Mining firm plumbs the depths with £30m retention payment for Chief Executive

Mining may be a dangerous and dirty business (as well as one that is profitable for its owners and shareholders) but a retention payment of almost £30m over the next three years for the Chief Executive of a newly-merged Anglo-Swiss mining firm seems somewhat over the top!

As reported on the BBC website, Mick “The Miner” Davis  of Xstrata has been offered £9.6m as "retention payments" for each of the next three years if (and surely this must be a big “if”) shareholders approve,  and he agrees to stay on as boss once Xstrata’s merger with Glencore is completed.

It won’t come as a surprise to learn that Davis is already one of the best paid bosses of a FTSE 100 company.  But he’s not the only one of Xstrata’s employees who is in line for a significant retention payment: In total, 64 of Xstrata's senior employees are being offered £46.4m in retention payments (basically being paid for turning up!) for each of the next two years. The rationale behind this is that these managers are “critical for our businesses and whose continued employment is key to integrating the two businesses and maintaining and enhancing the value of its operations and growth projects".

But just how critical can these roles be?

A recent report on BBC Radio 4’s More or Less programme revealed that bosses of the UK's biggest companies earn millions in "excess remuneration", and that pay packages designed to incentivise FTSE 100 chief executives had little effect on company performance.

Independent research for the programme compared profit growth and total shareholder return against the total realised pay earned by bosses between 2008 and 2010.

They found (for example) that former Reckitt Benckiser boss Bart Becht earned £138.6m more than the performance of his company justified - an 1,199% overpayment.

Dr Hermann Stern, chief executive of Obermatt (an international financial research company specialising in indexing operating performance) found that “there was absolutely no pay-for-performance link in the UK for those three years. Remuneration committees never want to pay below average. They are more worried about retention than performance. So this has led to spiralling pay inflation.”

Whether worry over retention can ever justify a retention payment of almost £30m is clearly questionable, but it will be interesting to see whether the “shareholder spring” which has led to major shareholders expressing serious concern over excessive pay and bonus packages will extend into the depths of the mining industry.

Equally concerning, however, is the relative silence in the HR community over an area which demands a response from the UK’s HR professionals. Surely our role is to direct and control executive reward, not just administer it!

The Not-So-Secret (but rather embarassing) Diary of an HR Blogger

Me.

Me, me, me, me, me, me, me.

Is that what blogging is supposed to be about?

Being loaned a couple of rather excellent books on the power of blogging (admittedly from the standpoint of a business rather than an individual) has given the editorial team of HR Case Studies the opportunity to reflect on the content of many of the HR-related blogs that grace the internet with their presence on a daily basis. 

Sadly, many of today’s HR blogs appear to resemble the juvenile musings of the 21st century equivalent of the Secret Diary of Adrian Mole; the blogosphere being treated to daily updates on the writer’s mundane activities or (if you are lucky) their views on recent developments within social media (frequently chastising those organisations which do not entirely and unequivocally embrace its use within the workplace).

For example, the six short paragraphs of one HR blog analysed as part of the in-depth research for this article contained the pronoun “I” 14 times (and that’s ignoring all the occurrences of “me”, “mine”, “my”.) 

To be honest, the contents of many HR-related blogs are, quite frankly, rather embarrassing, especially where they attempt to offer a glimpse into the soul of the writer. 

One of the problems with contemporary blogging is the ease with which anybody and everybody can not only unleash their views on their readers, but also fool themselves into thinking that, just because the number of page hits is high, therefore their daily updates of “What I learned at the employee engagement conference” are actually of any real significance.  

With information, opinion and trivia being thrown at us from every corner of the internet globe in which we live, the ability to filter out the dross from the profound is an increasingly essential one. But many of us within the HR blogging community seem to be making our collective task all the more difficult by serving up a daily diet of McWaffle. 

Come on HR bloggers! We're all entitled to our 15 minutes of fame. But that doesn’t mean you need to foist your introspective musings on the world every day of the week. If you're really writing for yourself, buy a diary and unburden yourself within its pages. Then hide it under the bed. But leave the blogosphere for those who have something significant and challenging to say.

An Enormous Request For A Lot Less Passion

For a function that frequently has the need for its existence called into question, HR currently seems to currently be inviting ridicule of epic proportions by the way in which it is talking about itself, particularly in the blogosphere and the twitterverse.

I’m therefore making a heartfelt plea to all of us within our beloved HR community to stop referring to each other in vomit-inducing terms.

Let’s look at a couple of examples:

On twitter, I am followed by a guy who describes himself as “a learner, teacher who is passionate about developing people to embody higher wave of Authentic Living”, and also a lady who is, apparently, “making the world a better place - helping people to shine - living life to the max.”  

Here’s a test: imagine that either of these two had just walked into a house-warming party in their neighbourhood, and someone asked them who they were and what they did. Would either of them ever describe themselves in the terms which are used in their twitter profiles? I seriously hope not. Or, if your fellow passenger on the flight from Manchester to Berlin introduced himself as someone who was “passionate about developing people to embody higher wave of Authentic Living,” could you manage to resist the need to reach for the vomit bag? I certainly couldn’t.

The examples above are by no means isolated instances either. Twitter is littered with (judging from their comments) lacklustre HR people who nevertheless describe themselves as Keynote Speakers, Ninjas, Gurus, Thought Leaders, Mavericks and Global Strategists. Very few indeed are anything at all what they claim to be in their hilariously worded profiles.

Right. Onto my soapbox for an even more vitriolic rant:

HR people: for heaven’s sake, stop describing yourself as “passionate” about what you do. Especially when it’s applied to activities such as organisational change or personal development. To be passionate is to be “dominated by or easily moved by strong feeling, especially of love or anger.” Is that the way people really and honestly feel about HR activities?

That you may be passionate about the ailing fortunes of Preston North End football club, I will allow. That you may be passionate about the all-too-few ECM albums of Keith Jarrett’s European Quartet (or the wonderful new album by Magnus Öström) I can grant. Perhaps if Opera is your thing, it may be the gut-wrenching arias in Julius Caesar by Handel. That you may be utterly passionate about your re-discovered lover, I will accept without hesitation. To be passionate is to be awake in the night thinking about the object of your passion, to miss meals, to suffer withdrawal symptoms when you cannot get what you desire. But to claim that you experience such feelings when you are involved with restructuring an organisation for optimum performance or (when it boils down to it) matching an individual with a learning and development opportunity is, quite frankly, ridiculous.

The thing is, I know I’m not the only HR person who feels the bile rising when I read such over-inflated verbiage. But what makes matters worse is there’s a whole world of non-HR people out there who are laughing up their sleeves when they see the HR community use meaningless and inappropriate terminology when they describe their activities.

If we want the HR profession to be treated seriously, a good place to start would be in the way we talk about ourselves and what we do. 

So let’s commit to use words that people recognise and understand, not ones that have them reaching for the sick bucket

Another New Year's Resolution for the HR Profession

Hot on the heels of yesterday's plea to check out the sources of information before sending it spinning into the HR community comes another resolution that we are going to adhere to in 2012:

Just because a statement contains some detailed statistics, we are not going to automatically accept it as the truth.

Let's look at recent example taken from HR Magazine and widely circulated online:

UK talent acquisition cost stands at £5,311 per hire. Cost per hire is a key metric of talent acquisition spending since this measure indicates hiring efficiency and productivity. While spending on talent acquisition also rose 6% in the US, companies there spend $3,479 per hire, or the equivalent of £2,226. 

Sounds so accurate and precise that it must be true. But learn from yesterday's example, and check out the source of the statistics, and you'll find they originate from an organisation who "will rapidly identify your organization’s key issues, benchmark your strengths and gaps, and engage in an ongoing dialog to drive impact." So let's say that they have a vested interest in getting you worried about your recruitment costs.

But, regardless of the origin of the statistics, they are clearly implausible and are also (it would seem) based on a fallacy.

The figures assume that all organisations use headhunters and agencies to fill some or all of their vacancies. They don't.

The figures assume that all organisations incur excessive costs through the advertising of their vacancies. They don't.

More significantly, such figures include the cost of "management time" derived from the salaries of those both inside and outside the recruitment team. This implies that, particularly in the case of the recruiting manager, there is a "proper job" that he should be doing, and that involvement in the recruitment process is a diversion from a task of greater importance.

But that is nonsense! The days of management passivity in the recruitment process are long gone, and many organisations now make active involvement in identifying new employees a crucial part of the manager's performance objectives. Not only HR, but line managers themselves now see total integration into the recruitment process as vital to adequately sourcing members of their team, and regard this involvement with as much seriousness as any other part of their job description.

Robin van Persie may be paid to score goals (17 this season so far, I believe!) but he's earning his keep just as much when he clears a ball off the line. Same with managers. So don't make it appear that recruitment is peripheral to what they do.

My New Year's Resolutions For HR

Do you recall the episode of Outnumbered in which Karen misunderstands the concept of New Year's Resolutions and, rather than making them for herself, she makes a list for her mum?

Well, dear HR Community, that's what I'm going to do for you today and tomorrow. Fortunately there are only two items on the list, but if we all stick to them, we'll make the world a far better place for everyone to live in!

Here's today's resolution:

We will check out the sources of any article before we distribute it to the wider world.

I have a specific issue in mind, and that is the oft-circulated and quite clearly untrue assertion that (and I quote) "90% of recruiters and hiring managers have looked a candidate’s social media profile (primarily Facebook and Twitter) as part of the screening process."

It isn't true. And ten seconds of thought would lead anyone to that conclusion. Are any of us actually gulllible enough to believe that 90% of (say) the companies in the FTSE 100 index (that's 90 companies if your maths isn't very good ... ) have HR Teams that have sufficient time to trawl through Facebook and Twitter profiles in search of Dark Secrets concerning their potential new recruits? Anyone who actually works in such an organisation will laugh out if you ask them if such activities are a normal part of their workload. There are far more pressing activities to complete and deadlines to meet than playing the HR supersleuth.

The reason that this myth is perpetuated is that we are encouraged to believe it by organisations with a vested interest in making people concerned about their online presence.

The particular offender here is Reppler who regularly feed the fires of candidate paranoia with alarming statistics on "the habits of hiring professionals." Get real HR people! Reppler are an "Online Image Management" business, whose marketing pitch is "Whether looking for a job or building up your career, it is important for your online image to represent you professionally and consistently." Their US-based research ("conducted among a random sample of 300 individuals involved in the hiring process at their company") does not stand up to scrutiny, and flies in the face of the facts.

They have a product or a service to sell, and they are appealing to the fear factor in the desperate (or possibly just the conscientious) applicant who appreciates that the current job market is a jungle, and who therefore wishes to use every tool at his or her disposal to give themself an edge over other competitors.

So please, please, please, dear HR colleagues: don't take such mouthwatering pseudo-facts at face value and mindlessly hurl them into the crowd. Read, think, and exercise some professional judgement and common sense before spreading unverifiable gossip!

I conclude this particular resolution by repeating the challenge previously made in the pages of this humble blog for anyone who is formally involved in the recruitment process to explain just how frequently they indulge in the Dark Practices that some would like us to believe.

Any takers?