A year ago, global economist Roger Nightingale told the audience at the Pensions Management Institute’s annual conference that the issue of fairness would be high on the agenda in 2009.
In June this year, Duncan Brown, director of reward services at the Institute for Employment Studies, flagged up the same issue to delegates at the Employee Benefits Summit, having written on the topic several times over the past year.
And these past few weeks, fairness has been an underlying issue in practically all reports on executive pay, both here in the UK and across the pond in the US.
The widening gap between the pay of ordinary workers and top executives has been growing for a long time, but now, as the average employee struggles to make ends meet, the unfairness of a situation over which they have no control has hit home and people are angry.
Fingers are also being pointed at compensation consultants and, over the years, I have often wondered how big a role they played, even unintentionally, in stoking up pay at the higher echelons. I have lost count of how many times I have been told that executive bonus targets are set to be challenging but achievable, so that good management teams will stay with organisations, especially in difficult times.
It is this last point that sticks in the gullet of so many people because, by concentrating large bonuses on top management, it seems to ignore the efforts of all the other staff in an organisation who helped achieve those targets. No matter where you stand on this debate, you can be sure it will not go away in a hurry and will become entwined in an organisation’s brand and position as an employer of choice.
Reward managers must feel particularly caught in the middle. They have little say over executive pay decisions, but usually have to implement them – witnessing the huge disparities first-hand.
Our Salary Survey 2009 among reward and benefits managers will not lessen the sense of unfairness because it also flags up just how desperate the need is for more equal pay audits – even among those tasked with managing pay. The gap in pay between male and female reward professionals is particularly upsetting.