuating elite 
Further reading from HR Case Studies
Trade Unions add their voice to the chorus demanding an end to the bonus culture

Your thoughts and comments are, as ever, most welcome.

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