Staff pay gap ‘affecting motivation’
18 December 2015
- From the section Business
A growing gap between the pay of chief executives and employees is having “a significant impact” on workers’ motivation, a report says.
Executive pay growth is at a “crisis point”, with no clear link between pay and performance, said the Chartered Institute of Personnel and Development.
Just under 60% of those surveyed said they felt demotivated by the pay gap.
The Institute of Directors said business leaders “share the public’s anger” at excessive pay.
The CIPD survey, which covered more than 1,000 employees, found two-thirds of employees thought their boss was not rewarded in line with their organisation’s performance.
Charles Cotton of CIPD said: “It’s crucial that chief executive reward packages are simpler and more clearly aligned to both financial and non-financial performance measures.”
These measures should include how their leadership affects employee wellbeing and engagement, and accountability for employee development, he said.
The Institute of Directors (IoD), which lobbies on behalf of business leaders, said pressure should be put on those at the top of a firm when “multi-million pound pay deals bear no resemblance to a company’s performance over the long-term”.
Oliver Parry of the IoD said that some steps had already been taken to rein in overly-generous pay.
“Shareholders now have a binding vote on executive pay, companies have to publish a ‘single figure’ for how much directors earn, and we have started to see institutional investors show their teeth by pushing back against the most inflammatory pay deals.”
He added that “employees fear bosses are just writing zeroes on their pay cheque which is then approved without scrutiny”.
To allay these fears, staff should be allowed to observe remuneration committees, he said.
Frances O’Grady, general secretary of the TUC, said companies should address the pay gap “as a matter of urgency”.
“This will boost staff productivity and ensure that workers get a fairer share of the rewards,” she added, and called for workers to be given seats on boards and remuneration committees.
This post was written by FSB News